This Startup Accelerator Aims To Be The Y Combinator Of Latin America

Latin America’s tech scene is growing up. There’s no denying the rapid pace of growth in the region, with record amounts of transactions recorded in 2020, and over $4 billion in capital raised, all despite the COVID-19 pandemic. As the regional ecosystem matures, local founders, mentors, and investors are playing a larger role in supporting the next wave of innovation. One such player, Chile-based accelerator program Platanus Ventures, is hustling to discover and help build local companies solving local problems. I spoke with the Platanus Ventures team and their portfolio companies to learn more about the opportunity they’re chasing, and why they’re uniquely positioned to succeed.

Latin America: The Right Ingredients for Lasting Technological Disruption

The case for startup growth in Latin America, and more than that, technology catalyzing economic growth on a large scale, has never been stronger than it is today. Latin America is a compelling market for several reasons, including a real need for new solutions to old and widespread problems, a relatively common culture and language (with the exception of Brazil) compared to other global regions, and a large, young, tech-savvy population willing and able to break with convention. 

Many of Latin America’s economies are characterized by volatility, inequality, and inefficiency. Much of the population is cut off from accessing their country’s financial system, creating separate formal and informal economies. In a region with 600 million people, the actual serviceable consumer market is far smaller—for now.

These challenges can and should be reframed as opportunities. As a recent post from Sequoia Capital noted, “LatAm is the ideal setting for the internet economy to disrupt the real economy. LatAm is home to a relatively young population that is internet- and mobile-native…Moreover, Latin America is home to a rising middle class that is now purchasing healthcare and education, cars and homes, delivery services and e-commerce.”

Where Talent Meets Opportunity

The current growth is being driven by a balance of talent and opportunity—supply and demand. While Latin America has long been a “good market” for growth, over the past few years, the level of experienced founder and investor talent has matured, meaning much more of the opportunity in the region can be realized. There’s been a noticeable shift in Latin America from copycat startups to localized products and services uniquely tailored to Latam’s diverse markets. Each recent success story and mega-round of venture capital investment, from Cornershop (Chile) to Rappi (Colombia) to Nubank (Brazil), infuses the ecosystem with new leaders and fresh local capital. The Latin American startup ecosystem is gradually becoming more localized—more self-sustaining.

Platanus Ventures: A Homegrown Accelerator to Propel Startup Growth

If localization and a deep understanding of local market dynamics and consumer preferences is the key to Latam’s tech growth, the logical evolution of the ecosystem is to further build out its own infrastructure. In this regard, Latin America has made great strides as mentioned above in terms of founder talent and investment: the region is the world’s fastest growing venture capital market. However, there are still missing links; capital can be hard to raise, especially in markets like Chile where investors are risk-averse. What’s needed to maximize growth is the maturation of proper local startup incubation and acceleration infrastructure to successfully surface and direct new startups towards the right investors. Startup accelerators are short-term, growth-oriented programs whose purpose is to transform ideas into products, and products into better, more scalable products.

This is where Platanus Ventures fits in. Platanus Ventures is an up-and-coming accelerator program started by five leaders of the Chilean startup community: Agustin Feuerhake, Andres Matte, Paula Enei, Jaime Bünzli, and Joaquin Stephens. Feuerhake and Bünzli are each co-founders of successful local startups (wealth management startup Fintual and crypto exchange Buda, respectively); Matte comes from a software engineering background at software firm Platanus, which is affiliated with the accelerator program; Stephens worked as a lawyer in the tech space; finally, Enei previously worked at Startup Chile, the renown public accelerator program.

These founders bonded over a core mission: to use their knowledge and expertise to create an exclusive founder-friendly program focusing on early stage companies with strong technical foundations. Their offer to Latin American startups: mentorship, technical support, and US$50,000 in exchange for 7% equity in the business.

Impressive Early Results

Platanus Ventures recently wrapped up its second remote cohort, or generation, of startups, and to date has supported 9 startups total. The program has been intentionally selective, accepting only 2% of applicants in an effort to devote its time to a few high-potential companies. The goal is to eventually support two generations of startups per year in the Fall and Spring, with 5 startups in each generation participating in the 3-month program.

As with any accelerator program, the measure of its success is in the outcomes of its startups. The early results for Platanus Ventures are promising. In a demo day event hosted by Platanus to present its first generation startups to an audience of investors, representing the culmination of the program, startups raised over US$400,000 in 72 hours. In the second generation demo day, four startups collectively raised US$1.3 million, and three of the four closed their target funding rounds within 72 hours. Additionally, two startups from this second generation applied and were accepted to the prestigious Y Combinator accelerator as the next step in their journey.

What Differentiates Platanus Ventures

It’s hard to ignore these results, but Platanus Ventures is by no means the only quality accelerator program catering to Latin America’s startups. Notable local players include 500 Startups Latam, NXTP Ventures (technically an early stage investor although previously operated as an accelerator), and Wayra. Furthermore, leading U.S. accelerators such as Y Combinator have started investing heavily in sourcing and supporting companies from Latin America.

What differentiates Platanus Ventures from other accelerator programs? To start, Platanus Ventures was built by local founders, in contrast with many other accelerators that are either not built by founders, or not built by local founders. As the team at Examedi, a healthcare marketplace from the second generation, noted: “Platanus Ventures provides the mentorship from an experience-based standpoint. Coming into the program, you are surrounded by founders who have already gone through what you’re going through, and are willing to give their opinion on certain business strategies and decisions.”

Additionally, Platanus Ventures prides itself on understanding the importance of technology in building a successful startup. In fact, Platanus Ventures requires each of its startups to have a technical co-founder. The program’s origins and operations are deeply rooted in technology. For its recent demo day, Platanus Ventures developed a digital platform through which it invited investors, enabled startups to pitch the investors, and facilitated meetings between companies and investors to raise capital. All investment in Platanus Ventures companies was completed using software. The program also offers a technical support track for startups hiring developers. It leverages its associated Platanus software firm to provide startups immediate development support at a reduced rate.

Finally, Platanus Ventures has built a stellar mentorship network, supported by founders from local success stories like Cornershop and many of the Latin American founders who previously participated in the Y combinator program. As the team at Fintoc, a startup from the first Platanus Ventures generation that subsequently was accepted to Y Combinator, pointed out, because there are so few startups in each cohort, “it’s more personalized and boosts your execution in a greater way at the beginning. We see Platanus Ventures as a better alternative [than other accelerators] for idea-stage startups.” 

The Next Phase

There’s much work that remains for Platanus Ventures, and others like it, to make a lasting impact of Latin America’s tech ecosystem. This includes expanding beyond Chile, the homebase for the program’s operations and the headquarters for all of the startups that have participated in the first two generations. The founding team has already begun exploring Mexico as its next target market, and the remote, software-enabled nature of the program should facilitate scaling to multiple markets.

Platanus Ventures is also working on striking the right balance of helping startups internationalize as quickly as possible, while proving its value so that startups appreciate the benefit of joining a local accelerator as opposed to an international program. Three of the nine Platanus Ventures startups have participated in Y Combinator following the Platanus Ventures program. However, Platanus Ventures views itself first and foremost as a local growth catalyst as opposed to a feeder to Y Combinator.

Last, Platanus Ventures is focused on expanding its community. The team has created a model of “associated startups” that will be inaugurated by our next batch. This means that all the startups that participate in this batch will make an equity swap of 1% with the rest of their generation. With this, Platanus Ventures seeks to recognize and financially incentivize the support that is organically given between founders.

Ideally, the efforts of Platanus Ventures and its counterparts will continue to energize the region, and to be the glue that fuses compelling founders and products with capital to propel growth. Be on the lookout for more to come from Platanus Ventures—the next generation begins in September 2021 and runs through December 2021.