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  • Foto del escritorEduardo Morelos

Science-Based Entrepreneurship: The Next Latin American Frontier

“I don't believe we need another food delivery company [...] I actually believe we're going to be seeing a transformation of where this money is going to go. It's not going to go to all this stuff that maybe provided us good utility to get food quicker or find a taxi sooner,” BlackRock CEO Larry Flink stated in an interview during The New York Times DealBook Summit when predicting where future investments — especially early-stage venture capital — will flow over the coming years.


The Global Financial Crisis of 2008 and the subsequent distrust in the traditional banking system are generally seen as major triggers for the emergence of fintech and e-commerce startups. In the same way, the COVID-19 recession and The Great Reset have created increasing awareness of some of the most pressing challenges faced by humankind, which are the core of life itself: public healthcare, sustainable agriculture, decarbonization, food and energy production.


Our next technological era may be defined by breakthroughs and investments in those areas, and together with artificial intelligence and robotics, they will catalyze new business opportunities in multiple fields, such as medicine, biotechnology, food tech, climate tech, and nanotechnology, to name a few.


After a decade of surfing the first wave of soft-tech startups, how is Latin America positioned to participate in this new reality where science-based entrepreneurship may take the lead? A recent study published by the Inter-American Development Bank asserted that about 865,000 individuals are engaged in STEM (science, technology, engineering, and mathematics) research and development, but less than 5,000 (0.6%) have joined the ranks of deep-tech startups.


Having graduated as a biotechnology engineer in 2006 and then converted to a venture capital and innovation adviser, I cannot but agree on the enormous opportunities and challenges ahead for our region. Deep-tech startups not only require significant upfront investments — for instance, data from Carta shows that the median cash raised by biotech companies at the Series A stage is US$9.8 million, a figure 55% above the average of all sectors together — they also entail a multidisciplinary approach to entrepreneurship involving intellectual property, technology transfer, regulation, and even ethical considerations.


According to Boston Consulting Group, global venture capital funding of deep-tech fell back from a record US$160 billion in 2021 to about $105 billion in 2022, while the overall Latin American funding in this segment roughly amounts to US$2.2 billion raised by 340 startups. Nevertheless, the creation of highly specialized accelerators in the region, such as GRIDX and Litoral, together with the occasional participation of well-established local VC funds is providing an incipient but fertile ground for unlocking deep-tech potential in the future.


Our recent initiatives at Brixton Ventures Lab with Tecnológico de Monterrey, on one side, and AstraZeneca, on the other, have provided us with unique visibility and access to talented researchers and entrepreneurs who are building highly innovative companies, from large-scale production of transplantable bioartificial corneal tissue to personalized medicine through precision oncology.


Balancing business acumen with scientific or engineering talent to build a fast-growing company is still an ongoing matter for most basic and translational research endeavors. The large pool of R&D talent in the region mostly remains within academic or institutional settings, and longer-term collaboration is still needed between the private and corporate sectors. In addition, most universities, both public and private, need to further design and facilitate spinout processes to make new technologies investable by venture capitalists.


At the same time, Latin American VCs will certainly benefit from incorporating more deep-tech capabilities to better assess deals, understand the science behind those, and perform due diligence processes beyond the level traditionally required by soft-tech businesses. Of note is the appearance of local funds like 1200 VC or Zentynel Frontier Investments, which aim to capture value from the earliest stages of technology development.


In this context, corporates in the region may now benefit from being first movers and leveraging the existing and future talent pool of science-based entrepreneurs across multiple industries, such as agri-food, pharma, medical devices, healthcare services, energy, and manufacturing. Open innovation initiatives and corporate VC funds specifically designed for deep-tech ventures would dramatically accelerate early access to disruptive technologies and speed up corporate innovation efforts.


One of the pioneers in bringing industry partners together to support early-stage biotech startups from Latin America is The Ganesha Lab, which partnered with Agrosuper, Thermo Fisher Scientific, and Janssen Pharmaceuticals. The six-month scale-up program now has over 30 companies in its portfolio with solutions ranging from vertical farming to cytogenetics with artificial intelligence.


If history is any guide, we are now at the starting point of a trend that will likely unfold over the immediate years, and those organizations that embrace science-based entrepreneurship earlier in the process will more probably benefit from it.

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