Latin American startups have come far. Let's just remember how companies like Nubank weren't even born a decade ago, and how much has happened since then. The LatAm startup ecosystem saw an acceleration of talent attraction and startup creation, funding, and growth. The money shower was especially strong back in 2021.
Then we had 2022. After a decade of a bull market, we're officially in bear territory for tech companies. And while this ride-or-die moment is stressful for all startups, it's also perfect to learn valuable lessons that will help them traverse any difficult terrain in the future.
Latitud's not an exception. During our "building in public" event, we shared some insights collected during the last year and how founders can prepare for 2023. We hope that this can serve you and other startup creators in Latin America.
Check out these learnings below (or watch above the full version of our All Hands). Let's build the future of LatAm together!
The Latin American startup ecosystem built itself up from scratch over the last decade: entrepreneurial and collaborative culture, risk tolerance, technical skills, visible successes, experience mentors, availability of capital, and regulatory environment – we collected each piece of the puzzle like infinity stones, and have built a solid foundation and momentum.
But since the last year, we've been going through tough times. In difficult economic times like these, a few of the pieces are shrinking – such as capital availability and risk tolerance.
That means the other pieces need to make up for the empty space. If we have less capital, we need a stronger entrepreneurial culture. Entrepreneurs now have to be less obsessed about the profit they can make and more about the impact they can have in the market they're addressing.
As we've already said in our letter for startup founders, tough seasons may be the perfect time for excellent entrepreneurs to rise.
Like you and your startup, we learned a few lessons during the last year and leveled up our game for 2023. Some of Latitud's learnings from 2022 were:
The financial scenario is different. We had to balance our virtue of thinking long-term with short-term responsibility. We tracked our profit and losses (P&L) with utmost attention while building this plan for the short and long term.
We had to be very intentional about how to onboard team members from a lot of different countries. Communication in the remote world becomes incrementally more important, complex, and challenging as we add more people to the team.
At the same time, we've also seen the importance of fostering in-person gatherings when possible to brainstorm and reinforce our virtues.
Diversity is a priority when we build our team, community, and initiatives. We've advanced mainly in gender diversity last year, but we're far from perfect: we're always making rookie mistakes and reflecting on how we can do better.
Having different backgrounds will forever be a non-negotiable at every step of the way, and that's ingrained in Latitud by being one of our virtues.
Sharing not only our successes but also our shortcomings was (and is) a way not only for us to get help, but also to help other founders who might be in the same situation. Building in public also attracted (and attracts) great talent for our team.
It's not all benefits though: there's that huge fear of looking stupid while building in public, and that takes a toll on the team. And yes, we've had to publicly announce a change of plans, and probably looked a little silly while at it– but we survived. We still believe the pros outweigh the cons.
Building a startup is really hard. It’s especially hard in Latin America. And it’s even harder when economic cycles generate instability, and you find yourself in the bust phase of the boom and bust.
So why don't we all give up on building startups? Because we know that entrepreneurship is the greatest lever for economic progress and social mobility in Latin America – and that tech enables generating an outsized impact that just wasn’t possible before. We all want to build something meaningful by solving some of our society’s biggest problems.
And, drum roll, that is why we built Latitud. We're helping an entire generation of builders to get their business off the ground and reach product-market fit in their startups. How? Offering the operating system for venture-backed startups in Latin America, from incorporation to education and community.
Founders in the Latitud community have gone on to raise over US$ 800M since joining in both equity and debt. We learned the pain points of early-stage startup founders in the region from experience and, with that, we hope to help you prepare yourself for a difficult year such as 2023.
That means we have homework for you: here are just two tasks you need to nail down by the end of this year to put your startup in a better position for long-term success.
Having a solid financial foundation from the get-go can save you not only from a lot of headaches but also from lots of financial losses.
It all starts with the right corporate structure. Having the wrong incorporation for the market you'll be working on, for the investors you want to attract, or for the exit strategy you envision for your startup can make you millions of dollars go down the rain (Brian's previous company lost US$100M once. Never again).
But that's not the end of your solid financial foundation journey. A lot of startups don't consider basic finances from the start. When they grow and even become unicorns, the lack of foundation becomes more visible, and the shaky ground they're standing on can just as easily come crumbling down.
That might have flown back in 2021, but not anymore. You have to nail down concepts like contribution margin, CAC, LTV, and burn multiple while searching for your product-market fit. Good thing we've got you covered on how not to die because of finance already.
Latin America is still a giant, with 600M people looking to pay for solutions to their problems. Businesses that solve real pain points will continue in demand and, if they have a path to profitability, success is only a matter of time.
Even if your startup is financially perfect now, it still doesn't exist in a void. Having a community is essential, even more so in difficult times like these.
They're there when you need advice from more experienced founders. When you need a software or supplier recommendation. When you want to know what an employee or an investor is all about. They're there to understand your struggles and celebrate your victories. And finally, they're there when you've made it big and just want to give back to the ecosystem and help the next generation of startup founders.
Being part of the group of the brightest minds across our entire region, and then helping each other to make smart decisions and meet the right people can make all the difference for your startup.
We have front-row seats to watch it happen in real-time with the hundreds of messages exchanged on Slack and WhatsApp by our community. It's amazing what can happen when over 1,000 handpicked founders and the top operators come together to help each other.
We also saw that happen in the flesh after years of lockdown, in our first-ever Vamos Latam Summit. Last September in São Paulo, we brought together over 1,300 operators, founders, and investors from across LatAm and the United States. (Btw, you can already pre-register for this year's VLS!)
We have a mantra to summarize this importance of having a startup community: “a rising tide lifts all boats”.
The waves are currently strong – and now's the time to prepare, rise above it all, and reach the promised land.