An Alternative Ranking of Latin America’s Startup Ecosystems

LatAm List – A few weeks ago, StartupBlink released their Startup Ecosystems Rankings Report for 2019, which ranks 1000 cities and 100 countries worldwide based on their startup ecosystems.

Crunchbase News covered the report, which was built off of thousands of data points over five years from 50,000 StartupBlink Members and partnering sites. But after delving a bit deeper into the rankings, which are quantity of startups, quality of startups, and business environment, we felt there was a need to come up with an alternative ranking for Latin America.

According to StartupBlink, the only Latin American country in the top thirty startup ecosystems is Chile. But Chile only received 10.6% of deals, or $44.6M of total VC investment to the region in 2018, just 2.3% of the more than $2B invested. Brazil and Mexico combined received over 75% of the deals and 73% of all the capital invested in Latin America in 2018, but they come in 32nd and 37th, respectively.

Here are the Latin American countries that made the list, in order of rank:

30. Chile

32. Mexico

34. Colombia

37. Brazil

44. Argentina

57. Peru

70. Puerto Rico

77. Ecuador

79. Dominican Republic

86. Costa Rica

91. El Salvador

93. Venezuela

96. Paraguay

98. Bolivia

When we get past Argentina, this list is probably accurate. But when comparing the top five, it is hard to imagine which metrics move Brazil out of the top spot. Although StartupBlink’s metrics do not seem to involve access to capital and investment, this factor is essential to startup growth and would place Brazil far above the rest.

Brazil receives 2/3 of the total investment in the region, has 11+ unicorns, and hosts at least three of the top venture capital firms in the region with more than $1B under management collectively. Almost all of Softbank’s newest investments in Latin America through their Innovation Fund have been in Brazil, boosting Brazil’s investment to over $1.8B+ in 2019 alone.

By comparison, Chile, which takes the top spot for Latin America, has no unicorns, no large institutional investors, and receives just 3.4% of the investment Brazil does. The Chilean market, while wealthier than Brazil on a per-capita basis, only has 17M people; Brazil has 220M.

So what gives? Mexico and Colombia are a relatively logical 2nd and 3rd, although based on funding, Argentina should probably come above Chile as well, despite recent (or constant) economic troubles. Chile is a great startup market with strong government programs supporting entrepreneurs, but Brazil, Mexico, Colombia, and Argentina have more capital, bigger startups, and a larger population, all of which make the local ecosystems stronger and more dynamic.

So if you had to ask me, this list would look a little more like this:

1. Brazil
2. Mexico
3. Colombia
4. Argentina
5. Chile

For the smaller countries, it is hard to disagree with StartupBlink, who has access to much more data than we do. But based on experience living in the region, Brazil is by far the strongest and most dynamic startup ecosystem in Latin America. There are few metrics that could budge it from that spot in today’s market.