Galicia Ventures: Argentina moving from fintech “experiments” to scalable opportunities

Argentina’s fiscal troubles have made the country into an “experimental lab” for fintech entrepreneurs, but now, if the economy begins to stabilise, more of these startups might become interesting investment opportunities, says Sebastián Spena, managing director of Galicia Ventures, the corporate VC arm of Argentinian financial services company Grupo Galicia, on the CVC Unplugged podcast.

“Argentina has been one of the top five countries with the most macroeconomic crises. When you see that, you understand why [on] the other side of the same coin is a lot of guys trying to start a new business to maybe avoid the crises because they want to prosper in life, and they cannot do it in the current market conditions,” says Spena.

Argentina has long been known for its high inflation rates, which have stretched across multiple governments and policy regimes. The resulting economic instability – including a byzantine network of exchange rate systems – have meant that entrepreneurs have had to find new ways of doing things.

In many ways Argentina has been a perfect place to experiment. Regulations, currency controls and runaway inflation are problems that create fertile ground for people who want to find solutions to them, says Spena, especially when combined with a well-educated talent pool.

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That is why, for example, the Argentinian market was an early mover in terms of cryptocurrency and blockchain technology, searching for ways to get around challenges involved with cross-border payments or foreign exchange volatility.

However, the financial instability has meant that many good entrepreneurs have opted to start businesses outside the country in other regional markets like neighbouring Brazil, Chile or Mexico.

“Argentina in the last eight years [or so] has become kind of an experimental lab where they test their ideas, they see if it has fit, they keep the talent, but then they go outside the country,” says Spena.

Political change

This might be about to change.

In 2023, Argentina showed it was not immune to the worldwide trend of incumbent heads of state being booted out of office. After Javier Milei, former firebrand personality and self-described anarcho-capitalist economist, assumed the presidency, a “shock doctrine” of cuts to public spending and regulation has managed to reverse the trend of runaway inflation.

While this has controversially come at the expense of some of the most vulnerable in Argentinian society, it has also alleviated some of its most chronic – some would say definitional – economic problems.

“ What we see is that the economy has changed in the correct direction. You can maybe question if the pilot is the correct one, or if the speed you’re going is the correct one, but definitely it is the direction the country needed. It was kind of like stopping before the pitfall,” says Spena.

Galicia Ventures

Galicia Ventures, started just over two years ago, has backed nine startups to date, many of them outside of Argentina, such as Colombian AI-powered accounting platform provider Simetrik and payment management startup Payana, also from Colombia.

But Argentinian startups also feature in the portfolio, including food delivery accounting platform developer Fudo, cross-border payment technology provider Remitee, agricultural analysis technology company Eiwa, and last-mile logistics services startup Moova. Spena says he would favour investing in more startups like this in Argentina.  

With a focus on fintech and agtech, the unit invests up to $500,000 in early-stage startups across Latin America, with a mandate to focus roughly 70% of its activity on disruptive technology that the corporate doesn’t have its eye on yet, while having 30% on more short-term revenue generative prospects.

The venture investment activity is complemented by a wider open innovation initiative focused on forming partnerships between the corporate and startups.

Galicia Ventures factfile

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