Nevertheless, smaller companies such as VivaReal and Compra3 have achieved great success early on thanks to building world-class teams and executing very well.  Both of these companies, similar to Buscape and Mercado Libre, are focused primarily on Latin America though the potential to go global is being pursued by others.  Though I wouldn’t dissuade a company from targeting the global market, there is such a void at the moment in terms of interesting content and applications targeting the regions rapidly growing user base.

Indeed, Twitter just released some numbers, published also by TechCrunch, on user growth and Latin America is the fastest growing region.   Latin American culture is extremely social and this region has been shown to be heavy users of social media and mobile devices.  The end result is that the users exist for new applications and content, but, for the most part, they need to make due with a few local choices or hook up with the main players such as Facebook, Amazon, Twitter and others.

Also, in terms of taking advantage of the approximately 150 million Internet users in Latin America from a marketing perspective, it certainly seems as though most companies in the region are asleep at the wheel. There are certainly exceptions to this rule doing some pretty innovative things.  In fact, lately, Brazil has been in the news thanks to its growing economic leadership and even thanks to their recent interest in acquiring companies in the developed world.

Either way you cut it, there is a tremendous amount of opportunity in Latin America, which isn’t apparent yet to global investors and even people in the region.  There are some exceptions and these are growing.  Brazil, particularly, has been attracting angel investors such as New Yorker, Michael Nicklas, who has been quite active recently not only in terms of funding, but also, in promoting investment through speaking at conferences and his blog, Startupi.

As an example, I had the opportunity the other day to talk with another US investor interested in funding a company in Latin America in the digital space.  It was a great conversation as this investor is extremely sharp and am sure closes deals worth many millions every week.  Nevertheless, he was trying to rapidly come up to speed on the environment and the nuances of this market, which is not easy.  Some things don’t happen as quickly down here and some basic infrastructure (e.g., credit cards, e-commerce, etc.) are not well established, yet, the growth rates and early successes can not be denied.

I could quote many statistics showing that each country boasts growth rates in terms of users, time spent online, e-commerce and other areas of 40% and above.  Any of these statistics can quickly be found by doing a quick search.  However, this is more of a paradigm switch where more US and European investors need to wake up to the fact that they are ignoring a region with a dearth of content and applications, but with a user base that grows exponentially on a yearly basis.  Differentiating a company in Latin America is much, much easier and, for the most part, amounts to bringing world-class teams and execution to bear.

There’s no question that countries such as Brazil, Argentina, Chile and, to some degree, Mexico, are at a more advanced stage when it comes their start-up and investment ecosystems. Nevertheless, there are small pockets of world-class teams working away in countries such as Colombia and this will continue to grow.

It definitely feels like we’re at the beginning of something very big.  I am extremely confident that within three years Angel and VC investment in technology start-ups will have dramatically increased and two years after that Latin America will be home to at least ten powerhouses on a par with Buscape and Mercado Libre.

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This is, by no means, an isolated event.  As I mentioned in my previous post, the time is now to create quality start-ups in Latin America. In the next three years things are certainly going to accelerate.  That’s why , as I announced in another post, Thomas Floracks and I will be transmitting every Tuesday at 7:30pm the TropicalGringo Show.  Part of the show will include a segment where one or two start-ups will present to us (even an idea) and we will provide guidance about how develop it better.  I’ll leave you with this: more and more you’ll notice that there is no scarcity of resources (investment, etc.), but a scarcity of excellent teams hooking up and focusing on world-class digital innovation.

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Also, I wanted to write said article because I’ve been observing the funding process of a few Latin American start-ups looking for funding in the states and I wanted to get something published on the Latin America web investment opportunities which start-ups could reference with international investors.  Although I wasn’t able to go too much into detail, I highlighted the fact that I feel Latin America offers what Warren Buffett looks for in investments which are defensible “moats” around great profit margins and growing competitive advantage.

Aditionally, VentureBeat published an article I wrote about Netactica, an Argentine web company offering end-to-end solutions to the online travel industry in Latin America.  Incredibly, yesterday, Google acquired ITA Software (relatively similar to Netactica in Latin America) in a demonstration that there is much value in these types of end-to-end solution providers in online travel.  According to a number of analysts, this acquisition changes the dynamics of the online travel booking and search market. Personally, I think that a player like Netactica has much to gain with this turn of events and, with the increasing interest on the part of international investors in Latin America, the company should benefit quite a bit.

As if this weren’t enough, I spoke last week with Fernando LaBastida and Ricardo Guerrero who have an excellent initiative with the organizers of SXSW in Austin (they live there) to include a panel on Latin America during  the next event in 2011.  Nevertheless, in order to make sure there is interest on the part of audience members, it’s important for people to suggest ideas for the panel.

I’m completely serious when I say that this week was a critical moment for the development of Latin American web start-ups.  You can be certain that investor interest will now start to accelerate at an amazingly fast pace.  Now, we need to find the most talented technical and non-technical people in the region so that these can focus on digital innovation.

In order to accelerate this, Thomas Floracks and myself are launching a weekly show (we haven’t decided the day and time, yet) so that, among other things, we can analyze one or two interesting initiatives during the show.  Note: for now, we’ll do it in Spanish, but will do a shorter recap show in English if there is interest. More details on this are coming soon.  It’s a good moment to launch this show because we need to elevate the conversation beyond comments like “look at my neat website” or “I’m going to sell xyz on the internet.”  It’s time for clear paths to profitability and solving real customer problems.

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So, I haven’t totally figured out the mechanics behind the whole streaming thing, but I’m sure we’ll figure it out.

Live Streaming by Ustream.TV

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Also, yesterday, VentureBeat published my article on a really interesting online travel company called Netactica.  This is what happens when you get two Argentineans together with an Aussie. You get some innovative and robust end-to-end technology to help Online Travel Agents (OTA) and others (such as the impressive guys at Mantaraya Travel) be successful in Latin America.

Mark my words. Digital Innovation is about to explode in Latin America.  There’s still a lot of evangelization to get accomplished in this region, but the list of future success stories will continue to grow from examples such as Buscapé and MercadoLibre to more and more companies getting outside funding.

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For me, it’s extremely gratifying to see so much interest in hearing about the possibilities today in terms of Digital Innovation.  Specifically, I try to evangelize the fact that people need to change their internal “chip” and understand that, in Latin America, they have the same access to gobs of information as well as having low-cost tools for creating new services and marketing these services.

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We spoke of the great success stories such as MercadoLibre, Buscape with market valuations greater than $1 Billion and, in the case of Buscape, in the hundreds of millions.  Though Brazil, Argentina and Mexico have definitely taken the lead, there was agreement that Colombia has all the pieces to also become a force on the web.

The conversation was great and quite interactive.  According to the participants, there seemed to be quite a bit of consensus on two areas where the Colombian environment needs a bit of help in terms of entrepreneurship: 1) training and preparation of talent (e.g., technical and otherwise) and 2) guidance for entrepreneurs wanting to take their companies to the next level. Also, it seems that there is much interest in any initiatives in these areas as more than one participant was asking what was the “next step.”  More than a Meetup to discuss these topics, it felt as though the participants wanted to become part of a specific initiative.

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Finally, one of the sharpest Venture Capitalists and Angel Investors in the business (according to moi), Fred Wilson, is promoting a global series of Meetups to talk about start-ups.  Please join me next week by clicking on the widget below so we can all meet in person and discuss the current start-up environment in Colombia and Latin America and what we can do to accelerate the creation and growth of innovative digital start-ups.   See ya next week!

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Additionally, from my own clients (software companies) and others, I’ve seen keen interest in developing new offerings leveraging the cloud. Nevertheless, there are many options and much confusion as to how to proceed.  Developing a solid SaaS solution takes a lot more than simply hosting on the cloud and that is where the true opportunity to differentiate your software company lay.

This is going to be quite an interesting year and I am going to have the opportunity to help my current clients and some new ones that should be hiring me soon.  My objective is to have each client understand the power of a SaaS offering and to set a clear objective for the same.

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We debated the merits and weaknesses of the different competitors.  I had a favorite that tried to solve an important problem (poverty) by applying better information design.  Unfortunately, they had some snafus with their presentation and demo and I was unable to vote for them as the winner.  We ended up giving the final prize to a sharp group with an incredibly polished presentation and they will be traveling to Poland to represent Colombia.  I wish we could have had the winning team train the other team to be more polished and to finish off their software as I think it would have been an excellent presentation in Poland.  Nevertheless, I’m sure the winners will do a great job!

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