- Uruguay is one of the leading software exporters in the region
- Continued economic growth and favorable business norms open up opportunities for tech startups
- Has one of the strongest fintech ecosystem in the region, with dlocal listed as the first Latin American unicorn
- Stable politics and strong trade relations make it attractive for foreign investment
- Penetration of the internet and adoption of technology is among the highest in Latin America
Uruguay at a glance
Population: 3.5 million
Languages: Spanish (Main), mix of Portuguese and Spanish spoken in regions bordering Brazil
Economy: Total GDP (in million current USD): 56,000; GDP per capita (current USD): 16,190
Average cost of living:
- Rent (avg.): US$400 (Montevideo)
- Living cost per month (avg. excl. rent): US$ 630
Despite its small population, Uruguay boasts a large economic middle class and has managed to uphold growth in the last decades despite economic turmoil in neighboring countries. The country is situated in a strategic location on the Latin American east coast within close reach of the major economies of the region which are Argentina and Brazil.
Historically, agriculture and to a lesser extent manufacturing have dominated the local economy, though the services and technology sector has recently become a priority for the government to reduce its reliance on primary exports. This includes the launch of various programs such as the National Agency for Investigation and Innovation (ANII) to encourage entrepreneurship and other collaborations with the private sector.
These efforts have paid off as the country gained its first unicorn in dlocal, a fintech payments company.
Nonetheless, compared to its bigger Latin American neighbors, the startup ecosystem including the venture capital scene is not as well developed in Uruguay and the prevalence of entrepreneurs in the country is sparse.
However private sector initiatives, events, programs and local entrepreneurship clubs have been created over the years to expand the reach and support of entrepreneurs. Additionally, Uruguay’s strong institutions and stable politics build a reliable basis to set up business.
The country also has the following accolades to boost
- Best Corruption Perceptions Index in Latin America (21st / 180 countries overall) for 8th consecutive year (Transparency International, 2020)
- Member of MERCOSUR (economic pact and trade association between Argentina, Brazil, Uruguay and Paraguay) and favorable trade relations with Europe and the US
- Strong rule of law and property rights claiming top spots in both indicators in Latin America
Over the years, Uruguay has put an increasing emphasis on entrepreneurship and innovation in its public policy agenda. The main priorities of these government efforts are to reduce the barriers to starting and growing innovative businesses in the sectors of interest (export, services, industry, science). This is achieved by ways of simplifying regulations and bureaucratic requirements, subsidizing R&D, promoting public-private and private-private partnerships, as well as creating and/or collaborating with programs that foster innovation.
From a public perspective, there are several entities tasked with executing this mission:
- ANII (National Agency for Research & Innovation) – Agency subsidizing entrepreneurship programs, research and innovative projects related to the socioeconomic context of Uruguay
- Uruguay XXI (Investment, Export and Country Brand Promotion Agency) – This governmental agency was created in an effort to strengthen exports and the competitiveness of Uruguayan companies while positioning the country as a safe and flourishing haven for entrepreneurs and (foreign) investors
- INEFOP (National Institute of Employment and Professional Training) – Created to promote professional development and employment opportunities in addition to offering courses and educational modules for (aspiring) entrepreneurs from ideation to management of startups
- ANDE (National development agency)- Agency tasked with the economic development of the country through programs improving competitiveness, especially in small and medium-sized enterprises
Part of the packages offered by these agencies to attract and cultivate tech startups includes the following:
Talent recruiting and development platform for the services sector in Uruguay connecting companies, individuals and educational institutions
- Finishing Schools (part of Uruguay XXI)
A policy tool that provides non-refundable contribution of up to 70% for training costs to Global Services companies operating in Uruguay
- Fast Track (part of Uruguay XXI)
10-day fast-track for foreign employees to access Temporary Residences and Visas (valid for 2 years + additional 2 years) to attract foreign talent
- PYME al Mundo (Spanish for “SMB to the world”)
International expansion program for small and medium businesses offering assessment, mentoring, and monitorization of all steps in the process of exporting products and services
- Business Mentoring (Endeavor, Chamber of Industries, Initium – University of Montevideo)
Mentoring program offered ANDE in collaboration with the three entities mentioned in the title which consists of a series of mentoring sessions focused on helping entrepreneurs work through their challenges and strategic decisions
(Pre-seed) Investments in disruptive startups with tangible and validated product-market fit
Network of all Uruguayan entities promoting and supporting entrepreneurship on a national level to leverage their unique service offerings and create a stronger collaboration between all ecosystem stakeholders
Incubators and Accelerators
There are more than 50 incubator and accelerator programs in Uruguay. These include government run programs, along with those from the private sector and even corporate venturing arms of major multinational companies.
The aim of publicly subsidized incubators and accelerators is primarily to diversify the Uruguayan economy, support startups in the process of exporting products or services as well as expanding internationally. At the same time, privately-run incubators and accelerators in Uruguay have the goal to establish the South American country as an advanced and digitized economy by supporting tech startups in various fields. To date, the most successful startups originating in Uruguay in terms of valuation are Dlocal and a few others which are coming up such as AstroPay and Bankingly.
According to Crunchbase, there have been over 32 funding rounds in Uruguay with a total of US$ 6.6 billion raised.
In general, there are a good amount of investment opportunities in the Uruguayan funding ecosystem though compared to its larger neighbors Argentina and Brazil it is still in its early stages and much smaller in magnitude. Nevertheless, the well-developed financial infrastructure in the Latin American country together with its lawful and democratic institutions make it a safe haven for venture capital.
If you’re interested in more Uruguay-related information, please click here.