Peru is characterized by rich biodiversity, dominant agriculture and mining sectors. The response to the unfulfilled demand of the emerging middle class becomes the foundation of the Peruvian startup ecosystem. Furthermore, corporations in Peru are considered to be not innovative, thus creating high opportunity for startups to fulfill the needs that until today, cannot be met by the larger institutions. The two industries in Peru that has the most potential for startups are Agriculture and Financial Services, with biotech, agtech, foodtech and fintech as the leading sectors.
In Peru, there has been a continuous effort by the government to diversify the industry. Peru is special in its agricultural composition due to its predominance of smallholder farmers instead of large-scale farms. Some progressive innovation in agriculture are being done through agricultural cooperatives. However, these entities may create a barrier to the wider-scale adoption for the startups in the future.
The Opportunity: The possibility of small holders making innovation testing low risk and easily accessible, allowing startups to do some small pilots and produce results quickly without jeopardizing the brand.
The Challenge: A small holder reliant system may make scale and adoption across many (usually lower income and lower willingness-to-pay) consumers more difficult, adding a higher customer service cost.
The Peruvian agriculture provides a great opportunity for agtech and foodtech innovations as startups could pilot solutions, starting from small farms first before scaling abroad with larger clients. Opportunity is also available in foodtech - Peruvians can utilize local farmers and rich production to create value-added products for both local and international market.
High mobile penetration, high economic growth, a growing middle class, and low financial inclusion are some characteristics of Latin America. Although banking is traditionally considered a conservative sector, fintech is one of the largest and more popular sectors with emerging startups in Peru. Fintech is such a big fragment of the startup ecosystem that some of the best accelerators have chosen to focus particularly on this segment.
The Opportunity: There are Peruvian consumers’ segments and deep needs in the banking sector, which includes the need for transparency, liquidity, ease of access and/or not enough variety of products to cater to different consumer demands, which are not being addressed by banks.
The Challenge: Peruvian fintech startups will have to prove their value proposition to local consumers effectively and as quick as possible first before competing regionally. They also have to deal with possible entrance of external competitors, such as Mexican startups, that are interested in Peru as well.
Brick-and-mortar banking and mom-and-pop shops has been the traditional methods for financial services and purchasing. However, startups are leveraging principles of network effects through various methods such as offering freemium products and services. By focusing on offering similar services with a better quality, or complementing existing services, startups can create healthy and important competition to spark innovation and improvements among the existing older companies. They are using their advantages of the lower transaction costs and their ability to connect players in the market that had previously not been connected.
Due to their advantageous business models, technology, and network effects, platform startups could grow more rapidly by partnering with larger corporations. If these giants realize how valuable the startups are to connect with their customers, and startups can communicate their value proposition, the collaboration of the two could be very effective as they could both capture new market segments and support each other’s growth.
Peru is developing home-grown solutions and are mostly tailored to end consumers’ needs instead of the banks’, and fulfilling the consumers’ needs by leveraging a marketplace by platform model. Some of the solutions they provide are access to cheaper, faster, and/or easier loans, savings solutions, or financial education.
Peru is well-known for its food and gastronomy. The increase in export-oriented agriculture has contributed to the country’s impressive economic growth. With the help of growing wellness trends, Peru has a comparative advantage in superfoods that are popular with millennials globally. Agtech and foodtech also gives Peru an opportunity to expand from its history of production of mostly raw agricultural products into value-added products and higher margins.You can find more information about Peru in Medium.Com and I-DEV Insights. Do you know this year Peru is one of our guest countries at the LatAm Startups Conf 6.0 in Toronto?
Meet Pedro Aramburu representing UTEC Ventures, one of the most important accelerators in the country. Pedro will present an updated version of trends and facts from the Peruvian Tech Ecosystem. Register here under a special price.
LatAm Startups is a non profit corporation based in Toronto supported by the City of Toronto, members of NACO and designated company for the Startup Visa program. We support international startups with bootcamps and softlanding programs to grow global from Canada.