Why Cuba is ripe for investment
by Ramphis Castro @CNNTech
December 10, 2015: 11:51 AM ET
Ramphis Castro, no relation to the Cuban leaders, is a Kauffman Fellow
and founder of Mindchemy, a startup bringing technology entrepreneurship
to the developing world. He is also managing director for Founder
Institute NYC, the world’s largest idea-stage accelerator.
A recent event at Havana’s Panorama Hotel provided a unique view into
the future of Cuba. Some 50 would-be business owners attended Cuba’s
first-ever Startup Weekend, listening to presentations, holding
workshops and refining business models. Listening to the young
entrepreneurs in attendance reinforced my conviction that Cuba is a huge
opportunity for venture capitalists.
Over the next decade, U.S. venture capitalists will likely fund hundreds
of projects in Cuba, finding a way to bridge infrastructure shortcomings
and to work with the Socialist government to help foster a new age of
economic prosperity. If that sounds overly optimistic, remember Vietnam.
After a long war that ended in 1975, Washington cut off relations with
the Communist government of Hanoi until 1995. Since then, the economy
has flourished and venture capitalists, including U.S. firms, have
invested heavily there. American companies have poured $11 billion into
more than 700 projects in Vietnam, ranging from manufacturing to
hospitality. Intel (INTC, Tech30), Ford (F) and Microsoft (MSFT, Tech30)
are among the U.S. corporations operating in the Communist nation.
Venture capitalists seeking an opportunity that could rival the type of
explosive growth seen in Vietnam need look no further than to Cuba. The
seeds of that growth could be seen in the resourcefulness and enthusiasm
of those at Startup Weekend Havana. The event was organized locally by a
grassroots effort and was like others held in places such as Myanmar,
Afghanistan and Palestine.
Early-stage venture capitalists want to see two things: the pool of
talent and the need for a given solution. Cuba has both in spades.
In Cuba, the pool of talent is deeper than in most of Latin America
thanks to a free education system that boasts more than 47 universities
and 400,000 students. A report by The World Bank credits Cuba with the
best education in Latin America.
Related: Verizon offers roaming in Cuba
The need — or problems new businesses will address — is clear after
more than a half century in which the economy has been largely isolated.
Cuba lacks basic infrastructure such as reliable Internet and even
supermarkets, meaning the opportunities for new businesses are boundless.
There are four major areas that could pay huge dividends:
Everything from food to entertainment to transportation is needed in
Cuba. One entrepreneur at Startup Weekend Havana pitched an app to
locate a pharmacy that has the medication you need in stock. There are
opportunities to create companies offering everything from taxi services
to dating platforms to concert listings.
Banking and financial tech
Financial services in Cuba are largely informal and present a huge
opportunity for businesses that can make finance on the island more
Cuba is a leader in organic farming and non-GMO agriculture, as
isolation has meant an absence of genetically modified seeds. Businesses
that can use technology to scale these operations.
Tourism technology that connects people with experiences and services is
another strong area for investment.
Venture capitalists can visit Cuba, traveling under one of the 12
exceptions approved by the U.S. Department of State. Once there, you can
get the lay of the land, seek out entrepreneurs who have been successful
in small, state-approved (generally cash-only) pursuits, and begin to
understand the opportunities and challenges ahead.
Anyone doubting that a hearty breed of entrepreneur exists in Cuba
should acquaint themselves with El Paquete, or The Package — a weekly
hard drive that costs five Cuban pesos and contains the latest TV shows,
music, movies, apps, magazines and news. Subscribers have 24 hours to
download what they want before the hard drive is picked up the next day.
That’s just one example of how for half a century Cubans have navigated
the technological and logistical challenges of a primitive economy that
has been semi-isolated by a U.S. trade embargo, as well as by Cuba’s own
Those lucky venture capitalists who visit Cuba will be like the
Americans who went West during the Gold Rush, pioneers on one of the
last wide-open frontiers of capitalism. Helping entrepreneurs
successfully navigate such difficult challenges is what we do.
Source: Why Cuba is ripe for investment – Dec. 10, 2015 –