Country Guide

Puerto Rico

Puerto Rico
Lucas Arzola

Guest Editor

Lucas Arzola

Managing Director at P18Ventures

Lucas Arzola was founding COO at Puerto Rico-based international startup program parallel18 during its first 5 years. He designed and led operations for the pre18 preaccelerator and P18 accelerator, advising 250+ startups and overseeing $11M+ in startup grants. Arzola now leads venture capital fund P18Ventures, deploying $2.6M in 58 investments so far, and is a business consultant and angel investor.


Guest editors are local ecosystem leaders: successful founders, investors, or thought leaders. Have someone in mind? Nominate a country guest editor.

Disclaimer: all content within the Startup Ecosystem Summary and Editor’s Guide sections is written by and reflects the personal perspective of the guest editor. The guest editor is not responsible for content within the Country Snapshot and Community sections, as much of this content is compiled from external sources and does not necessarily reflect the guest editor’s view.

Startup ecosystem summary

Key Startup Cities

San Juan, Mayaguez, Ponce

Connected Country Ecosystems

United States, Colombia, Mexico

Differentiators

  • LatAm culture with United States regulations and currency
  • Strategic geographical location
  • Bilingual educated workforce
  • Significant enterprise presence
  • Growing investment landscape

Challenges

  • Small consumer population
  • Limited coding talent
  • High electricity costs
  • Ongoing recovery from recent hurricanes and earthquakes

Editor's Guide

Introduction

The Puerto Rico startup ecosystem has scaled exponentially in the last several years, aligned with the growth of the Puerto Rico Science, Technology and Research Trust. This NGO is the driver of the island’s public policy around technology and innovation, and is the parent organization of parallel18. After the 2015 launch of this internationally-focused accelerator to augment existing local startup programs, there has been significant growth in every metric related to innovation, including startup grants available, companies launched, large enterprises engaging in corporate innovation, number of investors, private capital invested, and more.

Puerto Rico’s business-friendly environment and highly appealing quality of life — combined with the attractive Acts 20, 22, and 60 which provide 100% tax exemptions on capital gains for resident individuals and distributions of profits generated by locally based corporations — have multiplied the presence of accomplished businesspeople that are now local, and have brought a significant influx of international commercial activity and investment capital.

Puerto Rico offers a unique socioeconomic environment as a Spanish-speaking United States territory. The combination of business, legal, and regulatory federal oversight and a rich Hispanic culture provides an unparalleled commercial bridge for American companies expanding to LatAm, under more affordable costs of doing business and living. Similarly, LatAm companies scaling in the opposite direction can find soft landing for doing business in the United States, including the ability to become American entities investable by American funds, and an effective test market with qualified bilingual talent and a higher purchasing power than their markets of origin.

Outlook

The Puerto Rico tech scene continues to gain significant momentum from the foundation that previous local existing incubators established. The consequent evolution catalyzed by the Puerto Rico Science, Technology, and Research Trust through parallel18 has brought a consistent deal flow of high-growth investable startups that are poised to continue scaling locally and into global markets from the island. Key milestones that will validate the local innovation ecosystem are based on Puerto Rican founded homegrown companies realizing their potential by accomplishing large post Series A rounds of fundraising and eventual successful acquisitions/exits. This would bring success cases for the ecosystem, and new experience and wealth to a more mature entrepreneurial class that can become founders of subsequent startups with a higher degree of success and/or knowledgeable angel investors that can further propel the development of the tech sector.

While several angel networks and venture capital funds have organized around the parallel18 deal flow and are deploying funding, significantly more capital needs to be available locally to ensure the retention and growth of scalable startups from the island. The continued increase in participation from large corporations in the startup scene and the further development of tech talent, particularly coding, are also essential to overcome these upcoming challenges.

Featured Tech Startups

Editor’s choice of the country’s top 10 emerging tech startups.

Startup Showcase

Editor’s pick of which ‘Featured Startup’ is especially worth following and why.

Abartys Health focuses on solving the global healthcare crisis with smarter, faster care achieved by use of a unique, centralized data hub that allows for increased medical record portability and universal patient identification. Dolmarie, Lauren, and their 20-person team are disrupting healthcare informatics by facilitating a cloud-based platform which provides the means of shareable health informatics between patients, physicians and health insurance providers. The company continues to increase its revenues and plans to continue expanding through the mainland United States, partially funded via a Series A round projected for Q2 2021 with an expected raise of $10M. The company’s most recent valuation was $15M, and our valuation models project an approximate valuation of more than $100M by 2023, with the potential to become the first fully homegrown Puerto Rican company in our ecosystem to reach the market capitalization of a unicorn. Recently, Abartys Health was selected by Google as part of the winter 2020 edition of its accelerator program for growth-stage technology startups.

Focus Industries

Editor’s choice of the industries with the most potential for technology disruption and growth.

Foodtech / AgritechDuring the first half of the 20th century, agriculture of sugarcane and coffee was the main driver of the Puerto Rican economy. Since the 1950s, government policies focused on industrialization deemphasized agriculture, diminishing its contribution to the island’s GDP to 1%. Because 85% of all food consumed is imported (temporarily 95% after Hurricane Maria), agriculture is poised for a resurgence behind further sophistication by the culinary scene and increased awareness for eating local from producers, restaurateurs and consumers. This movement is reflected in the startup scene, with the establishment of agri-focused fund Semillero Ventures and entrepreneurs bringing unique food products and agritech platforms to market.
HealthtechFor the last four decades, healthcare has been the most prominent industry in Puerto Rico, generating over 25% of the island’s GDP. A worldwide hub for life sciences, 11 of the top 20 global pharmaceutical companies manufacture 5 of the world’s top 10 best-selling medicines in Puerto Rico. A highly educated workforce, established supply chain and service providers, and unparalleled tax incentives make this an ideal location to manufacture and export drugs and medical devices. More recently, local startups focused on healthcare software and pharmaceutical innovations are leveraging their proximity to a high density of pharmaceutical companies and a huge life sciences market to thrive.
Travel / HospitalityYear-round tropical weather and diverse natural ecosystems from beaches to mountains to rainforests and more have always made the Island of Enchantment an enticing tourism destination. Its central location in the Caribbean makes Puerto Rico highly accessible via cruises and direct flights from major airports around the world. It’s very popular among United States citizens, which do not require passport or currency exchange to visit. Served by numerous tour operators and hospitality businesses, the industry is being further boosted from its current 7% of GDP by the establishment of DMO Discover Puerto Rico. More recently, entrepreneurs are commercializing tech solutions to enable tourists to make the most out of their time in paradise.

Talent

Editor’s perspective of the maturity level of talent in the ecosystem.

  • Technical TalentUndeveloped
  • Marketing TalentModerate
  • Experienced TalentAdvanced
  • International TalentModerate

Culture and History

Editor’s commentary on how the country’s culture and history have impacted the ecosystem.

Puerto Rico’s indigenous Taino ancestry, the 405-year rule of Spain, and the introduction of Africans as slaves for centuries, led to the mixture of ethnicities that comprise Puerto Rico today, enriching a culturally diverse heritage that excels in the arts and music. In 1898 the island became a United States territory, and as a result, has never been an independent country. That, combined with the fact that Puerto Rico is an island, has been a barrier in the mindset of local entrepreneurs to feel empowered to succeed on a global scale. This has significantly changed because of parallel18’s approach to entrepreneurial training and its international focus. The island has diversified its industrial base and small business community by incorporating a formal tech sector with thriving entrepreneurs that is leveraging the best Puerto Rico has to offer and United States influence to scale globally from here.

Both a significant asset and also a disadvantage is the fact that all Puerto Ricans are born with United States citizenship, making accessible the opportunity to gain experience by studying, working, and/or launching startups in the United States. An important mission for local economic development organizations is to continue creating the conditions for these talented Puerto Ricans to return to the island and positively impact the local economy. In the meantime, Puerto Rico is leveraging its numerous and influential diaspora population in the United States to create channels for them to add value to the island, and to provide avenues for local entrepreneurs to engage with the Hispanic market in the mainland.

Interested in becoming more involved in this ecosystem and connecting with local ecosystem leaders? Let us know.

Community

Active Investors

Ashford Venture Partners (San Juan): Puerto Rico based serial investment vehicle focused on venture capital and private equity.

ATO Ventures (San Juan): Pre-seed and seed stage venture capital firm focused on technology startups backing companies at the earliest stages, often before products have been completely built.

Aurora Angel Network (San Juan): The leading professional association supporting the success of angel investors in high-growth, early-stage ventures in Puerto Rico.

Caribbean Private Equity Partners (San Juan): Caribbean Private Equity Partners ("CPEP") is a leading investment firm deploying capital in the Caribbean Basin with long standing and deep professional and personal relationships throughout the region.

Grupo Guayacán IDEA Seed Fund (San Juan): Puerto Rico’s first seed fund providing risk capital to early-stage innovation-driven ventures.

Morro Ventures (San Juan): Puerto Rico’s first institutional early-stage venture capital firm investing in technology companies across Latin America that leverage Puerto Rico as a platform for growth.

P18Ventures / Puerto Rico Science, Technology and Research Trust (San Juan): P18Ventures has the mission to create investment opportunities for parallel18 startups and alumni, through a follow-on investment fund, investment events, and direct contact with investors.

Parliament Capital (San Juan): Puerto Rico based, minority-owned alternative investment firm specializing in direct lending and private credit that targets underserved, privately held, lower middle-market companies in Puerto Rico, the US Virgin Islands and the United States.

Semillero Ventures (San Juan): Puerto Rico based growth-stage private equity investment fund specializing in agriculture, food, agribusiness and appropriate agricultural technology.

Startups Raising Capital
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Startups Hiring
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Coworking Spaces/Hubs

Co.co.haus (San Juan)

El Nodo (Ponce)

Engine-4 (Bayamón)

La Oficina (San Juan)

Piloto 151 (San Juan)

The Landmark (San Juan)

conferences

Agrohack (San Juan): An agriculture-focused conference.

Animus Summit (San Juan): The biggest women summit of the Americas.

BE Fest (Virtual/San Juan): The Boricua Emprende Fest (BE Fest), is an annual event promoted by Colmena66 to celebrate the talent of the business ecosystem.

Forward Research and Innovation Summit (San Juan): An event organized by the Puerto Rico Science, Technology and Research Trust that takes place every 2 years.

meetups

Country Snapshot

Economy

Startup funding
Startup funding
US$14 million (2019)
Standard of living
Standard of living
Global rank: N/A
Innovation
Innovation
Global rank: N/A
Entrepreneurship
Entrepreneurship
Global rank: 41 (2018)
Annual GDP growth
Annual GDP growth
1.2% (2019)
(Global avg. 3.0%)
Ease of doing business
Ease of doing business
Global rank: 65 (2019)
Ease of starting a business
Ease of starting a business
Global rank: 59
Research and development
Research and development
0.4% of GDP
(Global avg. 2.3%)
Contract enforcement
Contract enforcement
Global rank: 70

Sources

Startup Funding: parallel18
STANDARD OF LIVING: International Monetary Fund - GDP per capita (PPP)
INNOVATION: Global Innovation Index
ENTREPRENEURSHIP: Global Entrepreneurship Index
ANNUAL GDP GROWTH: World Bank
EASE OF DOING BUSINESS: World Bank
EASE OF STARTING A BUSINESS: World Bank
RESEARCH AND DEVELOPMENT: World Bank
CONTRACT ENFORCEMENT: World Bank

*Updated with latest available data based on listed source.

Society

Population
Population
2.9 million (2020)
Government
Government
Republic
Stability
Stability
Global rank: N/A
Internet usage
Internet usage
70.9% (2019)
Smartphone usage
Smartphone usage
N/A
Literacy
Literacy
92% (2017)
Population under 15
Population under 15
16% (2019)
Median age
Median age
41.5 (2018)

Sources

POPULATION: Worldometer
GOVERNMENT: The World Factbook
STABILITY: Global Innovation Index
INTERNET USAGE: International Telecommunications Union
SMARTPHONE USAGE: Newzoo
LITERACY: World Bank
POPULATION UNDER 15: World Bank
MEDIAN AGE: The World Factbook

*Updated with latest available data based on listed source.

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