The worse the economic circumstances, the greater the opportunity for startups – maybe. Does this story about Puerto Rico point to a way for helping disadvantaged areas in the UK ?In Puerto Rico’s deepening recession, two small startup generators, funded by a local trust, have begun to make an impact on its dire economy.

 Puerto Rico has suffered from continuing problems for a number of years, losing 10% of it population over the last 10 years as workers left the island in search of better jobs elsewhere; and since the Hurricane in 2017, another 4% have followed. Garment factories closed in the 1980s and 90s, changes in the US tax code caused large corporations and their factories to leave the island, and it fell into a long recession from which it is yet to recover. Puerto Rico used to import 85% of everything it consumed; and after the Hurricane that figure rose to 95%.

Brainhi was conceived in the immediate aftermath of the Hurricane. Two individuals found connectivity in a small strip of the island and worked from the street to create a company that automated communication with doctor’s offices. If a human receptionist did not pick up the phone, Brainhi’s artificial chatbot would step in to answer questions, helping the offices that were severely understaffed after the hurricane.

It got its start as one of the companies in a startup accelerator programme in San Juan organised by Parallel18. For a little over three years, Parallel18 has worked with 168 startup, each of which receives $40,000 in equity-free funding, co-working space and coaching. It also started a pre-accelerator programme after Hurricane Maria, to foster local startups in earlier stages of development. The aim is to power a new wave of locally owned businesses that are resilient enough to weather future turmoil; and the numbers suggest that this may be working.

A resource hub for people trying to start new businesses in Puerto Rico called Colmen66 and Parallel18 have offices next door to one another; and both receive funding from the non-profit Puerto Rico Science, Technology and Research Trust.

Brainhi’s founder graduated in Puerto Rico but was one of the few in his class and among his friends who stayed in the island. Now he is attempting to reverse the tide. Helping people to come back to Puerto Rico and rejoin their families has been a heart-warming experience, he says.

Parellel18’s Outreach Manager hopes that by building a startup system across the Caribbean, they will be better prepared to deploy regional solutions in response to future hurricanes. Together with Facebook, Parallel18 is making plans to begin Startup Hub Caribbean, which will be the first accelerator that Facebook has set up in the Caribbean. [Facebook Accelerators generally relate to startups that support Facebook’s core business eg the development of apps.]

Maybe disasters are indeed an opportunity for startups. Shouldn’t the UK’s Department of Business be getting Nesta to commission say Startupbootcamp or Techstars to set up organisations like Parallel18 in areas of high unemployment in the UK?

(Excerpted from the New York Times)  

 John Whatmore, May 2019