Pivots And Persistence: How Startups In Latin America Are Finding Ways To Survive The Current Crisis

Written by Greg Mitchell, the regional director of Angel Ventures, a startup investor and adviser, and creator of the blog Ruta Startup.

When COVID-19 hit Latin America, it shut down economies, closed borders and brought an instantaneous shift to remote work. Startups have had to make critical decisions surrounding cost-cutting, layoffs and doing everything possible to extend their runway. While some have already shut down operations, others have found ways to reinvent themselves, pivoting their business models to address drastic changes in consumer behaviors.

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In normal times, a startup pivot may involve changing just one aspect of the business. For example, pivoting from a web platform to a mobile app, focusing on a new consumer base, or spinning off a product feature into an entirely new product. A startup may rework some aspect of its operations, but the mission, market and end goals usually remain the same.

The pivots startups are making now are more complex. Founders are forced to find ways to address the need for short-term survival while maintaining long-term resilience and growth. Here’s a look at different ways startups in Latin America have pivoted successfully to survive the storm.

Repositioning an existing business model

Many startups have identified new opportunities and managed to pivot without shifting entirely to new markets or consumer segments. Some startups have launched a product or service that simply meets their target market’s new needs, such as digital-first solutions. Meanwhile, others have found ways to offer their existing solutions to new customers.

Lima, Peru-based Fitco, a community management and CRM software for fitness centers throughout Latin America, had to come up with a new way to support its community. When gyms started closing, the startup quickly launched a digital platform called Fitco Live where gyms could continue delivering services to their existing customers, attract new customers, and easily monetize online classes. 1

Poliglota, a Chile-based platform that connects people for face-to-face language learning experiences in cafes, saw its business model disrupted overnight with mandatory quarantine orders. Before COVID-19, the company was growing rapidly, with a presence in three countries, more than 7,000 students registered, and a network of hundreds of cafes. In two weeks, Poliglota transformed its business into a completely virtual experience. The pivot resulted in a 25 percent increase in students per month since May and an unexpected boost in demand for corporate learning experiences.

Frubana, a Colombia-based startup that facilitates the process of buying farm-fresh food for small retailers and restaurants, saw an opportunity to broaden its services for both businesses and consumers during the pandemic. The startup introduced Club Frubana, a hub of tools and resources to help restaurants digitize their menus and websites, shop for supplies, stay up to date on the latest industry news, and even look for job opportunities.

When the lockdowns started in Colombia, Frubana also launched a new platform called Fresco to help consumers receive groceries at home. Grocery delivery is a competitive market; however, Fresco managed to set itself apart with a “community leader” feature, which allows one person to organize and deliver orders with their friends, family, or neighbors, helping more vulnerable people or those without internet access to receive fresh groceries without leaving their homes.

When cutting costs isn’t enough to survive, startups can reposition their existing products or services to reach customers in the short-term while potentially uncovering innovative ways to solve new problems in the long-term.

Rethinking the entire business

For some startups, COVID-19 has disrupted “business as usual” completely, and pivots have been more drastic. With in-person events canceled or postponed indefinitely, Joinnus, a popular online ticketing platform with half a million users in Peru, Colombia and Ecuador, had to reinvent itself. The startup’s sales quickly plummeted to zero, so it launched three new platforms: one for live event broadcasts, one that provides digital tools to small producers, and a platform to help charities with live events. The platforms are already generating revenue for the company and its users, who can charge viewers fees to tune in to an event.

COVID-19 has also paralyzed the travel and tourism industry. With travel restrictions still in place in many Latin American countries, startups in this sector worldwide have shut down or pivoted their business models entirely. Tripflix, a travel perks platform based in Argentina that launched last year, saw its business come to a halt and knew it had to reinvent itself to survive.

The team relaunched as Freecovid, a comprehensive training and communication platform that helps the hotel industry implement health and safety protocols outlined by the World Health Organization, World Tourism Organization, and the governments of the countries in which they operate.

Freecovid is already present in Argentina, Brazil and Peru, and will soon be in Colombia and Mexico. More than 30 hotels in Brazil have implemented the Freecovid program and more than 40 in Argentina are in the process. The startup found most of its demand coming from independent and family-run hotels that lack the resources of an international hotel chain or group.

Making and communicating decisions

In Latin America, entrepreneurs are accustomed to planning for economic hurdles long before they happen, so it’s not uncommon for them to have governance structures already implemented. When corporate governance is part of the company culture early on, it can help startups immensely during difficult times and improve decision-making.

As with any major business decision, how a startup communicates a pivot is important. Startups should include their investors and board early on in the conversation so they can offer insights from past experiences and additional perspectives on what is going on in the region or with other companies in the industry. Employees or partners should be kept informed about any changes in real time and brought into the process when creating new solutions.

Innovation is often born during downturns and challenging times. As startups in Latin America pivot and reinvent themselves in the short-term, evidence is slowly emerging that they are doing so successfully and providing hope for the region’s future.

Illustration: Li-Anne Dias.