Hablamos con Tony Duckett, director de xiVentures Fund Inc y Senior Consultant de Beyond Partners, quien además es inversor de capital de riesgo con base en Toronto y posee gran experiencia ayudando a empresas latinoamericanas en la navegación por el terreno empresarial norteamericano.
¿Cuáles son las perspectivas macroeconómicas generales para Estados Unidos y Canadá (2024~2025)?, ¿Qué deberían considerar las empresas de TI con sede en LATAM para este año?, ¿Los despidos (¿masivos?) en TI perjudican (o benefician) a LATAM?, todas estas preguntas y muchas más nos responde Tony Duckett en esta nota, donde además nos da importante información para todas aquellas empresas que finalmente se decidan por entrar en el mercado de USA.
Outlook for LATAM Tech Exporters to North America
In the current global landscape, LATAM-based tech companies looking to export to North America may find the market conditions perplexing and daunting. As a seasoned VC investor based in Toronto, I offer a unique vantage point, coupled with hands-on experience assisting LATAM companies in navigating the North American business terrain. In this brief exposition, I aim to demystify the process and provide actionable insights. By addressing key questions and concerns, my goal is to empower you with the knowledge to determine if now is the opportune moment to venture into these promising yet complex markets.
What is the General macro-economic outlook for the US and Canada 2024~2025?
The macro-economic outlook for the US and Canada in 2024-2025 is a subject of intense scrutiny and debate among economists, policymakers, and financial experts. The landscape is characterized by volatility and unpredictability, shaped by a myriad of socio-economic and geopolitical factors. The ongoing conflicts in Ukraine and Israel, coupled with the dynamics of the US election cycle, contribute to this complexity. These issues, while distinct, interconnect at a macroeconomic level, influencing market sentiments and outcomes.
From the US perspective, several challenges could potentially dampen the prospects for exporters, including rising trends of protectionism and isolationism, political gridlock, pervasive uncertainty, and sustained inflationary pressures. These factors collectively pose risks that may hinder international trade, particularly for LATAM exporters targeting the US market.
However, it’s important to note the resilience of the US economy, which continues to exhibit robustness against such headwinds. Indicators such as persistent GDP growth and a strong labor market suggest a ‘soft landing’ despite the turbulent global environment. These positive trends offer a counterbalance to the aforementioned concerns and provide a degree of optimism for the economic trajectory.
As the November elections approach, policy directions will hinge on the prevailing political party, with long-term implications for international trade and economic policies. While the immediate effects may not drastically alter the landscape for LATAM exporters, the overarching inclination towards protecting domestic industries suggests that some form of trade barriers may persist.
The Canadian political landscape is poised for a shift with the anticipated election at the end of 2025. Forecasts suggest the emergence of a more populist party, which, despite its rise, is not expected to significantly alter policies related to LATAM in the near term. Economically, Canada’s recovery trajectory, particularly in GDP growth, has been more tempered compared to the robust rebound of the US. Nevertheless, the Canadian job market demonstrates resilience, and inflation rates are on a gradual decline, mirroring trends in the US.
A notable demographic shift has been the substantial increase in immigration, fueling population growth and contrasting with nations facing demographic decline, such as Japan. However, this influx has raised concerns regarding the potential overextension of Canada’s infrastructure. As LATAM tech exporters consider their North American strategies, understanding these nuanced dynamics will be crucial for navigating the Canadian market in the coming years.
In summary, the macro-economic outlook for 2024-2025 remains a complex tapestry of challenges and opportunities, with the US and Canada navigating through a period of transition and adaptation. For LATAM tech exporters, staying informed and agile will be crucial in leveraging the positive trends and mitigating the risks associated with this dynamic economic phase.
What is the Specific economic outlook for the IT industry?
The tech sector, like all areas of the economy, is experiencing a dynamic interplay of trends, both challenging and favorable. In the wake of the pandemic, many tech businesses are undergoing a period of recalibration, having expanded rapidly to meet the surge in demand that has since evolved. The changing consumer landscape has necessitated downsizing for some, while others grapple with the repercussions of rising interest rates—impacts that vary widely based on each company’s debt levels and investor relations.
Yet, it’s not all contraction and caution. The industry is witnessing a robust counter-movement characterized by the ongoing digital transformation journey which is becoming ever more evident in the SMB (Small to Medium Business) market. Large enterprises have been navigating this shift for years, but now, SMBs are approaching artificial intelligence (AI) with a newfound sense of urgency, seeking to understand and implement what is necessary to remain competitive and agile in a rapidly advancing technological landscape. This balancing act between consolidation and innovation is shaping the future of tech, as companies strive to align with the evolving demands of the digital era.
Do the (massive?) layoffs in IT hurt (or benefit) LATAM?
The recent wave of layoffs across the tech industry presents a complex scenario for LATAM companies aiming to export tech services and products to the US and Canada. Intuitively, one might assume that an influx of available talent could impede the entry and expansion of foreign tech exporters in these markets. Moreover, the strengthening of protectionist policies adds another layer of complexity to this equation.
Nevertheless, the North American tech market has demonstrated a remarkable capacity to integrate laid-off employees, thanks to the acute shortage of tech talent experienced during the pandemic. This absorption mitigates the potential oversupply of talent and maintains a demand for specialized skills.
Furthermore, large-scale layoffs often lead to companies outsourcing certain functions that were previously managed internally. This shift opens doors for LATAM tech exporters, who can capitalize on the need for external expertise and services. By offering competitive solutions, LATAM exporters can turn these challenges into opportunities for growth and collaboration in the North American tech landscape.
What about the investment outlook for tech firms? Are VCs investing?
The investment landscape has undergone a significant transformation post-pandemic. The era of abundant stimulus funds and historically low interest rates prompted investors to seek higher yields through ventures with elevated risk profiles, such as venture capital. However, the recent surge in interest rates has compelled investors to reallocate capital towards more conservative avenues promising reasonable returns.
Venture capital is witnessing a resurgence of funds, albeit with a newfound prudence. The focus has shifted from chasing the elusive ‘Unicorn’ to identifying enterprises that exemplify fiscal prudence and possess robust business models. Today’s investors prioritize firms with demonstrable client growth and expedited routes to profitability, indicating a paradigm shift towards sustainability over speculative growth in the VC domain. This cautious optimism signals a maturing market that values stability and long-term viability.
Last year many spoke of a recession that didn’t come, will this year be the same?
Current economic forecasts suggest a “soft landing” is likely, with a recession not immediately anticipated, particularly in the US compared to Canada. Nonetheless, the economic horizon is dotted with potential events that could unexpectedly sway the future, both negatively and positively. These include:
– Unforeseen “Black Swan” events that could disrupt global stability
– Escalating trade wars that may hinder international commerce
– Expansion of conflict in Europe, potentially destabilizing the region
– Middle Eastern conflicts that could jeopardize critical supply chains
– A potential crisis in the Taiwan Strait if tensions with China escalate
– Severe climate events that could have widespread economic repercussions
Despite these uncertainties, there’s a silver lining: the resolution of some of these issues could catalyze an economic boom. The markets have seemingly priced in these variables for the short term, reflecting a cautiously optimistic outlook for continued growth in both the US and Canada.
This balanced view acknowledges the complexities of the global economy while recognizing the resilience and adaptability that have characterized market responses to date.
What should LATAM-based IT firms consider for this year? What should they do to prospect?
Despite the prevailing uncertainties, the North American market remains a fertile ground for LATAM-based tech companies. However, successful entry hinges on several critical factors:
1. Resource Availability: Does the company possess sufficient resources to effectively market and sell its products or services in North America? Adequate funding, skilled personnel, and robust infrastructure are essential.
2. Existing Presence: A physical presence or established client base in North America can significantly ease market entry. Leveraging existing relationships fosters credibility and accelerates growth.
3. Viable Offerings: Have the products or services been thoroughly assessed for viability in the North American context? Understanding local demand, competitive landscapes, and regulatory nuances is crucial.
4. Channel Partnerships: Collaborating with channel partners—be it distributors, resellers, or strategic alliances—can streamline market penetration. Partnerships provide access to networks, expertise, and shared resources.
5. B2B or B2C Focus: Clarify whether the offering targets businesses (B2B) or end consumers (B2C). Tailoring strategies to the specific audience is pivotal.
6. Language and Localization: Is all marketing and sales collateral in English? Ensuring professional translation and localization by native English speakers is imperative. Clear communication builds trust.
If the company can affirmatively address these questions, the path to entry becomes smoother.
However, if uncertainties persist, the initial step should involve assessing whether the offering genuinely addresses North American pain points. Adaptation may be necessary—whether fine- tuning the product or reorienting the approach—to resonate with the unique requirements of this dynamic market.
When a LATAM-based tech company lacks physical presence or existing clients in North America, a deliberate networking effort becomes paramount. Building a robust network of contacts within the relevant industry is essential. Engaging a local representative—whether an individual or a specialized company—can facilitate this process. This holds particular significance in the B2B space, where cold calling can be an arduous task, often requiring persistence to break through to decision-makers.
Once the decision to enter the market is made, preparedness is key. The company must be equipped to handle incoming leads, referrals, and inquiries promptly. Having a skilled professional who can effectively “close the deal” is critical. Remember, when engaging decision- makers, that initial impression is often your sole opportunity to establish trust and interest.
Leveraging existing channel partners or LATAM collaborators with a North American presence can be advantageous. These partners can serve as conduits, providing valuable introductions to potential clients.
In summary, the North American landscape teems with opportunities. Numerous small to medium-sized companies are grappling with digital transformation across various sectors. LATAM tech companies, armed with competitive pricing, shared time zones, cultural affinity, and robust technical skills, can offer substantial value. The key lies in identifying specific industries or verticals where your expertise shines brightest. Adaptability to North American work environments and methodologies is equally crucial for successful market entry
Tony Duckett
Sinergia Golf,
hello@beyond.partners
