In Latin America, new technologies can present solutions to major challenges. In 2021, the region's startups achieved funding records - a year in which 18 Latin American companies reached unicorn status (startups with a market value of US＄ 1 billion before going public). Although capital inflows were more modest in 2022, the outlook for the region remains promising in the short term.

With 214 million inhabitants, Brazil is the largest economy in Latin America and represents 54% of the region's digital market. São Paulo alone contributes 10,3% of Brazil's GDP and has the largest hub in the country and Latin America, housing no fewer than 12 unicorns, as well as companies that have successfully completed IPOs. As a result, startups based in the city have stronger growth prospects due to their in-depth knowledge of their own market.

Mexico is the second most prominent country in innovation in the region. Mexico City, the capital, is second in the ranking of Latin American entrepreneurial ecosystems. Despite less than half of the adult population having access to banking services, fintechs are attracting investment. Four of the city's five unicorns also operate in this sector.

Buenos Aires' ecosystem is the third most significant in Latin America and was responsible for 67% of the investment received by Argentine startups in 2021. This hub is followed by Santiago (Chile), Bogota (Colombia), Montevideo (Uruguay), and Lima (Peru).

In the opinion of Durval Garcia, director of innovation at international consulting firm G.A.C. Brazil, despite the region's political and economic conflicts, Latin American entrepreneurs have the ability to see opportunities even in difficult times. "Ways of innovating, as the term itself suggests, are also constantly changing. Companies need to structure themselves so that they can organize in a way that is more coherent with their strategy and can develop successful innovation projects, ensuring an increase in revenue and competitiveness". The executive reveals the main emerging areas of innovation in Latin America:

1. Fintechs: "The financial industry has seen a huge growth in the number of fintechs - technology companies that offer digital financial services. This includes innovations in mobile payments, digital banking services, cryptocurrencies, and peer-to-peer lending, among others”.
2. Agtechs: "Agtechs, which offer services and new technologies for the agricultural sector, represent another significant group of innovation, given the importance of agriculture for many economies in the region. Innovations here include the use of big data to improve crop yields, robotics to automate agricultural tasks, blockchain technology to track food provenance, the use of nanotechnology in the soil, and artificial intelligence in pest identification, among others".
3. Edtechs: "The Covid-19 pandemic has highlighted the importance of distance education and accelerated the adoption of online learning technologies. Innovations include personalized learning platforms, MOOCs (Massive Open Online Courses), gamification, and virtual reality for education".
4. Renewable Energy: "With growing global awareness of climate change, Latin America has seen an increase in interest and investment in renewable energy technologies. This includes innovations in solar and wind energy, as well as emerging technologies such as tidal energy and energy from biomass (particularly important for Brazil)".
5. Information and Communication Technology (ICT): "The region has stood out in the development of innovative solutions in ICTs, ranging from broadband infrastructure to cloud solutions and cybersecurity".
6. Startups and Innovation Ecosystems: "There is a growing startup culture, with many cities developing strong and vibrant innovation ecosystems. This has been accompanied by an increase in venture capital funding in the region, as well as the creation of accelerators and incubators".
7. Digital Economy and e-Commerce: "E-commerce and the digital economy have grown significantly, fueled by the middle class and the accelerated digitization caused by the pandemic".
8. Healthtech: "In the health area, there has also been a greater demand for technological solutions in the last three years. Telemedicine has become essential during the pandemic period, as have remote patient monitoring technologies and artificial intelligence solutions for diagnosis and treatment. They form continuity solutions".
9. Biotechnology: "There is a significant increase in research and development in biotechnology, including manufacturing through biological routes, biorefinery, gene editing, gene therapies, and advanced vaccine technologies. This is especially relevant considering the current health crises".
10. AI and Machine Learning: "Artificial intelligence (AI) and machine learning are being widely explored in various industries, from retail to manufacturing, through finance and health. They are used to enhance operational efficiency, develop new products, and improve the customer experience".
11. 'Green Technology': "Latin America is innovating in the ‘green technology space’, with companies developing new ways to reduce the carbon footprint, reduce, recycle and reuse waste, and create more sustainable products and processes, with less or no use of natural resources at all".
12. Smart Cities: "With the increase in urbanization, many cities are looking for technological solutions to improve infrastructure, efficiency, and the quality of life of citizens. This includes everything from intelligent transport systems to energy-efficient public lighting and high-speed internet infrastructure".
13. Industry 4.0: "The so-called fourth industrial revolution, which combines digital and physical enabling technologies to create cyber-physical systems, is another area of innovation. The application of these technologies can be seen in areas such as advanced manufacturing, logistics, and supply chains".

The expert says that these are just a few examples of the many areas where innovation is happening in Latin America. "The region has great potential and is proving increasingly capable of producing innovative ideas and solutions to face local and global challenges. In addition, the Latin American continent has incredibly rich diversity, with ecosystem services (material goods, cultural benefits, climate regulation, etc.) that contribute to livelihoods and well-being".

Garcia thinks it’s essential to reconcile social and environmental issues in the region to ensure that development is sustainable and aligned with the Sustainable Development Goals. "It is necessary to promote greater synergy between companies in the region, governments, social enterprises, and NGOs that are engaged in different forms of innovation, taking into account social, ecological, and environmental values".

Source: Durval Garcia, director of innovation at the international consulting firm G.A.C. Brasil – www.group-gac.com.br