The Republic of Peru is a country in South America that is bordered by the Pacific Ocean, Chile, Bolivia, Brazil, Colombia and Ecuador. Peru received the qualification as an emerging market. Its poverty rate is about 19%, with a high upper middle class income level and an equally high degree of human development. In South America, Peru’s economy is one of the most thriving. It also has one of the faster paces of industrial growth in the world. Contributors to Peru’s economy right now are biotechnology and telecommunications, which are growing sectors. Staple industries include fishing, agriculture, manufacturing and mining.
Peru is part of The Pacific Pumas, the counterpart of the Tigers of Asia. It is an economic and political alliance of emerging market models in Latin America’s Pacific Coast. It likewise includes Mexico, Colombia and Chile. These countries are open to global integration. Their governance shows improvement and their macroeconomic foundations are stable. They also show positive growth. The country is a member of the World Trade Organization (WTO), the Trans-Pacific Partnership, the Pacific Alliance and the Asia-Pacific Economic Cooperation (APEC).
Peru is a favorite destination of tourists from different countries. They are enchanted with visiting some of the locations of Peru’s ancient cultures, such as the remnants of the Norte Chico (Caral Supe) civilization that existed in 32 BC. It is considered South America’s oldest civilization. Many have visited the site of the Inca Empire, which, during the pre-Columbian era, was considered the largest state.
Peru’s attractive business climate
Within the Latin American region, Peru is rated #3 in best business climate, according to the World Bank Group Peru’s 2018 report, which measures the ease of doing business in a number of economies around the world. It has the most solid economy among the countries in Latin America, based on the report called Doing Business 2018: Reforming to Create Jobs.
The report on Peru contains a variety of information about the business environment in the country.
It is the only country in the Latin American region that showed improvement in 2017 despite the devastating effects of El Niño.
The president of Peru said that their growth strategy includes promoting its drive to formalize businesses by reducing barriers and reducing costs. These reforms are meant to lower taxes, cut down financing costs, increase loanable funds for small businesses and startups, and lower interest rates on mortgages.
Support for Peru’s rise as an international business hub
Speaking at the Peru Venture Capital Conference, Chris Heivly, the co-founder of MapQuest, said that he believed that Lima, Peru has a huge potential for business. Lima alone has an outstanding culinary scene that is considered one of the world’s best. Lima is home to 10 million people, which represents about 33% of the population of Peru
According to Heivly, Peru has the fastest moving economy in the region but the growth rate, pegged at only 5.9 %, is slow. It lags behind its neighbors in its technology ecosystem. Peru invested only 0.08% of the GDP into innovation, but the Peruvians are busy working to reduce their reliance on raw materials by increasing their investments in innovation to ensure that it is at par with their neighbors.
Their efforts are on the right track, as aside from government support, several venture capitalists from outside the country are willing to provide funds, especially for startups.
The Universidad de Ingeniería y Tecnología (UTEC), located in Lima, has a business accelerator called UTEC Ventures, which is the university’s entrepreneurial department. According to the UTEC Ventures co-founder and program manager, Andrés Benavides, they searched nationwide for startups to support.
The government initiated the Startup Peru through the Ministry of Production in 2012. It aimed to promote the growth of startups in Peru. In 2017, the program already had 106 startups that qualified to the program, receiving funds ranging from US$5,000, US$46,000 and US$153,000.
Another government support program is Innovate Peru, which is managed by the Ministry of Innovation. It was started in 2014 with the objective of strengthening entrepreneurs, support systems and companies and improving the cooperation between the organization and different fund providers.
In a few years, the funding grew, and by 2017, the country already had $100 million to fund micro, small and medium-sized companies. Some of the sources of funds include loans from the World Bank (US$45 million) and Inter-American Development Bank (US$40 million). Peru’s Ministry of Finance provided the equivalent of US$60 million.
Another government collaborator that helps improve Peru’s innovation ecosystem is the MIT Regional Entrepreneurship Acceleration Program, which is tasked to develop a framework to strengthen the entrepreneurial and innovative ecosystems. It is working with investors, corporations, entrepreneurs, academia and Lima’s local government.
The Universidad del Pacifico is also a collaborator. Many tech talents come from this particular university. Wayra, the country’s first accelerator, Endeavor Peru, another accelerator and about 10 incubators and accelerators provide support and funding.
Collaboration with other supporters
In 2017, the Peru Venture Capital Conference led by UTEC, the Multilateral Investment Fund of the Inter-American Development Bank and Corporación Financiera de Desarrollo S.A. (Cofide), focused on the creation of venture capital, angel investment and corporate innovation. It also aimed to gather important players in the community to forge collaboration and ramp up the momentum. The conference had some very important international speakers such as Nelson Gray (chairman of Firth Ventures), Dave Blakely (mach49 co-founder), Paul Singh (Result Junkies) and Claire Delaunay (Director of Engineering – Uber and co-founder of Otto).
Ms. Delaunay thinks that Peru offers plenty of room for innovation, which she said the international business community needs. She believes that different cultures equate to people thinking and doing things differently. With the fresh energy that Peru exudes, the country is open to changes, which is needed to create a good environment required to support innovation and startups.
Profitable sectors for investment
With the consistent development of the economy of Peru, there is a great chance of success for both local and foreign entrepreneurs to start their business in Peru. It should be accompanied by sound business decisions, careful planning and choosing the right business to ensure a good return on investment (ROI) and profits. The right location should be carefully considered as well. Here are some of the businesses you can consider.
- Website design. Businesses need digital presence, which is one of the things that investors look for.
- Cafés and restaurants. It would be a waste not to promote Peruvian cuisine, which is attracting the attention of foreign visitors.
- Guesthouses, hostels and hotels. The tourism industry in Peru is booming and there is increased demand for accommodation, particularly those that serve breakfast.
- Real estate. The increasing interest in Peru makes the condition ripe for real estate investments
- Clothing for export. A bigger demand for textiles made in Peru is growing because of the different free trade agreements. The high quality alpaca fiber the country produces is in great demand and Peruvians spend more money on trendy fashion.
Peruvian startups that are drawing interest
Peru is not willing to be left behind by its neighbors. The country now has various startups and other small and medium-sized businesses that are garnering interest from third party investors.
U.S. based Rethink Education provided seed round investment to Crehana. It’s an online training site for digital and creative professionals in Spain and Latin America. It provides over 500 training tech courses from coding to design. The courses are project-based and very affordable. In 2017, the company grew by 270%.
The company is a drone-enabled digital program that brings big data to the agriculture sector in Peru. To give them an edge over other agriculture tech companies, they are focusing on special products like the Peruvian goldenberries (Peruvian groundcherries) and blueberries.
3. Mesa 24/7
Mesa 24/7 is a reservation program for restaurants, which also includes methods to understand and manage customer information. Through advanced dashboards and analytics, the platform is capable of analyzing the market for high-end restaurants.
4. Seguro Simple
The company has built a program that provides a different experience for consumers when interacting with the insurance sector. It allows consumers to tailor their preference by choosing the right insurance plan. The company was established in 2013. It is being used in life, health and auto insurance markets. It expanded into the car insurance market in Mexico in 2016.
Connecting people who share common interests is the function of Joinnus, an online platform for businesses and consumers to create, manage and share events and other group activities. In May 2017, it gained 160, 000 users in Peru. One of Peru’s biggest media groups invested US$500, 000 into the company.
Laboratoria is unique as it focuses on the training of women web developers. It aims to provide the world a different source of female Latin American talents skilled in computer technology. It expanded to Chile in 2015.
Mandu is a unique program for companies. Their product enables enterprises to measure, improve and manage business relationships with employees and stakeholders, through different analytics dashboards.
It’s a Peruvian FinTech startup that aims to encourage people to save. It has a marketplace where people can search for better interest rates for their savings and connect them to these financial institutions.
Solven connects financial institutions and borrowers virtually. It’s an online loan marketplace that promises to have loans approved within a day. The company’s ultimate goal is to turn the company into an online bank.
Marana is not a tech-based startup. It’s a producer of artisanal ”bean-to-bar” chocolates. They differ from other artisanal chocolate producers by using chocolate beans from the different regions of Peru to provide an authentic experience to their consumers.
These startups are attracting the interest of many investors because they have solid traction with Peruvian consumers. They leverage the core strengths of the country – its natural resources. The companies, especially the FinTechs, are driving the middle class economy. Some of the startups are able to utilize solutions learned from outside sources and give these lessons a Peruvian context for easier adaptation.
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