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With over 460 programs in 2019, corporate venturing in Latin America is on the rise

Financial services appeared as the leading industry for corporate venturing in the region, according to study

Connecting traditional firms with startups to boost innovation, corporate venturing activities have been on a global rise – but, according to a report released this Monday (16) by IESE Business School and Wayra, Telefónica’s open innovation hub – particularly in Latin America, this trend has found quite a momentum.

Whether by startup acquisitions, sharing of resources, strategic partnerships, or many other initiatives; the study disclosed that over 460 collaboration programs between large corporations and startups took place in the region this past year, driven by the most hyped industry in Latin America right now: financial services.

With nearly 75% of the analyzed activity; financial services appeared as the leading industry for corporate venturing, followed by information technologies, management consulting and telecommunications; while Brazil, Mexico, and Colombia were featured as the main corporate innovation hubs in the region.

Pushed by the surge of new technologies in recent years, innovative solutions to old problems increased the potential to disrupt some well-established firms. Combined with the complementary assets that these companies have with innovative startups, it was at this point that corporate venturing started to drag the attention of large firms.

If on one hand, corporations start benefiting from an innovative mindset and new technologies; on the other, startups gain industry know-how and distribution channels. With 107 global giants running 460 initiatives in 19 Latin American cities, take a look at some of the cases highlighted by the study in the region:

The largest bank, not the most traditional

Leading the ranking of corporate giants engaging with startups, one of these Brazilian cases was the country’s largest bank Itaú. Connecting with the fintech ecosystem through events such as Itaú FinTech Day, in which several ventures introduce their solutions to the company, Itaú also has a collab program in partnership with early-stage VC firm Redpoint eVentures, Itaú Cubo.

Launched in 2017, the coworking space sources innovation to the company through its programs, besides working as a hub for entrepreneurs, large firms, investors and universities. More than 100 startups are currently developing their ventures in Itaú Cubo.

ALSO READ: Brazil is the 5th largest global destination for investments in fintechs

When brick-and-mortar meets marketplace

Through a strategic acquisition that boosted the company’s presence in Latin America, Santiago based Falabella, the largest South American department store chain, closed a deal at the end of 2018 by purchasing Linio, a Mexican marketplace platform founded by Rocket Internet, for $138 million.

Propelling Falabella’s position all over Chile, Peru, and Colombia, and tackling the entry of new online competitors in the region; the acquisition has also allowed the Chilean retailer to consolidate its digital platform and enhance the geographical reach and offering.

While Linio’s logistics system focused on the marketplace and door-to-door services, Falabella relied on retail with delivery and in-store pick-up, and the acquisition put both players in synergy to complement each other.

Innovation pushed by Colombia’s public sector

Medellín based EPM (Empresa de Servicios Públicos de Medellín y Colombia) is a public company that provides the public water, energy, and natural gas services in the country – and is currently working with deep tech and science startups in the Colombian ecosystem.

Providing mentoring to entrepreneurs through tech incubators and joint ventures Ruta N and Créame, EPM is also supporting the venture capital fund FCP Innovación, a $40 million fund focused on investment in science, tech, and innovation towards the public sector.

Transforming the food industry in Latin America

Through its financial arm Bimbo Ventures, Mexican food manufacturing company Bimbo, a global leader in the bakery sector, is a player focusing on disrupting the food industry in Latin America

Promoting mentorship and financing of innovative startups in related sectors, Bimbo has also launched Eleva, an acceleration program aimed at transforming this sector in the region categories such as renewable energy, retail, ingredients, product offerings, and packaging.

Carried out in partnership with the accelerator BlueBox Ventures, the program lasted 16 weeks and included mentoring by Bimbo executives, access to the company’s global infrastructure and commercial partners, besides the ability to kick off pilot services and platforms and test new products.

With traditional firms seeking to boost their own technologies and to adopt innovation, corporate venturing has been proving to be a land where competition against startups has a truce. And with several sectors still to be disrupted in Latin America, this seems to be a trend far from peaking.