We all know that it’s a long road to the top if you wanna rock ‘n roll. It turns out that the same applies to having your own business, especially in Argentina. Luckily, there are many of entrepreneurs who can share their story and give a preview of what to expect when you’re trying to become the next unicornio. Some share a lot of common ground: startups in this country face many challenges, especially when it comes to finding investors or paying taxes. There’s a lot to glean from both the successes and mistakes of others who have been down the same path before.
Have an Idea
Seems simple, right? It’s not. That was the first challenge for Increase, founded by Sebastian Cadenas and Matias Doublier. Back in 2013, they were working at very different places: Cadenas as a consultant in San Francisco and Doublier at a restaurant in Mar del Plata. However, both knew one thing to be true: local stores risk losing up to 5 percent of their income because they can’t track operations with credit cards. They decided to change that, but the only question was how. It took almost eighteen months for Increase to find the way to build the platform they offer today.
To create their product, Cadenas and Doublier relied on the same stores they were trying to help. They didn’t charge their clients at first, as they wanted to learn about their needs and problems. Increase also had help from the accelerator seed fund Nxtp Labs and Telefonica’s startup accelerator Wayra; having the idea might be the foundation of a business, but you can’t do much without money to fuel the process.
This is particularly problematic in Argentina, not only because of its economy, but also because of the lack of instruments and know-how among investors. “This is where most problems start,” says Mauro Ayala, CEO of Alquilando, a local platform that connects tenants and owners to rent properties. He founded the startup three years ago, after seeing how complicated is for people in Buenos Aires to both find and rent apartments.
There have been more funding opportunities in Argentina in the last few years, such as government initiatives that provide some capital or seed money. However, Ayala believes that the country doesn’t have a strong tradition of entrepreneurship, which means that large companies still don’t know how to support new businesses.
Even if you have the proper funding, you’ll have to pay attention to taxes. Sometimes there are federal, provincial and city fees to deal with, which according to Ayala means that startups have to face a “double effort,” and afford those expenses along with the cost of maintaining the project itself.
Diversify Your Business
Zolvers started with just an idea: an online marketplace where people could hire housekeeping services. Coming up with the right platform wasn’t the hardest part for the team, as they already had a background in software development. “The only challenge was understanding the customer,” explains its founder Cecilia Retegui. Mentors were extremely helpful during that process, she says.
Founded in 2013, Zolvers has grown to offer more than the possibility to outsource a cleaning service. Now it provides delivery, maintenance, and adult care services. Users can even make payments on the platform.
This is key in making the startup sustainable. Increase has a similar story. After two years focused on obtaining funds for their main product, they’ve started to develop new ideas. Cadenas assures this is vital to surviving in the business environment. “You can’t rest on just one product if you want to be seen as essential,” he believes.
Bluesmart, a company from Argentina that until a few months ago was considered a success, definitely understands this problem. The startup had a great idea: connected luggage that could be tracked directly from your smartphone. The first suitcase was launched in 2014; even Barack Obama had one. The dream ended last year, when several airlines announced a change in their policies: they no longer accept batteries inside checked luggage.
“After exploring all the possible options for pivoting and moving forward, the company was finally forced to wind down its operations and explore disposition options, unable to continue operating as an independent entity,” Bluesmart stated on its website. Four years after their first suitcase was created, the startup was acquired by the American luggage brand Travelpro.
Sources of Support
In 2017, Argentina passed a law to promote the local entrepreneurial ecosystem that eased some bureaucratic burdens and paved the way for more sources of both public and private funds.
For example, entrepreneurs in their initial stages can access to a seed fund from the Government, that lends up to AR $250,000 to boost their ideas. The fine print? Zero-percent interest and six years to pay the loan back.
The Entrepreneurs’ Law also created the Fiduciary Fund for the Development of Venture Capital, which finances ventures and venture capital institutions.
Private options for financing a project include places like Nxtp Labs, which provide entrepreneurs with infrastructure, mentoring and support services. Accelerators like Wayra offer up to US $50,000, a workspace, and access to a global network of business experts.
Another essential source is the entrepreneurial community itself. Local organizations like Start Up Buenos Aires (SUBA) or Area Tres offer precious help. SUBA works to connect all the members of this business environment and provide resources to get them on their feet, while Area Tres promotes networking by creating an innovative, open space in the heart of Palermo.
Just Do It
Yes, starting your own company might seem like a rocky road now, but it gets easier if you think about it as a step-by-step process. “Go for it,” Retegui suggests. She also highlights that today there are more organizations and institutions willing to help entrepreneurs to achieve their goal.
In the end, it all comes down to a trial and error method, especially when startups are creating or expanding their team. “Local entrepreneurs have to deal with many uncertainties, but they should always take care of their team,” Ayala points out. To him, that’s the true road to success.