A Promise of Growth: LABA Conference 2013
By and large, most panelists struck an optimistic tone when it came to doing business in Latin America.
The conference brought together ten distinguished speakers and roughly 100 people were in the audience, coming from within various Columbia schools as well as outside institutions.
Last Saturday, April 13, The Latin American Business Association hosted its 15th annual conference, focusing on the promise and potential for sustainable growth across the region. The conference brought together ten distinguished speakers and roughly 100 people were in the audience, coming from within various Columbia schools as well as outside institutions.
The conference was set up as four distinct yet overlapping panels which were designed to give the audience clear insights into the challenges - and also the opportunities - of doing business in Latin America today. By and large, most panelists struck an optimistic tone. Latin America is a broad region, and cannot be simply seen as the sum-total of its parts (indeed, Argentina took a drubbing in almost every panel, with speakers advising Argentines to fine jobs abroad and stay away from the country until at least 2016). Despite individual, country-level differences, the panelists pointed to over-arching areas of growth and opportunities, albeit certain key challenges as well.
The first panel was centered on foreign investment into the region, and speakers included Sandy Severino, of the Brazilian investment bank BTG Pactual, and Sebastian Villa (MBA '04), of Argentina-based (though not Argentina-investing) private equity fund, Southern Cross. The panelists concurred on the fact that capital was still flowing into South America at a steady rate, though in a more selective manner, as of late. Indeed, despite Brazil's preeminent status among investment markets, Severino underscored a shift in capital into Mexico, which currently offers higher, and perhaps more sustainable, growth in the near term.
Beyond regional opportunities, Severino and Villa agreed on the challenges of operating effectively in the region; foreign investors should always to work closely with a trusted local, but warned that when shopping for local partners, you only get what you pay for.
The focus of the second panel was entrepreneurship in the region, and the panelists were Patrick J. McGinnis, an angel investor and advisor active in the region, Isabel Noboa, known to be the wealthiest woman in Ecuador and head of the NOBIS conglomerate (which provides seed capital across various industries), and Martin Varsavsky (MBA '85), a successful VC investor and professor of entrepreneurship. Here too the panelists voiced a great deal of optimism. Varsavsky quickly had the audience downloading his newest investment, the iBillionaire iOS app, in which he is an investor and which was founded by two Latin American developers. He proudly explained that talent had never been lacking in Latin America ("from the hard rocks grows a beautiful flower," he poetically explained), but that only recently had the region's entrepreneurs become more sophisticated on the deal structuring side. All three panelists also passionately supported the role of the entrepreneur in emerging economies - indeed, there is no better job creation tool than entrepreneurship.
Following a networking lunch, the conference reconvened with a panel centered on the growth of the middle class and resulting trends in consumption. The panel was composed of Lori Tieszen, a director of Wines of Chile, Diego Saez-Gil, of travel app WeHostels, and Peter Siemsen, the president of Rio de Janeiro soccer club, Fluminense. Though spanning three very different industries, the moderator prodded the panelists into an interesting conversation regarding the strategies for acquiring new customers, marketing in the digital era, and client retention.
The final panel of this year's LABA conference was focused on infrastructure and was made up of Lachlan Creswell, of Macquarie Capital, Mexico; Alfredo Capote, head of investment banking, Citi, Mexico; and PlÃnio SimÃµes Barbosa, a managing partner at Barbosa, MÃ¼ssnich & AragÃ£o, a Rio-based law firm with deep expertise in infrastructure M&A. Approaching the subject matter from various angles, the speakers underscored that this area was poised for a great deal of growth in the coming years. Indeed, much of Latin America stands so far behind comparable economies in terms of infrastructure development that certain areas would offer "VC-like" returns, one of the panelists argued. Of course, a significant challenge with infrastructure in Latin America is the inherent role that governments must play and the lack of transparency (and sometimes qualified counter-parties), that private investors have had to interface with in the past. Further to physical infrastructure, all panelists advocated investing in human capital, as that too would surely generate returns and improve the functioning of the countries in questions.
As the conference wrapped up, the audience surely felt a mixed-bag of emotions in looking towards Latin America. On one hand, the broader region has yielded generous returns over the last few years and the outlook still remains positive. On the other hand, many of the challenges that Latin America faces are deeply ingrained. The exclusive nature of institutions, a lack of transparency in business dealings, the difficulty of entering new markets within the region - there barriers are unlikely to fall in foreseeable future. As such, perhaps one of the most valuable lessons from the conference was the fact that having a sharp business mind might not be enough to perform in these markets - knowing who to call might end being just as valuable.
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