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Desperation to Innovation: Necessity Entrepreneurship in Latin America

CCA LiveE | Monday December 17th, 2012 | 5 Comments
Image credit: http://www.flickr.com/photos/86339820@N07/

Image credit: http://www.flickr.com/photos/86339820@N07/

By Daniel Gómez Seidel

When we think about developing countries in the Latin America, our faces might light up with hope as we come across increasing initiatives that are arising to fight extreme poverty, promote equality and increase education coverage.

We might even cite some innovative examples that are helping rural communities thrive in distant rural towns throughout the Andean continent. U.S.-based organizations like IDEO.org or Accumen Fund, are leading the path to new crowdsourced solutions that are taking action in creating sustainable development.

There is no doubt that these efforts are highly impactful and meaningful to the benefited countries, but one can’t help but stop and ask the question: Have we really looked deeper into the innovation possibilities within these countries?

As a Colombian immigrant studying Design Strategy in San Francisco, I looked deeper into the nature of entrepreneurship in my country. The results are both surprising and encouraging, and lead to a pathway of collaboration that is not being fully harnessed today.

According to the Global Entrepreneurship Monitor, developed by Babson University, Colombia doubles almost every rate of entrepreneurship when compared to the United States. On entrepreneurial intention alone (percentage of 18-64 population who intend to start a business within three years) at 55.8 percent, more than half of the Colombian population wishes to engage in an entrepreneurial project, whereas only 10.8 percent of Americans manifest this interest.

The reason why this phenomenon exists lies deep within the Latin American culture, which has been shaped by decades of struggle for positive change under difficult economic conditions. With high unemployment rates, young, bright professionals are forced to innovate out of desperation. Entrepreneurship is not an option; it’s a necessity. Therefore, cities and towns are filled with thriving young entrepreneurs who rely on creativity to overcome poverty. They are called the “Necessity Entrepreneurs.”

Sadly, most of this entrepreneurial and creative boost is cut and minimized as these people find stable jobs. Their necessity is gone, and so is their potential to innovate. As Doug Powell from the design blog, Merge, states: Down economies provide a ripe opportunity for entrepreneurs, and the chorus of believers in this idea continues to grow.” As a matter of fact, the Ernst & Young Innovation Report states that only in the U.S., more than half of the companies in the 2009 Fortune Magazine List were founded during a recession (that includes Starbucks, Intuit and PetMart). What if we could harness that innovative motivation in the right moment?

Latin American countries offer a full range of opportunities for visionary venture capitalists and entrepreneurs who are able to see past philanthropic efforts and recognize the immense potential that necessity entrepreneurs embody. If these young professionals had a chance to make the leap from desperation to innovation, amazing synergies could be born, accelerating development and change both here and there.

A few companies, like Ernst & Young, have already grown aware of this opportunity and are acting quickly and decidedly in collaborating with Latin American Entrepreneurs (Click here to download a full report). Yet most of the opportunities are to be discovered.

What are you waiting for?

** Daniel Gómez Seidel is a Colombian entrepreneur and innovation consultant based in San Francisco, California.

[image credit: Carolina Soto: Flickr]

 


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  • Juan David Ochoa

    Congratulations, hope you can keep writing this amazing job!

    • Daniel Gomez Seidel

      Thanks much Juan! Let’s connect!

  • Jan Erik Stimman

    Great article! Interesting links as well!

  • Camila Monroy

    Interesting point of view. Hope you can provide us more information about how to apply innovation thru entrepreneurial projects

  • http://twitter.com/MagicLifestyle Shaun Lindbergh

    Writing from Africa. The challenge with entrepreneurship, in developing countries especially, is the high cost of failure; a serious failure can sideline an entrepreneur for years.

    A true entrepreneur will always choose a venture over a job. I am developing a strategy to;

    1. Reduce the consequence of failure to the entrepreneur by creating a decent financial and emotional support structure as part of the start-up plan.

    2. Reduce the risk of failure by creating empowering relationships, ‘triangles of power’.

    3. Enhance the probability of success through sound governance.

    An entrepreneur needs to be able to fail, learn, recover quickly and try again. The faster the recovery cycle the better and speed through the process is largely related to managed risk; investors don’t mind losing when there’s progress towards an eventual win. One-hit investments and stagnation are risky for everyone.

    I am a serial entrepreneur with a solid track record of failure, learning, unlearning and relearning. I recently got sick and tired of bootstrapping and so decided to sort out my personal cashflow before setting up in business again … yet even now I can’t help but keep on pitch to investors as new ideas emerge. http://EmpoweredCapital.com