Global investments in education technology, commonly known as edtech, will reach $252 billion by 2020. In fact, the global e-learning market is growing over 14% annually, and this growth rate is likely to continue.
In Latin America, government focus on education increased significantly over the last two decades. As a result, Latin America is now the fourth largest edtech market in the world – behind North America, Western Europe, and Asia in terms of revenue – with expectations for the e-learning market to generate revenues of over $3 billion by 2023.
According to UNESCO, more than 12 million adults in 20 Latin American countries are participating in some form of online education. This is not just online courses; millions of people are now accessing written materials, webinars, podcasts, collaborative software, and more.
What’s driving edtech opportunities in Latin America?
The short answer is surging levels of mobile and Internet access.
Latin America is a world leader in mobile adoption, with more than 415 million out of approximately 690 million people connected to a mobile network. Approximately 60% of all mobile connections in Latin America are smartphones and there are predictions that by 2020, 63% of Latin America’s population will have access to the mobile Internet. This rapid growth is translating into endless opportunities for the edtech sector, even in the most rural and remote areas.
1.4 million cars joined the roads in Latin America in the first quarter of 2018. In a region that struggles with automobile safety, the increase of motor vehicles on the road raises challenges for policymakers, auto manufacturers, and citizens. Over 115,000 people die every year from car accidents in Latin America. In 2000, 26.2 people per 100,000 died in car accidents and that number is expected to rise to 31 car-related deaths for every 100,000 people by 2020. In the US, the rate of accident deaths hovers around 11.4 per 100,000 people.
Managing Latin America’s growing automobile fleet is one of the most significant challenges that startups and governments will need to tackle as cities swell. Latin America is home to many auto producers, so manufacturers will also need to pay attention to new technology to stay competitive.
Opportunities in autotech in Latin America
Worldwide, startups and giant tech companies are tackling the conventional auto industry with solutions that include self-driving vehicles, electric cars, pay-per-mile insurance, and car-shares. Latin America is experiencing a wave of autotech startup launches, including a few that raised notable international investment rounds.
Much of this innovation remains concentrated in Latin America’s two largest markets: Brazil and Mexico. This disparity makes sense as 70% of vehicles on the road in Latin America are in these two countries. In Brazil, there is approximately one car per four inhabitants, while in Mexico, the ratio is one in three. Argentina, Colombia, and Chile trail far behind in quantity of vehicles but maintain similar ratios.
The Internet of Things (IoT) is a buzzword that many people throw around but not everyone understands. While it sounds obscure, the concept is simple; IoT is communication between physical objects that connect via the Internet.
These products are implanted using sensors, monitors, and other devices that allow them to communicate with other connected devices. For example, if a machine in a factory could automatically send an alert to the supervisor’s smartphone when a gear is starting to wear down, that communication would happen through IoT.
It’s easy to imagine hundreds of applications of IoT technology that could simplify or solve everyday challenges. In Latin America, where millions of people still struggle with safety (especially in big cities), access to clean water, or adequate healthcare, the Internet of Things has the potential to provide innovative solutions to these problems.
The field is still in its infancy in Latin America. Since IoT has applications across almost every industry, efforts to join forces or create collaborative solutions have been few and far between. However, the newness of this industry, as well as the rapidly-increasing connectedness of the Latin American population, opens many opportunities for IoT solutions to take hold in the region over the next decade.
Credit in Latin America is notoriously hard to access. Just a few years ago, credit card rates in Brazil hit 450%, which has gone down to a still astounding 250% per year. In Chile, I’ve seen credit cards that charge 60-100% yearly interest. And that’s if you can even get a card in the first place. Yet people still use these predatory systems. Why? There are rarely any other options.
In the US, access to loans depends mainly on a single number: your FICO score. Your credit score is an aggregate of your spending and borrowing history, so it gives lenders a way to find out if you are a trustworthy customer. In general, the higher your score, the bigger (or more lenient) your line of credit. You can boost your score by managing credit wisely for long periods, such as always paying off a credit card on time, or lower your score by taking on more credit, not paying it off on time or carrying a high balance. While many people criticize the FICO score model, it is a relatively simple way for lenders to verify the creditworthiness of potential customers.
Consumers in the US have access to deep pools of capital at their fingertips. Home loans, credit cards, consumer credit and other forms of debt are readily available. Perhaps they are even too available, as we saw in the 2008 financial crisis or as we might be seeing now with bubbles in student loan debt.