Mapping the Guatemalan Entrepreneurial Ecosystem

Entrepreneurial ecosystems
01.03.2021
Building a vibrant environment for an ecosystem to thrive can only be achieved by having open conversations about its state and culture. A recent report takes a closer look at the entrepreneurial community in Guatemala in 2020 in an effort to expose the dynamics of the system and provide recommendations for ecosystem players. The data for this analysis is based on workshops, interviews, polls and collaboration programs with over 80 ecosystem support organisations.

Guatemala's entrepreneurial ecosystem is young and fragmented into disconnected clusters. According to the Index of Dyanmic Entrepreneurship, Guatemala ranks on 63rd position of out 64 countries. This report aims to capture and discuss the state and culture of the Guatemalan ecosystem to contribute to building a vibrant entrepreneurial environment. 

As part of the Action Research Project, the report analyses the entrepreneurship context in Guatemala and recommends solutions to the identified gaps. For instance, the website startupguatemala.org was created as a centralised source of information relating the ecosystem in order to make resources more easy to find. Another example is the Female Founders Club, which was created to increase the representation of women in the ecosystem and provide a space to exchange experiences and knowledge.

The investment paradox

Access to investment is one of the main challenges of the Guatemalan entrepreneurial ecosystem. Paradoxically, entrepreneurs often feel there is no capital, and investors often feel there are no startups worth investing in. Nevertheless, it is crucial for investors to diversify to reduce the risk but in an ecosystem where many are traditional small and medium enterprises, it is not easy to find a diverse range of startups. Within the Action Research Project, the startup investors' association CAPCA (Capital of Central America) was formed to promote local investment and provide data on local startup investment.

Guatemala
Entrepreneurial ecosystems
Action Research - Social Network Analysis
By analysing social networks, we can identify and improve the dynamics of social groups. If applied to entrepreneurship ecosystems, this translates to actively linking actors and creating collaboration mechanisms that could facilitate the interaction and development of local entrepreneurial communities. The Guatemalan entrepreneurship ecosystem is fragmented and has difficulties in collaborating and coordinating with its members, which often leaves entrepreneurs adrift. As in most Latin American countries, start-ups in Guatemala are built on relationships and connections. The value chain does not begin with the what, but with the who. This disconnect, coupled with social and economic factors, is why the failure rate of local ventures is over 90%. Additionally, most companies created in the country are classified as a type of "sustenance employment" or self-employment, with little or no growth potential.