More and more startups in Peru are receiving investment from U.S. investors. Many of these startups have reached product-market fit and some have already scaled across multiple countries in Latin America.
This trend is partly due to the growing tendency for Peru startups to set up U.S.-based entities as holding companies. Founders are using Simple Agreement for Future Equity (SAFE) financing documents, the standard document for early stage U.S. startups, allowing them to raise money from a wide variety of investors.
Often, the impetus for setting up a U.S. entity has been to enter Techstars, 500 Startups, or Y-Combinator. But even for those startups that don’t get into these prestigious programs, setting up a C corporation (C-corp) can open up opportunities to attract new investors. Jose Deustua, Managing Director of UTEC Ventures, a top accelerator in Peru that is part of the GAN Network, recommends startups in Peru set up Delaware C-corps, and confirms that most of the UTEC Ventures’s portfolio is comprised of C-corps. You can check out his portfolio companies here.
Three reasons for U.S. investors to back founders in Peru:
- Regional scope. These startups may be raising seed rounds of capital, but they typically already have acheived product-market fit and attracted recurring clients in multiple countries across Latin America.
- Good bang for your buck. Comparatively low labor costs in Peru and the frugal nature of founders that have mostly bootstrapped, means that your $10,000 or $25,000 investment could pay for one month of operating costs. Carlos del Carpio of Valia notes that “labor is relatively cheaper in Peru compared to Brazil, Mexico, so there are great opportunies to use capital efficiently to build talented teams.” U.S. investors that bring specific expertise or a large network to the table also may have the opportunity to contribute to the startup’s Advisory Board.
- Opportunity to make an impact. Many of these startups are impacting consumers and SMEs in Latin America, through quality education, career development tools, and access to financial products.
List of seed stage Peru Startups using SAFE financing documents:
Below is a list of some Peru startups for U.S. investors to have on their radar. Not all are currently raising money, but they are structured as U.S. C-corps and have recently raised rounds using SAFE financing documents.
- Aimo* – Automizing delivery services for e-commerce companies and logistics providers
- Apurata – Pre-approved credit products for the underbanked
- Fitco* – Transforming the fitness industry with technology to impact the lives of 100 million people
- Get on Board – End-to-end platform for tech recruiting
- Hapi App – Democratizing access to public financial markets
- Manzana Verde* – Offering healthy meal delivery for people who work hard and seek a simple way to lead a healthy lifestyle.
- Prendea – Offering over 250 online educational experiences for K-12 students
- Qempo – Building a borderless world for e-commerce
- Rebajatuscuentas* – Providing mortgage-backed loans
- Talently* – Helping tech professionals along their career path
- Turbodega* – Digitizing the supply chain of small grocery stores
- Valia – Real estate marketplace elevating the experience of real estate agents and their clients
*Denotes team with at least one female founder
We will keep updating this list with seed stage startups in Peru that have U.S. C-corps as holding companies and are using SAFE agreements to raise money from individuals or funds.
For startup entrepreneurs, keep in mind there are many considerations for putting together an international holding company. Recently, Brian Requarth, a proven startup founder, and founder of Latitud, wrote about the pitfalls he experienced in setting up the legal structure for his startup.
Disclosure: I manage AVP Seed Fund I, which is an investor in Fitco and Get on Board. I am also an angel investor in Apurata.