June 24, 2024 in Latin America
Latin American startups face unique challenges to transform the economy for young people amidst systemic hurdles. Discover their stories.
Latin American startups are emerging as agents of change for young people, harnessing technology to improve the socioeconomic outcomes for those who are eager to thrive. However, all startups face challenges, and in Latin America these include lack of access to financing, regulatory uncertainty, and the digital divide – issues that directly impact their ability to transform possibilities for young people at the required rate.
In this article, we examine how three Latin American startups are unraveling the economic tangle affecting young people to highlight their innovative, collective solutions to systemic challenges.
“It's nothing new that young people are the most promising agents of change,” says Daniela Guerrero, Program Manager at Village Capital Latin America. “What is particular about the current generation is that we now need quick and drastic action to change the paradigms that have led us to economic, climate, and social crises. We must support startups that enable young people to grow personally and professionally – to pave the way for these agents of change to achieve their goals.”
Latin American startups face diverse challenges. Firstly, the lack of access to financing represents a significant barrier.
Secondly, regulatory uncertainty adds another layer of complexity, as constantly changing laws and regulations inevitably hinder operations for startups, which are already trying to move quickly to stay ahead of trends.
Thirdly, the digital divide poses an additional challenge, especially in rural regions with limited access to connectivity. This hinders the ability of Latin American startups to reach broader markets, leverage digital tools for business growth, and to collaborate with companies that have made the leap to remote work and collaboration.
Finally, women-led startups face entrenched sexism that impedes their progress, especially in countries with significant gender gaps, such as Mexico, Nicaragua, and Peru.
Overcoming these challenges will require a comprehensive and collaborative approach among governments, the private sector, and other organizations to create an enabling environment for startups to flourish in the region.
Since its inception in 2009, Carolina Díaz and Constanza Gómez, Co-Founders of Calificadas, an Argentine edtech, have demonstrated an unwavering commitment to their mission: using public speaking as a powerful tool for change. Calificadas focuses on strengthening women's communication skills as a means of professional development. By improving communication and women's participation, companies can increase productivity by 25% according to their research.
The founders began their entrepreneurial journey with a focus on development for girls, but during the 2020 pandemic, they realized there was untapped potential in transferring their knowledge to professional women. Simultaneously, the startup was cornered by the need to adapt its conferences and coaching to a digital model.
The motivation behind Calificadas is based on a global need, which is why they have expanded the availability of their app. Constanza has seen the growth opportunity in communicative assertiveness firsthand in business environments led by highly-skilled women – a finding Calificadas has confirmed through research, showing a pattern of the lack of consideration in gender experiences at a systemic level. “This is why the professional strengths of women leaders tend to go unnoticed.”
In their headquarters in Corrientes, Argentina, Calificadas faces challenges that are typical of Latin American startups, including difficulties finding specialized employees with experience in the kind of technology they are developing, such as working with a real-time feedback tool that would use artificial intelligence. Carolina and Constanza recognize the need to continue expanding and bringing their digital solutions for professional growth to all corners of the Spanish-speaking world.
The lack of in-person networking also limited them during 2020 and 2021 despite the existence of digital connections. Today, the two founders continue to promote and train confidence in young professional women so that young people see Latin American startups as an option for professional growth.
Overcoming local and global challenges, Calificadas has heard many moving stories from its users who range from business leaders to entrepreneurs and manufacturing workers. Mariana, who has a technical job in a factory, used to succumb to nerves when she received in-person visits at her factory. Thanks to the Calificadas app and their work on verbal and non-verbal language, she now adds tremendous value to the place she works, proudly presenting in person.
While it may not be their main purpose, Calificadas’ impact transcends the boundaries of the office: “We train entrepreneurs who come in to learn how to promote their projects but feel a lack of confidence in expressing themselves even with their own families,” the founders comment. “Several have gained confidence through Calificadas, such that they learned to communicate more assertively with their families and even solve communication problems in romantic relationships.”
Each day, 2,500 users log into the mobile app, while Calificadas uploads new materials to transform the way women perceive themselves and are perceived in the world. Calificadas is creating a space where respect for individuality is fundamental, and people can take control of their careers and personal growth. Similarly, but with an even younger audience, we will address the next startup.
Alysson Sanches, Founder of U4Hero, has a dream job: exploring the educational landscape through immersive and educational games. His edtech U4Hero, is called a “healtech” by his team in Brasilia. U4Hero is the world’s first socio-emotional gaming platform for children and young people and is available in Portuguese, Spanish, and English.
The founder behind the startup sadly experienced events that led him to pursue a mission with which he identifies personally: addressing bullying and other emotional challenges faced by children in schools. That is why he set out to explore how games can be a tool to better understand student behavior. Alysson’s research led him to talk to educators and delve into the theories of philosophers like Plato, Piaget, and Lev Vygotsky, who advocated for the power of play in human development.
“U4Hero stands out for its focus on two fundamental aspects: captivating students and supporting educators and administrators,” explains Alysson. “It is an immersive platform that gives a voice to students’ feelings and emotions while providing educators with a tool to better understand the impact of these emotions on learning and relationships,” adds Alysson.
U4Hero’s range of gamified and automated tools invite reflection in children and young people and facilitates the work of educators, allowing them to customize their educational approach according to the specific needs of their students.
However, the path of this innovative startup has not been without its challenges. Alysson and his team faced initial resistance from investors and a shortage of financial resources in their country. However, their determination and persistence guided them to investors and other agents committed to the mission of making a positive impact on education. This led them to find Village Capital’s ADAPT program, supported by MetLife Foundation. This program was designed for Latin American startups helping individuals and communities adapt to economic and social challenges. That is why the three startups mentioned in this article have been selected to join the 2024 cohort. (Read the complete list of startups here).
Returning to U4Hero’s story, which stands out for its positive impact on multiple lives, Alysson told us about Adriana, a teacher with a student who was overly dependent on her, treating her like a mother. By using the platform, the teacher discovered that the student preferred to be with her over other adults, and thanks to the data collected, she was able to address the problem with the parents sensitively.
From helping children overcome traumatic experiences to facilitating sensitive dialogues between students, educators, and their families, U4Hero continues to demonstrate its value in the educational field. However, learning goes beyond traditional early education, as Hackademy identified a gap to close for the benefit of young people and businesses.
They say a loss can be a beginning, and for Hackademy from Sinaloa, Mexico, that was indeed the case. When they had to vacate their initial operational space, Hackademy’s renovation triggered a series of events that culminated in the startup’s growth and brought about the birth of its HackWomen branch during the 2020 pandemic. Today, Hackademy is an edtech with a peer-teaching method for software development, fully funded and available to students with or without degrees.
We met Fernando Gallardo, CEO and Founder of Hackademy, and Raquel Sánchez Gaxiola, COO of Hackademy and Co-Founder of HackWomen. Fernando, originally from Jalisco, and Raquel, from a town in Sinaloa, joined forces to bring technology training to those who neither have experience in the field nor are located in Mexico’s major cities.
Fernando noticed that many young people graduate from technology careers, but their professional practices do not adequately prepare them for the workforce. Therefore, he recognized a significant gap and designed Hackademy to go beyond imparting theoretical knowledge – as there are already thousands of high-level institutions in Mexico delivering quality education. Instead, Hackademy focuses on practice, community, and collective knowledge. Their approach to real projects and personalized mentoring for each “Padawan” or user aims to equip students and recent graduates with practical and relevant skills for the job market.
Their second venture, a branch of Hackademy, is HackWomen, which transcends earthly borders, extending to countries like Argentina and Spain. This project was born out of the need to address the gender gap in technology, offering exclusive workshops for women and women-led startups, providing mentorship and support for their entry into the tech field. Currently, 96% of electrical and electronic technicians and 95% of telecommunications engineers are men, according to the Global Gender Gap Report.
Raquel told us: “Companies have specifically sought us out to provide workshops, and we have been able to position HackWomen members as speakers.” By launching a targeted call for women, there was a huge increase in registrations for their technology programs from women-led and independent startups.
The importance of Raquel’s efforts at HackWomen to promote gender equality has been internationally recognized with the Skills for Women in Tech scholarship from the British Council in Mexico and the Dalia Empower Mind Woman award.
Hackademy graduates range from Venezuelan dentists who became front-end developers to petroleum engineers who found their way as data engineers. “Sometimes, career changes allow young people to follow their dreams and improve their income, demonstrating the transformative impact of technology experience,” Fernando tells us.
In a world where the demand for technology skills is constantly increasing, Hackademy and HackWomen are leading the way towards greater geographic inclusion and gender diversity in the technology field. Their mission is to ensure that people from diverse backgrounds can reach their full potential in this field.
In addition to developing their products and seeking investment, founders of Latin American startups witness regulatory advances and are even part of their development. Alysson Sanches, Founder of U4Hero, comments that “in Brasilia, we have seen significant advances in regulatory frameworks in recent years. Since 2020, the implementation of Socio-Emotional Education has become essential in public and private schools, as established by the Common Core Curriculum in Brazil.”
Recently, the Brazilian government enacted a new law with measures for preventing and combating violence against children and adolescents in educational institutions, and another law that aims to promote the mental health of all members of the school community, including students, teachers, parents, and others. This speaks to the importance of the evolution of Latin American citizens’ rights towards quality education and a peaceful environment.
Innovation may sound intangible, but it is key to progress. To this end, supporting the development and growth of startups that are at the forefront of creativity and change; generating employment, boosting the economy, and solving complex problems with technology. We can all contribute to the development of Latin American startups: whether as investors, mentors, customers, or advocates.
The ADAPT Initiative by Village Capital and MetLife Foundation started in 2022 to support projects working on social resilience, prioritizing women-led startups, and funding those who have been marginalized. All startups that applied to ADAPT were invited to join Abaca, a free online application by Village Capital designed to help entrepreneurs make strategic decisions about fundraising.
*All opinions contained in this document are exclusive to Village Capital.
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