It’s hard to go a day in Peru without hearing the word confianza, or trust. People discuss trust because it is important, although not always felt. There is empirical evidence that people in Peru trust others less than in other countries in the region, and the world.
“Trust, it turns out, is a scarce commodity in Latin America and the Caribbean. According to a poll by Latinobarometro, 43 percent of Mexicans say they have low trust in people of their own communities. That number is 54 percent for Peruvians.“
Latin America’s Trust Crisis, IDB
Recent studies have shown that compared to the rest of the world, people in Peru have a harder time returning lost wallets, trusting neighbors, and feeling safe making online purchases.
Reporting lost wallets (Science Magazine):
Trusting Neighbors (IDB):
Feeling safe buying online (eMarketer.com):
These are not encouraging numbers for Peru. We need to take this issue seriously in the startup community, where early stage investments are based primarily on people’s trust in each other.
For startup founders, the already daunting challenge of building a business is augmented by the necessity of building trust along the way. Taking pro-active steps to build trust among investors and customers is necessary to position startups for success.
Here is how local startup founders are building trust:
- Intros and recommendations. Finding a person in common to make an introduction to someone you would like to meet.
- Networking. Startup founder, Maria Velez, of Crack the Code, wrote here about how she built a network after moving to Peru.
- Transparency. Sending monthly updates to current and potential investors.
- Vetting processes. Going through a vetting process with respected programs, including Startup Peru and Endeavor.
- Advisors. Getting people on board that build trust (angel investors, industry experts). Set up meetings with an established schedule and frequency.
These informal signals build trust and lead to formal, lasting bonds, including investments.
By deliberately working on establishing trust, the startup ecosystem in Peru is a solution to cultivating trust more widely in country and the region. We are off to a good start – one million people in Peru have purchased tickets online using Joinnus and there is even a startup in Peru called dConfianza!