Supporting Women Entrepreneurs in Latin America
Latin America presents a significant opportunity for women entrepreneurs, even though they receive less than 2% of global venture funding. Data from the Global Entrepreneur Monitor indicates that women in Latin America have a higher rate of small business ownership, at 21.2%, than most other regions. This growth, however, is largely concentrated within the informal sector.
Fortunately, LatAm possesses a natural inclination for women to start businesses. The challenge lies in integrating this entrepreneurial drive into the formalized technology startup ecosystem. To achieve this, both the public and private sectors can implement strategies to empower women tech founders, focusing on community building, promoting access to new technologies, and establishing responsible investment metrics.
Community Building
While studies reveal that women-led startups generate higher revenue per dollar invested compared to male-led ventures, women represented only 15% of all tech startup founders in 2023. Encouragingly, Latin America has higher rates of female founders, particularly in Colombia, Chile, Ecuador, Guatemala, and Panama. Nevertheless, collaboration and inspiration among these founders, as well as the next generation of female entrepreneurs, remains a challenge.
Several organizations, including Women In STEM Entrepreneurship (WISE) Latin America and Rede Mulher Emprende Brasil, are already working towards this goal. Endeavor has also launched programs to support female entrepreneurs in nations like Colombia.
However, strong local and regional communities remain in their early stages. The tech community in Latin America can enhance support and information-sharing networks through the following channels:
- Dedicated conferences
- Digital dashboards for venture capitalists (VCs) that list women entrepreneurs
- Entrepreneurship-focused podcasts and social media channels
- Public and private accelerator programs focused on female founders
- More mentorship programs for female business school and STEM students
Providing young Latinas with visible role models in tech leadership can dismantle gender stereotypes and cultivate a larger wave of female entrepreneurs.
Promoting Digitalization
Like other developing economies, technology access remains a considerable hurdle in Latin America. Research indicates that financial limitations curb entrepreneurs’ access to essential digital technologies, which are vital for value creation. According to data from the United Nations Economic Commission for Latin America and the Caribbean, a mere 36% of micro, small, and medium enterprises (MSMEs) in Latin America have their own websites, with only 16% utilizing e-commerce tools. This is even lower in Mexico.
This lack of technology access presents a significant challenge, especially for Latin American women, given their inclination towards founding companies in the informal sector. Leaders in both the public and private sectors should increase their support of digitalization in Latin American economies. Training programs for women that focus on e-commerce and communications technology can help them better tap into expanding digital markets in Latin America.
Several initiatives are already in place, such as Chile’s “Digitaliza tu Pyme” program, Colombia’s Digital Business Transformation Centers, and Costa Rica’s Intelligent Community Centers. Tec de Monterrey in Mexico operates a business development center for MSMEs, which promotes digitalization. Increased access to technology and skills will assist accelerating the entrepreneurial potential of Latin American women.
Access to Financing
In Latin America, 73% of women entrepreneurs lack financial support, and they often have to use their own savings, thus exposing themselves to high levels of risk. More recently, public development banks (BPDs) have been striving to offer women access to financial tools, offering low-interest loans and working capital.
The World Bank’s Financing for Women Entrepreneurs and the Multilateral Investment Fund, for instance, enhances women’s access to finance from developing countries. Furthermore, nonprofits like Pro Mujer offer a range of services, including loans, business training, and technical assistance.
While these initiatives are valuable, they fall short of fully addressing the finance gender gap. VCs and angel investors should set up internal metrics to ensure a percentage of funding in LatAm is directed towards female founders. Such investments will yield a higher return over the long term, as studies reveal that investments in companies with female co-founders surpass those with only male leadership teams by 63%.
Despite the challenges, Latin America is home to women who take initiative to improve their economic circumstances through entrepreneurship. By providing female entrepreneurs with the necessary community, financial support, and digital tools, this innate drive can be better channeled into the expansion of the region’s tech industry.
