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Geeks on a Plane: The power of the Latin American market

Geeks on a Plane left Miami this morning with more than 40 startups from around the world, including several from South Florida. Those travelers include Brian Breslin of Infinimedia and Refresh Miami, Davide Di Cillo of Fifth Layer, Susan Amat of UM's Launch Pad and Bill Hajjar of Senzari. They embark on a 10-day Latin American trip organized by Silicon Valley's 500 Startups. First Stop: Mexico City.

GOAPdinnerBut on the eve of the trip, they got quite the sendoff party at Novecento sponsored by Greenberg Traurig and Senzari, a Miami startup that recently received more investor funding.  Before the dinner, the Geeks on a Plane also got an earful about the Latin American market:

From Rodrigo Teijeiro, founder and CEO of Fnbox.com (photo of him at the event provided by Pabla Ayala):

Behind the rising tide that is lifting all boats in Latin America is record foreign direct investment and high commodity prices as well as internal factors such as political stability. By 2010, there were more cellphones in Latin America than there were people in the U.S. There are now nearly as many Internet users in Latin America as people in the U.S. Brazil is already the second biggest market for Facebook and Twitter.

"The market is here today. You don't have to wait," he said. "The opportunities to disrupt are huge."

While much is focused on Brazil, there are huge opportunities thoughout Latin America. Teijeiro said. For instance, just 28 percent of Latin America's mobile phone users are in Brazil, leaving 72 percent around the rest of the country. Just 36 percent of Internet users are in Brazil, leaving 64 percent of the pie for the rest of Latin America. However, in ecommerce, Brazil dominates bigtime: 70 percent of the Latin American market, where credit card use is huge.

And there's this eye-opening stat from Teijeiro: The GDP of Sao Paulo market alone is larger than all of Argentina, Chile, Uruguay, Bolivia and Paraguay combined.

Of course the flip side is the difficulty of navigating the Brazilian market. While it takes seven days to open a business in Chile, it can take four to six months in Brazil. And rents in Rio are more than in NYC, he said.

From Adriana Cisneros, vice chairman of Cisneros Group of Companies:

AdrianacisnerosThe fast growth of the U.S. Hispanic market is well documented but the way the U.S. Hispanic market is growing is very important. The median age of the U.S. Hispanic -- 28 -- is significantly younger than the U.S as a whole -- 37 -- which means it is the perfect population to target for anything digital interactive. And 88 percent of the population growth is 18 to 34 and it is going to come from the Hispanic market, she said. By 2020, 70 percent of Hispanics will be born in the U.S.

Hispanics, both in the U.S. and in Latin America, are very early adopters of technology: In the U.S. 60 percent are on mobile, for instance. "It's a really neat time to be in this space... The U.S. Hispanic population is one more country in Latin America you guys should be committed to. ... With technology, the border isn't there. Everything we do here works there, and what we are doing in Latin America works here as well."

DavemcclureDave McClure, founding partner of 500 Startups, talked about how the costs of setting up a tech business have dropped dramatically in the last decade, from $5 to $10 million all the way to $50,000 to a million today. At the same time there has been a dramatic increase in online distribution platforms, including social media, providing fast and inexpensive access to customers.

500 Startups is part of a growing trend of funds that would rather make small bets on many startups than large bets on just a few.

He explained he would rather make 500 $50,000 bets on startups, even knowing that 70 percent will fail very fast. Of those, 30 percent might go on to attract another $500,000 to a million in investment, yet only about 10 to 15 percent will make it to venture scale. Initial experimentation is fraught with risk. If we can fail at small budgets -- $50,00 to $250,000 instead of millions -- we're better off, he said.

McClure pointed out that just $3.5 million went into building Slideshare, which recently sold for $120 million to LinkedIn.

In the last 3 to 5 years, amazing entrepreneurial communities have been emerging all over the world, thanks in part to the emerging incubator culture and widespread education available. While any large metro area can be a breeding hotbed for entrepreneurship, one limiting factor is still the local investor market. While local investors might say the talent is not there, McClure has this response to them: "Bull---. You are the one that is not taking enough risks, you're not investing in your own market. If you were to put money in your own market, you would find those talented entrepreneurs."

GeeksonthebusinMexicoBuen viaje, Geeks on a Plane. Watch The Starting Gate for guest posts from our Miami Geeks on a Plane.

 Update: Geeks on a Bus in Mexico City -- dmc500's photo provided by Pabla Ayala.