Expanding into Latin America
Easy to say, not so easy to do.
It is often heard, both from investors and entrepreneurs, that “the next step is to expand regionally in Latin America” and that is the reason why they are seeking capital. Regardless the country of origin of the start-up, let me tell you that “expanding into Latin America” is easier to say than to do. Even US investors believe it is easy, they look at the region as a 1/3 of the US, believing that each country is like a state.
Of course is not impossible. Many companies did it. Some of them organically, others with huge VC/PE growth investments and others with joint ventures and partnerships. But when planning such expansion, take the time to understand each target market, and to see if the customers on each market behave the same way (and also the processes such as logistics, payments, legal are similar).
And a special case is Brazil. Very few projects from the Spanish-speaking Latin American countries managed to conquer Brazil. And viceversa: very few Brazilian Internet projects trascended Brazil (despite the fact that some of them do not want to, since Brazil’s internal market is already huge). So if among your expansion plans is Brazil because everybody loves to hear that, especially US investors, then you should keep in mind to either:
- One of the founders move there and manage the operation.
- Find a top-notch manager to lead the country and give him equity (local and/or holding)
- Partner or acqui-hire with another company, if it applies to your business model.