With the advance of new companies "100% digital", traditional companies have already started an innovation race to not lose ground in the market. However, many times they do not know how to do it.
Although they have the economic "back" enough to fight, their structure and weak corporate culture are often an obstacle to digital transformation.
For this reason, Argentine companies are betting more and more on the Corporate Venturing format - or corporate risk investment - to promote the creation of new products or services. Something like "incubators in house".
In Latin America, some 155 large companies are working with more than 2,000 ventures, according to Hugo Kantis, director of the Entrepreneur Development Program (Prodem
In this line, Juan Manuel Giner González, executive director of the Argentine Association of Private Capital, Entrepreneur and Seed (ARCAP), remarks that "there are good prospects for startups in 2019" in Argentina.
And one of the models where these projects will find support is the Corporate Venturing (CV), a format that combines the spirit of entrepreneurs with a technological base and the solidity of large corporations.
The modality is born to find "a faster and cheaper way to innovate, especially in those fields that exceed the incremental efforts that companies usually face with their internal resources", said from Prodem.
In the same vein, María Julia Bearzi, Executive Director of Endeavor Argentina, affirms to iProUP: "We are seeing more and more corporations that develop their investment chapters in startups and are beginning to take an interest in the innovation that entrepreneurs bring to them outside of the corporation" .
"With open innovation programs, large companies go out to find entrepreneurs who are acting within their line of action or interest," adds the board.
Born to accelerate
As a success case, the Bearzi highlights Global Ventures, Globant's high-impact external project accelerator, one of the local unicorns.
"They are actively interviewing and searching the local ecosystem, analyzing what are the opportunities in which to invest and always looking at those who have the potential to grow with them on an international scale," the directive completes.
The Sancor Seguros Group also has its accelerator: CITES. It is inspired by the Israeli model and contributes US $ 500,000 for 50% of each startup. In addition, it has a risk fund (Venture Capital or VC) of US $ 24 million to be disbursed in 32 companies.
Within the beverage sector, the most relevant case is that of Eklos, the accelerator of Cervecería y Maltería Quilmes. One of its successes is ZoomAgri, an agtech (Agriculture & Technology) that combines artificial intelligence and image recognition to identify genetic varieties of cereals in real time.
"The project arrived in 2017 with our first version without validating the product, through our e-Factory program, they worked with our Agro team to understand in greater depth the limitations of the current tools and the needs of the users, incorporating the feedback to the solution ", explains Federico Espinosa, director of Disruptive Growth of the firm for South America.
"In 2018, they became technology providers for the company nationwide," recalls Espinosa in dialogue with iProUP.
He adds: "In the three years, we have bet on three projects and we are in the final stages of closing the investment in two more.The last year, the disbursement in initial tickets was US $ 100,000.And contributions are in negotiation consecutive in two of the startups already invested for an amount that exceeds $ 300,000. "
In the fintech world, Mario López, founding partner of Poincenot, tells iProUP that his company has two specific business units.
"The first is CompanyBuilder, whose specific objective is the creation of fintech firms, such as Moon Money Online, b.trader or Credicuotas." The second is Digital Acceleration, which, based on its technological assets, equipment and ability to innovate, they associate or collaborate in the digital transformation of clients or specific businesses, "he explains.
The success story of Poincenot highlighted last year was the launch of the Common Investment Fund of BIND with Mercado Pago.
Go to Series A
NXTP LABS is one of the pioneers in the sector. Founded in 2011 by Ariel Arrieta, Gonzalo Costa, Marta Cruz and Francisco Coronel as an investment fund with acceleration programs, it currently invests in companies in Series A and Series B phases, and continues to execute different acceleration programs.
According to Alex Busse, Principal at NXTP Labs: "The companies in the Fund I portfolio have raised more than $ 900 million today after we invested them and have invested more than 150 investors in these companies. the region".
In 2018, NXTP Labs launched a new fund focused on the Series A stage for more mature companies. It is NXTP Fund II. "We had a US $ 40 million close last year and we made five investments throughout the region," adds Busse.
Busse says that they have four impact verticals to which they pay special attention: Financial inclusion, SMEs, Environment and Access to Basic Goods.
Another unicorn that has its own fund is Mercado Libre: MeliFund, whose committee is composed of Pedro Arnt (CFO), Daniel Rabinovich (CTO) and Martin De Los Santos (SVP Finance).
For this year, his plan is to expand the number of portfolio companies in Argentina, Brazil and Mexico, focusing on a Series A (Opportunities Strategy) stadium.
"The focus is to support technology companies in Latin America that have synergies with a Free Market business unit, thus enhancing both operations and reducing inefficiencies in the ecosystem.For 2019, we will emphasize the vertical logistics and fintech", point from the company.
Wayra is the accelerator of the Telefónica Group. Since 2011, he has worked with 57 startups in Argentina and more than 400 globally.
Agustín Rotondo, who recently became Country Manager of Wayra Argentina, lists two relevant cases in 2018 as an example:
- Increase. "It raised a 3 million round and is expanding to four Latin American countries in the hands of strategic partners that entered as investors," he says.
- WinClap. "It is showing an exponential growth, it is closing agreements with Telefónica at a global level and already has offices in Spain and Brazil, as well as Argentina, with the project to extend its expansion," he explains.
Rotondo anticipated iProUP that "based on the new strategy, we refocus our challenge in helping our startups to scale, supported by the capacity to generate joint ventures, either with Telefónica or with more than 350 million customers in 24 countries. "
In this way, they look for mature investments that assume the challenge of establishing synergies with Telefónica's operations.
"Our accelerated companies gain momentum to open businesses in new markets, and Telefónica incorporates more innovation and agility to its operation, adding new products and services to its offer", closes Rotondo.
Invest in other ways
There are players in Argentina who do not necessarily contribute money, but participate in a process to find entrepreneurs who add value and add them to their business.
"This is sometimes more interesting than investing per se, it is a contribution, not in cash but resources from a large company to the entrepreneur." For a company, growing hand in hand with a large company, here and in the region, is an extremely interesting opportunity ", says Bearzi, from Endeavor.
Among other players that are already -or will be this year- in the "game" of the innovation of the local entrepreneurial ecosystem are Arcor, Swiss Medical, Natura, Novartis, Tenaris, CCU and Samsung. There is also talk of Coca-Cola and Mondelez.
"YPF and Banco Supervielle are also shaping their Venture Capital," adds Daniel Tricarico, executive director of ASEA, a non-profit organization formed by and for entrepreneurs.
Other notable experiences are those of Telecom, Adecoagro and Visa, companies named during the last Argentine Innovation Forum.
Samsung, for example, developed Innova, a contest that in 2018 awarded the best projects in the country linked to technology, innovation and positive impact on society.
Meanwhile, Telecom launched the "Garage Personal" acceleration program, which provides economic incentives of up to $ 875,000 to initiatives of the vertical fintech, Internet of Things and entertainment.
For its part, the Brazilian cosmetics company has the Natura Startups program.
"It is an open platform for entrepreneurs who produce innovative and sustainable business solutions who want to be part of the company's value chain," explains Enzo Laporta, manager of Digital Innovation Latam de Natura, at iProUP.
With the focus on the environment, it defines that one of the areas with the most critical challenges is Sustainability.
"We have mapped different initiatives that we want to address and we are actively looking for startups to help us with our topics of interest, such as waste, recycling or education," the executive completes.
Open roads
The truth is that by investing in startups, Corporate Ventures are nourished by innovation and also access to tax benefits, in addition to providing advice and financing.
This trend of the "inhouse incubators" is encouraged by the expected Law of Support for Entrepreneurial Capital, which provided:
- The creation of Simplified Public Limited Companies (SAS), a corporate format that is created through the Internet and in a few hours.
- The establishment of the Entrepreneur Capital Fund (FONDCE), which enables the State to invest in different stages of the development of a startup.
"Investors who choose to support Argentine ideas will be able to discount the Income Tax between 75 and 85% of the amount they contribute, with a cap of 10% of their annual earnings," explains Daniel Tricarico, from ASEA, an organization that was part of the the drafting of the law.
First, the seed
One of the aspects that differentiate the different degree of maturity of the ecosystems of each country is the role of large companies in the "game" of innovation and entrepreneurship.
In the most advanced, it is much more common to find the bridges that link corporations with startups than in Latin America. Consequently, for CVs to invest in entrepreneurs, there must always be an "angel" earlier in the early stage.
"Behind a large Venture Capital investment, there is always an angel investor that allowed that to come to that," says Juan Giner, ARCAP.
For a sector that is growing and in the first half of 2018 raised $ S115 million of entrepreneurial capital, the role of angel clubs is important because it acts as a gateway for many potential investors that make this number come in growth since 2016.
Undoubtedly, the acceleration of the process of technological change caused by the digital transformation and the 4.0 revolution has generated new stimuli for large companies to be interested in working with entrepreneurs.
As they say from Prodem, "phenomena such as Netflix, Amazon, Whatsapp, Airbnb or Uber, to which must be added the cases linked to the fintech, have generated a direct threat in the world of large companies." Innovate or die "seems to be the slogan ".