Understanding the Barriers and Development of a Venture Capital and Seed Funding Ecosystem in Ecuador

Open Access
Author:
Castro, Juan Jose
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • James Alan Miles, Honors Advisor
  • James Alan Miles, Thesis Supervisor
  • Joseph Randall Woolridge, Faculty Reader
Keywords:
  • venture capital
  • seed funding
  • south america
  • Ecuador
  • angel investing
  • entrepreneurship
  • innovation
  • financing
Abstract:
South America has experienced significant growth in the venture capital and seed funding industry during the last decades. This industry is critical to finance new projects as financial and capital markets become more important in the region. However, Ecuador is a country that has lagged this development, a fact that generates a competitive disadvantage for local entrepreneurs and investors. The study analyzes some of the venture capital and seed funding programs throughout South America and within Ecuador to illustrate the dynamics of the market. It then develops a framework of barriers that exist in Ecuador for the development of the industry which includes legal, political, economic, and cultural barriers. Once the dynamics and barriers are identified, the study analyzes some of the potential solutions that could transform and develop the ecosystem of seed capital in Ecuador. These initiatives comprise an angel network to facilitate investments, educational programs that change the culture of entrepreneurs, and fiscal incentives. The study concludes that even though there are important barriers for the development of the seed capital industry, there are programs that could give Ecuador the tools to boost innovation and economic growth.