Puerto Rico may not be the first place that comes to mind when thinking of tech hubs in Latin America. But through the immense work of the San Juan-based accelerator Parallel18 that has helped raise tens of millions of investment dollars for hundreds of global startups, maybe it should be.
In August, the accelerator is set to begin the ninth cohort of its intensive startup program called P18, which will use a rigorous selection process to ultimately choose from 40 international companies that apply. Parallel18 then gives those startups a $40,000 equity-free fund to help build their products.
Parallel18 operations director Eduardo Padial said the program, which takes from both international and local startups, has helped put Puerto Rico on the map as a global destination for startups.
“(Entrepreneurs) are able to formulate business models and solutions that are scalable from day one, knowing that we’re on an island, knowing that we’re building something that can be global,” Padial said.
Parallel 18 has also successfully attracted a lot of foreign startups to Puerto Rico, with 65 percent of the graduates of the P18 program ultimately staying on the island. That’s due largely to the fact that the accelerator has more than 75 corporate partners based in Puerto Rico, many of which are multinationals, that make lasting connections with the budding startups.
“That’s something that we’re really proud of because it shows that the program is focused in helping the local ecosystem,” Padial said. “We have a great program that provides connections between entrepreneurs and the startups.”
Puerto Rico ranked as the seventh-best tech hub in Latin America and 70th globally in a set of 2019 rankings from StartupBlink. Certainly, the impact of the economic fallout brought on by the COVID-19 pandemic has been felt across the island. In a recent survey, more than half of business owners in Puerto Rico who were polled said the current economic situation is their biggest obstacle to succeeding.
But Puerto Rico’s businesses have overcome big challenges before. After the devastation of Hurricane María in 2017, business rebounded and entrepreneurship rose across the board as soon as the following year. Around that same time, Parallel 18 began its locally-focused accelerator – Pre18 – meant to kickstart early-stage businesses from the island.
Now the successful accelerator looks forward to showcasing the next wave of innovative tech talent with its ninth generation of startups.
The 20-week event utilizes Parallel18’s network of investors and business partners to work hand-in-hand with the participating startups so that they can strengthen their ideas and address any problem areas. Nearly a quarter of Parallel18 alumni say they were better suited to close deals with corporate partners because of the P18 program, per the company’s most recent Impact Report.
This will be the first such cohort in the pandemic that will participate in a hybrid setting, as the two previous versions of the program went through completely virtual experiences to comply with lockdown protocols. Padial said Parallel18 received positive feedback from the all-virtual cohorts, but that the accelerator is ready to welcome startups back to this partially in-person setting that opens up different doors for the participating entrepreneurs.
“It allows those who are from outside of Puerto Rico to have a good understanding of the market here,” Padial said. “It can be a very strong test market because it’s under U.S. federal laws, but also has a Hispanic culture. So just by being here it gives you a better sense of how to sell and how to engage.”
To date, the more than 200 startups that have come through the P18 program have received over $126 million in investment money. Sixty-one percent of those have been startups founded by Latinos.
Companies interested in signing up for the next program must complete the application online before May 11. To qualify, startups must be in operation for no more than three years and have a sales product that can scale globally. Startups that apply will then go through a three-part process that includes an internal evaluation by Parallel18 staff, a judging round that features more than 100 international judges, and a selection committee made up of investors and entrepreneurs. Those who are chosen will be announced in July and the program will begin in August.
Disclosure: This article includes a client of an Espacio portfolio company.