Argentina: a country, most people only connect with soy, meat and a number of economic crises. Few would expect the country to be the home of one of Latin America’s best-developed startup ecosystem, and a vast number of highly successful software companies. But exactly this is the case.
Argentinian national unicorns range from “South America’s Amazon” MercadoLibre to globally active FinTechs such as Prisma. Another example is Globant, an IT-outsourcing giant counting now over 10.000 employees. And US multinationals such as Microsoft, Intel, Amazon and IBM are omnipresent in the capital Buenos Aires.
What they all are looking for, are Argentina’s highly educated developers and engineers. Tertiary education in Argentina is free of charge and very solid, and while the University of Buenos Aires (commonly known as UBA) counts 300.000 students, in many careers it also ranks 1st on the whole continent. In general, the quality of education in Argentinian universities is certainly on the same level as their European counterparts’. Even foreign students from the Mercosur area are allowed to attend UBA’s courses without restriction or fees, which attracts additional talent from those countries.
However, as the country’s economy faces high uncertainty and regular downturns, domestic companies are only capable of employing a fraction of all graduates. In IT, most graduates start their career in outsourcing companies in order to gain experience in various fields but are keen to quickly jump to more exciting jobs. Thus, for foreign companies and domestic startups, it is easier here than virtually anywhere else to find highly educated and experienced talent in the fields of software and engineering. Not to mention the highly favorable Euro-Peso exchange rate, making R&D in Argentina even more competitive.
Especially for startups, the Argentinians’ education, creativity, and strong will to take risks provide a more than fertile breeding ground. Modern infrastructure is provided by 50 local coworking spaces, as well as numerous accelerators and business angel networks. To support young ventures, the city of Buenos Aires hosts major initiatives to create additional exchange between investors, startups, and larger corporations. It appears to be successful: while the overall economy may struggle, Argentina’s startup ecosystem breaks one record after another. Every single year.
Most important Fields & Technologies
Most startups are founded in high-tech fields such as AgTech, BioTech, FinTech, HealthTech, Machine Vision and Telecom. In total, 104 AgTech startups profit from expertise and capital by Argentina’s traditionally strong agricultural sector. BioTech and HealthTech are fueled by entrepreneurial scientists and university spin-offs, and flourish thanks to very liberal regulation. As an institution, the successful public-private company Bionnovo regularly delivers additional breakthrough innovations in the field of Gene-editing. Further, Artificial Intelligence and Machine Vision technologies strive, profiting from cooperation with present giants such as Microsoft, Intel, AMD, Amazon and Google, and are additionally fostered in the course of Argentina’s designated national AI plan.
VC funds mainly from the US have realized the opportunity long ago, and are actively looking for startups to invest in the country. They are also fast in inviting them to San Francisco and Silicon Valley after closing an investment. They compete with regional funds such as NXTP Ventures (FinTech and AgTech) or Kaszek Ventures (Telecom and Software), and corporate venture funds run by national unicorns like MercadoLibre, Despegar and Globant, as well as domestic enterprises like YPF (energy), Litoral (BioTech), or the local branch of Telefónica (telecom). Not at least, Japan’s Softbank recently announced to invest through their Vision Fund 1 bn US$ in Argentinian startups in the years ahead. Public programs exist to match private investments with public ones, thus further increasing the investors’ leverage.
Opportunities for Austria
For both Austrian startups and corporations, Argentina offers numerous opportunities. While almost all companies struggle to find enough qualified and experienced IT staff and engineers in Austria (aka ”Fachkräftemangel”), these are abundant in Argentina. For startups aiming at developing software, but lacking the necessary staff on-site, outsourcing project-based software development can represent an ideal solution. Highly successful IT-outsourcers like Globant (10.000 employees) or BairesDev (800 employees) proved to deliver custom software at the same quality, but not even half the cost, compared to their European or US competitors. The smallest possible project sizes start at 5.000€. Besides hundreds of US and German companies, also Austrian ones such as Kapsch and Red Bull Media House have already exploited this opportunity.
For smaller projects, more than 3.000 local IT freelancer with a fluent level of English are registered on Upwork.com alone. Hourly rates start at 20€, depending on their experience, skills and specialization. Working with Argentinians definitely provides much less friction than in other parts of the world (especially compared to traditional outsourcing to India), since they share our European culture, have a strong sense of responsibility and in general a good level of English.
Another option is to directly recruit from Argentina, and invite your future employee to work on-site in Austria, as most Argentinians are very open to travel or migrate. Unfortunately, administrative barriers and visa restrictions still represent a major obstacle in this regard. If you choose to do so, be aware of a long and complex process with an uncertain outcome. After all, a total of only 2.000 Rot-Weiß-Rot cards has been granted per year. Still, a reform of the RWR-card is on its way to take effect by 2020, which will abolish the crippling requisite to prove a confirmed accommodation already when submitting the application. In addition, the minimum salary required will be lowered, and finally, the form can be submitted online.
However you decide: for every company interested in Argentina, Austria’s local foreign trade center (AußenwirtschaftsCenter Buenos Aires) offers a free contingent of 8hrs of personalized services to all WKO members and is there to support you. A detailed report about Argentina‘s startup industry can be requested here.
The author – AustrianStartups volunteer Philipp Schardax – was in Argentina for two months, working at the local foreign trade center by Austria’s chamber of commerce (AußenwirtschaftsCenter Buenos Aires). He supported the office in establishing a local network for startup and technology scouting, and explored opportunities for Austrian companies in the country.