Palermo Valley: Where Creativity and Venture Capital May Meet

This afternoon on West 56^th Street, the Argentine Consulate was buzzing with activity. A good number of entrepreneurs, lawyers, venture capitalists, and hedge fund managers gathered for the first meet-up of Palermo Valley in New York. The host, Philip Hordijk, a Dutch entrepreneur and globetrotter, introduced the audience to Palermo Valley.

Those lucky to have visited the beautiful city of Buenos Aires, Argentina conjure up stimulating visuals with the mere mention of the name Palermo, the largest barrio of the Argentine capital. While Palermo’s urbanism dates to the 16^th century, its urbanity developed through the centuries. Today one distinguishes the palpable sophistication of Palermo’s inhabitants in the creative designs of its bars and restaurants and in the creative production of web-production agencies based in the neighborhood.

According to genuine Argentine, and co-presenter, Lucas Lopatin of United Virtualities (http://www.unitedvirtualities.com/) the world is seeing “Argentina as a digital production-outsourcing hub” thanks to Palermo Valley. Lucas demonstrated that Western agencies outsource work primarily based on reliability, then quality, and finally costs, in order of priority. When the job needs to get done, cost may even become irrelevant, while “Argentina delivers on time.” It does not hurt that Argentina is only 20% more expensive than Asia but 50% less expensive than the US. Ironically, its own financial crisis just a few years ago has helped this sector of the digital industry grow. Considering that Argentines share our Western culture and are only one hour ahead of New York, it is not hard to imagine that outsourcing projects to friendly and reliable porteños contributes to successful project management. This is the reason agencies return to the Argentine creative designers for more, either in the field of strategy and creative direction or execution and project management.

The caveat: Infrastructure in Argentina is still lagging behind. “No internet” days are common but easy to laugh off, since there are back up servers at various locations (including the US). In addition, wi-fi connections are always booming in the streets of Palermo allowing project managers to “remain on the grid.”

What distinguishes Palermo Valley from Silicon Valley is the stream of capital. There are plenty of start-ups in Palermo and vivid enthusiasm for new projects. Outsourcing has been a catalyst for this community of creative minds as they have been sharpening their skills in strategy, creative thinking, and implementation/product development. In addition, they have been absorbing new business models and their lessons as they travel to them from their clients. Despite the abundance of start-ups, capital in either form of angel investing or venture capital is scarce in Argentina. There are very few Venture Capital funds in Argentina (perhaps no more than six or eight) and only two among them are US-based. This sounds like a great business opportunity for US investors. If not anything else, the first step would be to either visit Buenos Aires or connect with the people who run Palermo Valley.