Argentinas Innovation Counter-Narrative
The story of the Argentinian economy since World War II has confounded economists and central bankers alike, from its 19th century growth (at the time it was the 4th largest global economy), to its dizzying 20th century period plagued by political instability as the country moved between military dictatorship to liberal democracy, then back again. Its currency has paid the ultimate price, resulting in a very daily pain for consumers, businesses, and FDI. Most recently after the resignation of the country’s Finance Minister, Martin Guzman, the country was hit with an overnight inflationary spike, putting pressure on fiscal authorities to allow the peso to depreciate more quickly alongside voters demanding a longer term solution. Experts have gone as far to suggest a shared currency with Brazil (no one I spoke to during my time sees that as a solution, especially given it was already attempted in 1987 but rolled back amidst hyperinflation). Nobel laureate Simon Kuznets quote still seems to ring true, “there are four types of countries in the world: developed, underdeveloped, Japan, and Argentina.”
And yet, we can never forget that entrepreneurs and innovators play by a different set of rules. Those who I met in the Argentinian startup ecosystem building and supporting the next generation of breakout ideas are no different, in fact they have a distinct edge. I observed first hand this delicate balance of risk taking, deep expertise, and a wave of experienced founders developing innovative business models.
Newtopia (Fund I) made 52 investments in 2022, one per each week into pre-seed and seed companies across Latin America. I had the chance to visit with Diego Noriega (Managing Partner) at their regular “Wednesday asado” at the company headquarters, located within a repurposed horse barn north of Buenos Aires. The fund-slash-accelerator has deep roots in the region, famously even securing Argentinian NBA Superstar Manu Ginobili as an LP.
Newtopia has invested in startups ranging from social commerce, to B2B fintech, metaverse, climate, consumer, and they show no signs of slowing down in their search for the best early stage founders in the region. In my conversation with Diego, I started to realize the longer term impact of what they are building at Newtopia beyond an influential early stage venture firm — they are building a think tank for the next generation of LATAM entrepreneurs. By helping so many promising founders along their journey from pre-seed through what Diego calls “graduation” (Series A fundraising round) the organization is able to collect and institutionalize the learnings of each team to better equip the next class of founders. This is and will continue to be an invaluable asset for startups in the region, from hiring great talent, to building an effective enterprise sales channel, or negotiating a debt facility, Newtopia will have a playbook and network to support founders from Ushuiaia to Chihuahua.
The agriculture industry in Argentina has been a driving force of the economy and politics for over a century, in recent decades hovering around a 7–10% contribution to GDP annually, in the United States the number is regularly below 1%. Today, nearly 75% of production is concentrated among the country’s global corporations such as Cargill, Louise Dreyfus Company, and Bunge, Many of its largest players in the industry are waking to the opportunity for technology to play an outsized role across every stage of the value chain. This concentration is an opportunity and challenge for founders building the next generation of agtech companies best navigated with expert agriculture and food tech investors like Yield Lab.
Straight after my red eye from Medellin, I had lunch with Camila Petignat, the former agtech founder turned Venture Partner at Yield Lab. In a growing field of generalist investors in the region, Yield Lab brings deep insights and a global enterprise network necessary to entice and build confidence, educate enterprise customers, and help founders build best in class teams. Yield Lab is a cornerstone of the agtech movement in LATAM. Camila shared that the region is producing a new generation of founders with creative business models that are more partner-centric, scalable, and less reliant on the challenging dynamics of crop specific sales cycles. Lets dig into a few examples I met during my time in Buenos Aires.
I had the chance to catch up with Diego Hoter, CEO of UcropIt, who before launching his blockchain-enabled crop provenance platform spent 15+ years working for major players in the agriculture space including Monsanto. His vision is to enable consumers, enterprises, and retailers to access verified information about where, and with what techniques their food is grown, would be transformative for the growing demand to trace the impact of our purchases. Imagine being able to scan a QR code at the grocery store and know exactly from which farmer, with what method, and whether or not the product is truly “soy-free” along with its net emissions. The platform solves a critical problem for food brands and farmers who are often separated by middle men all across the continent, augmenting this chain with a verifiable “Crop Story” will be a game changer. The company already has customers in the United States, Brazil, and across the continent.
Before launching Bioeutectics, Tomas Silicaro spent 7 years leading Cargill´s supply chain operations. He arrived to our lunch with mate in hand, and proceeded to give me a university quality seminar lesson on the nuances of the Argentine economic moment before sharing his vision for a sustainable chemical revolution. Alongside a team of leading chemistry PhDs, Tomas is on a mission to replace traditional biosolvents with sustainable alternatives through biomimetics and eutectic technology. Their AI-powered platform designs and tests novel solutions for the $50B annual industry that serves as an input agriculture, personal care, and packaged foods. The company recently graduated from the famed SOSV biotech accelerator program in New York City and plans to run its R&D operations in Argentina and production facility in New Jersey.
My stay in Buenos Aires was brief, but it was clear from meeting these incredible characters that there is a powerful counter narrative that can be expressed about the next chapter of the Argentinian economy that leverages the strength of its incumbent industries and world class technical talent. It was only appropriate to wrap up the trip with one of the early venture pioneers. Over a coffee in her offices in Belgrano, Marta Cruz from NXTP was truly inspiring in sharing her perspective on the lightning speed maturation and growth of the early stage venture industry across the continent in the last decade. From her early work leading major corporate digital transformations internally to investing in the next generation of B2B startups, her seed stage fund to date has made over 130 investments including 6 unicorns.
I left Argentina feeling that there are some ways that a country’s dominant narrative can be misleading, but it can also oddly be an advantage. Argentina´s twin economic realities often boil down to the dominance of the agriculture sector, and a battle with currency stability. From my perspective, the leading agriculture sector is exactly where a flourishing agtech ecosystem has emerged, and a challenging currency has accelerated the development of legitimate discussions of adopting cryptocurrency infrastructure consumers and businesses desperate for an alternative.
Thank you to my friends at 17Sigma, Bioeutectics, Yield Lab, NXTP, Newtopia, Agree, and UcropIt for sharing your experiences.
