Sandwiched between the giant economies of Brazil and Argentina, Uruguay has traditionally been at a disadvantage when it came to attracting foreign investment into its promising tech sector.
But with the recent emergence of the country’s first unicorn and another company developing a sophisticated coronavirus app within a week, the diminutive Latin American economy has put itself more firmly on the global map.
Google and Apple heaped praise on GeneXus after the Montevideo-based software company spearheaded a push to develop a sophisticated Covid-19 advice app, with early success meaning Uruguay was one of the first countries to be chosen by the US groups to pilot contact tracing technology.
In September the country’s tech scene was thrust into the spotlight again after cross-border payment processor dLocal, backed by US-based private equity firm General Atlantic, raised $200m to become Uruguay’s first unicorn.
“We are setting the bar high,” Omar Paganini, Uruguay’s industry minister, told the Financial Times. “If Uruguay can become a player in this field it would be very valuable for the country. This goes beyond our government, it is a policy of state,” he added, explaining that the tech sector is deemed to be of strategic importance.
Uruguay’s relatively new conservative government wants to emulate the success of countries like Israel, another small and open economy with a thriving tech sector. While the country’s economic and political stability means it is often compared favourably to its neighbours, its competent handling of the pandemic in one of the worst hit regions in the world has further burnished its image.
Small nations like Uruguay, which has a population of 3.4m, should concentrate on “developing and attracting talent and entrepreneurs, and being a relevant part of the [global tech] ecosystem”, said Francisco Alvarez-Demalde, managing partner of Riverwood Capital, a private equity firm based in Silicon Valley. “The reality is that the companies that are most successful in tech are operating in a parallel universe without geographical borders,” he said.
Yet Uruguay’s small size has been a factor in its success, forcing businesses to look early on beyond its national borders for growth. This has been the case for dLocal, which has nearly doubled in size each year since its 2016 launch and is now valued at $1.2bn.
It began expanding abroad almost immediately and now operates in 20 emerging markets across Latin America, Asia and Africa, providing services to companies like Amazon, Spotify, Uber and Booking.com.
“For us, it is key to continue expanding. At the end of the day, if you want to be a global emerging markets payment company, you need to be in most emerging markets,”…
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