Comment by Alejandra Luzardo, leader in innovation and creativity, Inter-American Development Bank

The dynamic cultural and creative sectors of Latin America – recognised as part of the “orange economy” – are an untapped global resource in need of investment. The corporate capital venture (CVC) model could be a solution. CVC is the direct investment of corporate funds in new companies. This type of investment has typically focused on sectors such as the internet, new technologies, health and telecommunications. Some parts of the orange economy, such as the audiovisual sector, have also benefited from this model. ViacomCBS is a case in point. One of the world’s largest producers of entertainment content, for more than 20 years it has been able to innovate by acquiring countless companies and developing co-productions with them. The analysis of more than 300 creative startups presented in Launching an Orange Future, an Inter-American Development Bank publication, found that financing was one of the leading obstacles to achieving scale, given that investors are frequently unaware of the economic and social impact of the creative sectors. For their part, creative entrepreneurs have often not developed their business skills, leaving them unable to pitch the benefits of their projects, particularly those of intangible value, such as video games, film and animation. Another significant obstacle – particularly in the covid-19 pandemic – is the liquidity that is vital for many startups to survive and to continue growing in the long term. Finding new clients, adapting to new technologies and forming partnerships with businesses that dominate distribution in global markets will be key for smaller businesses to survive and move ahead. Large corporations will also have to innovate, enter new markets and reconnect their products and services with more demanding and knowledgeable consumers. This is where the model of CVC can benefit enterprise both small and large. In the lockdowns of the pandemic, we consumed a greater amount of digital content. Bill Gates’s 1996 prediction that “content is king” has never looked more prescient. Today’s exploding demand for content has created an opportunity to rethink how independent producers or small businesses collaborate with each other. Meanwhile, the large content conglomerates are dedicated to finding new creators of unique stories – talents that abound in Latin America. A notable example is how Netflix transformed its model from pure distribution, becoming a co-producer of original local content to attract and retain subscribers and enter new markets. Netflix quickly learnt that combining its role as curator of existing productions with investing to co-produce content is a model…

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