Digital transformation in Latin America: Investing in Technology
Technology is fast becoming the foundation for business development within Latin America. It is clear that in a developing world, there is a need to stay connected in your personal life, but also in your professional life. Whether it is on social media, or digital meeting applications, innovators and business developers are rapidly moving towards online platforms to build a community and expand their businesses. In the region, it is said that between 2017-2020, the amount of unicorn companies (those valued at US$1 billion or more) rose from 0 to 17, the most valuable of which is ‘MercadoLibre’, an online shopping company. So, owners of technology companies should be attracted to the growing market in Latin America, as well as the fact that nations are increasingly providing economic incentives for these businesses, allowing faster development for those innovative enough to adapt to such a lucrative and diverse sector.
Over 60% of Latin Americans have a reliable connection to the internet, quantifying the maximum market reach, and demonstrating the necessity to expand into digital space to remain innovative in a modernising society. The pandemic is causing Latin American governments and companies to see the need to rapidly develop e-platforms, meaning the sector is growing faster than ever, presenting no better opportunity than now to get on board.
Governments in the region are seeing the opportunity to attract technology companies by offering incentives, sometimes in the form of tax benefits, in order to ensure they will develop within their borders, creating a mutually beneficial relationship. Latin America is seen as an ideal location for foreign technology companies to base themselves due to the number of options available in terms of incentives, being greater than those in the United States and European countries as well. It seems clear that as a region, Latin America is presenting an attractive prospect to companies across the globe, and with the possibility of discounts on income tax and capital gains (ITR report), it would seem that any forced progress due to COVID-19 is only set to be built upon in the coming years in order to develop the region into a technological centre for innovative business development. Furthermore, not all of the tax incentives are open to foreign businesses, providing an opportunity for technology start-ups within Latin America to advance and present themselves as having the modern business mindset so desperately required nowadays. Despite the difficulty to read how markets will grow in general due to the pandemic, technology is one sector which does not rely on physical interaction to continue to develop, making opportunities to enter the sector ever more attractive.
If you are looking to invest in LATAM, Creimerman Team can be your I+D regional partner. Schedule a meeting to explore your options.