Editorial Note: This piece was written and produced prior to Hurricane Fiona.
The Conclusion To The Study
The work of five entrepreneurial support organizations and a global foundation concludes a three hundred and forty-seven thousand and five hundred dollars ($347,500) incubation program across the island. Alongside these five organizations, and through a collaboration with Colmena66, the consortium has also published the case study titled “From Surviving to Thriving.” The study explores the current status of the domains of entrepreneurship shaping Puerto Rico’s innovation community. Led by Foundation for Puerto Rico’s Program Manager Anneliz Oliver Ortiz, the 56-page study explores the conditions on the island. It puts into context the reality facing entrepreneurs and aspiring business owners.
During a global pandemic and after a series of tremors that shook the south and southwest of the island, the study elaborates on the elements that have prevented the sustainable progress of the innovation economy for the past decades. The results of months of research, alongside data collected from 2020 and 2021 by local partners, the study not only provides a glimpse into Puerto Rico’s startup ecosystem but also exemplifies the opportunities for organizations to work together. Oliver’s passion for sustainable economic development, and the unique alliance between all organizations, forges a precedent for multifaceted incubation programs accessible to all.
[ en·tre·pre·neur] a person who realizes extraordinary value for themselves, their customers, and society. – Worthless, Impossible, and Stupid, by Daniel Isenberg (2013).
An Economic Overview
Since the beginning of the 1950s, the island of Puerto Rico has undergone radical transformations that impacted the economy, social edifice, and associations with neighboring countries. Subject to numerous economic shifts and transitory policies, the island has seen effervescent prosperity and the deepest troughs of its economic prowess. With more than 76 tax incentive policies passed since 1942 – designed to attract pharmaceuticals, spur manufacturing, and open new sources of risk capital – some of these fiscal projects have been phased out, amended, or have had their impact contested.
Through the Great Recession in the United States in 2008, several phased-out policies compounded their negative fiscal costs with a growing economic downturn and austerity measures that effectively laid off tens of thousands of government employees. These decisions and events impacted Puerto Rico while the island’s government continued accruing debt and veering toward bankruptcy. Unable to declare bankruptcy, the government accepted the debt as unpayable. A year into the restructuring process, a fiscal oversight board, a devastating hurricane, ongoing tremors, political turmoil, and a global pandemic welcomed the abated residents of Puerto Rico to 2020.
To Progress or Regress
In December 2019, Foundation for Puerto Rico, Centro para Emprendedores, Grupo Guayacán, INprende, and Causa Local, launched one of the most integrated joint efforts inside Puerto Rico’s entrepreneurial ecosystem. A grant provided by a global-leading entrepreneurial development organization, the Ewing Marion Kauffman Foundation, challenged the organizations to break down the barriers to entrepreneurship in disconnected and underserved communities in Puerto Rico. As Katerina Sánchez-Roig, Program Manager for Grupo Guayacán, stated: “After Hurricane Maria, the whole ecosystem stopped,” [1] and they had to turn the economic engine back on. Nevertheless, Kauffman Foundation asked to take it a step further. The grant required the organizations to leave their headquarters in the island’s Metropolitan Area and venture into the communities with a less robust support network for nascent business owners. The selected municipalities for this pilot were Coamo and Ponce.
This requirement sought to level the playing field for entrepreneurs across the island. In a recent interview, Oliver stated, “Our goal was to reduce the barriers to entry, increase the exposure of business owners to a culture of innovation, and democratize access to business aids and resources.” Before designing the Emprende360 program and conducting a case study on Puerto Rico’s entrepreneurial ecosystem, each organization had successfully forged an independent curriculum and programming for over two decades. Now, the organizations had to come together, communicate, and synchronize their programming activities to provide gradual & continual investments necessary for a sustained Puerto Rico ecosystem.
So, What Is an Ecosystem?
Babson College professor Daniel Issenberg defines an ecosystem as the structures, organizations, elements, and environment that aid in the development of an entrepreneur or anyone who desires to develop a business venture. A healthy startup ecosystem can serve as the precursor for competitive economies and innovation sectors in cities, states, or countries. Each ecosystem is different and leverages the inherent values and characteristics to foster creators and new enterprises. His methodology focuses on 7 Key pillars that compose a robust startup ecosystem: Market Potential, Networks, Access to Capital, Culture, Infrastructure, Skilled Talent, and Regulation.
Access to early customers allows new founders to test their service or product’s market potential. It serves as their first exposure to early adopters & clients and engages with field experts and distribution channels that will shorten feedback cycles. When it comes to communities with a significant diaspora, such as in the case of Puerto Rico, ease of access to each diasporic generation provides additional benefits to the success of new enterprises. These early customers transform into the support network for a new enterprise to thrive, develop, and find seasoned professionals to define their venture further. The networks that catalyze this process include trade organizations, legal & tax professional associations, technical experts or advisors, and other non-government organizations promoting competitions, business plan contests, and conferences.
Access to early customers allows new founders to test their service or product’s market potential. It serves as their first exposure to early adopters & clients and engages with field experts and distribution channels that will shorten feedback cycles. When it comes to communities with a significant diaspora, such as in the case of Puerto Rico, ease of access to each diasporic generation provides additional benefits to the success of new enterprises. These early customers transform into the support network for a new enterprise to thrive, develop, and find seasoned professionals to define their venture further. The networks that catalyze this process include trade organizations, legal & tax professional associations, technical experts or advisors, and other non-government organizations promoting competitions, business plan contests, and conferences.
For corporations on a path towards increased profitability or capturing an outstanding market share, other capital firms, such as Venture Firms, Private Equity, and Traditional Debt Financing, are paramount to ensure these enterprises can expand fervently throughout their market and abroad. Lastly but not least important, access to regulated and strong public capital markets serves as an essential key indicator for larger firms to access additional capital through issuing stocks and company shares for traditional investors to acquire. This process may be via the New York Stock Exchange in the United States or other international exchanges.
The only corporations from Puerto Rico listed on the New York Stock Exchange:
Coincidentally, the success of these first four pillars relies on the culture of the leaders in the ecosystem and the entrepreneur that begins their journey. Societal norms and values that promote low-risk tolerance, not speaking about your failures, or avoiding accepting & amending mistakes will contribute to a slower evolution within the ecosystem. In contrast, openly sharing success stories, creating visibility towards the paths forged by recent founders, as well as quantifying the wealth created & captured by members of the ecosystem will aid in not only increasing the international reputation of the ecosystem but developing a culture that sees entrepreneurship as a viable career option for all.
Nevertheless, a healthy culture, abundant capital, wide support networks, and access to early customers do not provide alone a strong enough foundation for new entrepreneurs. Without physical infrastructure for brick-and-mortar businesses to sell online, workers and skilled labor to travel to their workspaces, ports, and logistics providers to transport their merchandise, or economic zones and clusters that relieve the fiscal burden on business owners, the capacity of the ecosystem to progress is hindered. Accordingly, not all infrastructure pillars are restricted to accelerating commerce and exchange. It includes the institutions that develop skilled talent and human capital. Skilled and unskilled labor and continuous education for serial entrepreneurs and generational business owners help shift and prepare talent for ever-changing global landscapes.
Lastly, the government has an essential role in enacting policies that position their respective ecosystem as a competitive destination. Regulation that attracts & retains capital eases bureaucratic processes to start a new business invests in research & development, and provides jumpstart funds, sees a higher output of entrepreneurs & new ventures within their jurisdictions. Intelligent regulators can direct funds from a regulatory incentive framework into academia and research institutes and expand market networks and the quality of the infrastructure provided for entrepreneurs. However, a lack of solid bankruptcy law, property and workers’ rights, and contract enforcement practices might hinder the market potential of any new service or product developed in that startup ecosystem. Hence, making it less competitive.
Where does our ecosystem stand?
These seven pillars have an interdependence that allows any ecosystem builder or support organization to understand the needs inside their ecosystem. With more than forty variables contributing to an ecosystem’s performance, the Global Entrepreneurship Monitor Consortium has measured, since 1999, every element and published their finding in over 150 countries every year. Nevertheless, they don’t do this work alone and rely on academic institutions and nonprofit organizations to report and document their findings. Even so, they don’t do this work alone and rely on academia and nonprofit organizations to report and document their findings. The last published study on Puerto Rico’s ecosystem was in 2020, and these were the results:
Everything In Paper Is Beautiful: Filling in The Gaps and Adjusting to Circumstances
The program the organizations designed had one significant challenge ahead. It did not account for the tremors that battered the island’s south coast nor the global COVID-19 pandemic that engulfed the world. One of the leaders of a partnering organization, Katerina Sánchez-Roig, recalls kicking off their program with a Security Onboard in Ponce in January 2020. The Program manager recognized: “nos tuvimos que pintar de [2] empatía,” as they disseminated safety information and guidelines. Unbeknownst to them, their actions in January 2020, and their decision to transition to a virtual setting, enabled them to effectively enter a remote work environment before COVID-19 arrived months later. “We cannot afford to put at risk the life of a business owner or any of our partners,” Sánchez-Roig recalled when explaining to the groups their unconventional decision – at that time – to go fully remote.
Amidst this digital transition and reduced operating timelines, all organizations pledged to one rule: do not duplicate efforts. “This pledge,” Anneliz explained, “cemented [3] the importance of communication (among organizations) and the synchronization of curriculums.” This communication was not restrained to only the leading organizations. In fact, “during and after the program, we were actively seeking feedback and listening to the challenges participants were facing,” Oliver stated. Among the many challenges, a survey conducted in Q1 of 2022 by Colmena 66, “Levanta Tu Negocio,” found that 84% of businesses didn’t have an emergency fund and only four weeks of cash in reserves when the earthquakes hit[4]. Hindered by the damages of the tremors and the COVID-19 pandemic, the Emprende360 program was adjusted to serve each entrepreneur remotely and document the response of all entrepreneurial support organizations. After implementing the Emprende360, the case study “From Surviving to Thriving” published strategies each organization leveraged to continuously support the community during these perilous times.
Emprende 360: Collaborate and Thrive
Emprende360 is an economic development initiative focused on incubating and accelerating entrepreneurs through a streamlined eight-step program. The program combines the strengths and proven curriculums from established organizations in Puerto Rico into one compared to other incubators or accelerator programs. The complete program is led by: Foundation for Puerto Rico, INprende, Centro para Emprendedores, Grupo Guayacán, and Causa Local. The five organizations each represent one or more of the seven pillars of a startup ecosystem and, in some instances, have aided entrepreneurs of all stages in advancing their business endeavors since 1996. In a recent series of interviews with each organization and their respective directors, we explored the lessons and results of this program deployed during the 2020 tremors and the first year of the global COVID-19 pandemic.
Step #1: Teach A New Skill Set (#StartHere Weekends)
First, selected entrepreneurs attend a series of Startup Weekends oriented towards organizing skills and talents among the participants. Much like a hackathon popularized throughout Silicon Valley and colleges at the beginning of the internet boom, participants would immerse themselves for fifty-four (54) continuous hours in specific methodologies and exercises to validate their business idea, familiarize themselves with fast prototyping practices, and grasp the dexterity needed to start a business.
The team of Centro para Emprendedores directed the training and skillset formation for each participant. Seasoned entrepreneur Nerma Albertorio leads Centro para Emprendedores. Albertorio, the Founder of (CPE), is a previous restauranteur and publishing entrepreneur who founded the nonprofit organization in April 2011. Since its inception, she and her team have deployed over 100 Startup Weekends across Puerto Rico and raised over $3,000,000 in funds & donations. Furthermore, in the months following hurricane María, CPE provided technical assistance to over 200 businesses as part of FPR’s Cash Grant Business Program and began modifying their curriculums to include resiliency and disaster response education. This decision further catalyzed the organization to aid more than 1,000 entrepreneurs and start their entrepreneurial journeys.
Step #2: Tapping into Networks (Community I-Corps)
Second, participants are submerged into a two-month program dubbed Community I-Corps. The program led by Katerina Sánchez-Roig, Program Director at Grupo Guayacán, was initially designed by the Georgia Tech Institute of Technology in 2014. The program, Sánchez-Roig, expressed: “is a 5-Week customer discovery boot camp, where entrepreneurs interviewed one hundred (100) potential clients to validate their idea. Sánchez-Roig recalls “the boot camp is an intense and emotionally consuming process.” During these five weeks, the participant must continuously adapt and iterate their product and service to their target client’s needs as they repeatedly validate and test their idea.
Grupo Guayacán is a nonprofit organization established in 1996. In the past 26 years, the organization has transitioned from one focused on providing capital for growing businesses to a multifaceted entrepreneurial support organization with several programs and resources. Their core programs and offering include Enterprize, Guayacán Venture Accelerator, and I-Corps. Enterprise, established in 2005, provides a platform for new entrepreneurs to participate in business competitions, business plan competitions, and access to mentors.
The Guayacán Venture Accelerators, first launched in 2010, focused on the vacuum of education and workshops oriented toward family-owned, family-operated, and growing enterprises looking to take their business to the next level. “Most of these companies had a plan. Still, they did not know how to execute nor drive their enterprise forward to their chosen destination,” Sánchez-Roig elaborates.
With more than three active programs and two adapted curriculums for Emprende360, Grupo Guayacán has been able to serve through Guayacán’s entrepreneurs. Some alums successfully passed through Guayacán’s programs include Cidrines, Atención Atención, INVID, Rock Solid Technologies, Island Wide, and many more. During the Emprende360 Program, 32 companies entered their programming schedules, and 26 completed this phase.
Step #3: Assess Market Potential (Validation Bootcamp Toolkit)
Third, with a list of potential clients validated and a new skill set for fast prototyping, participant entrepreneurs were then presented to the team of INprende. Led by Natalia Bonderenko, Executive Director of INprende, every participant was provided with a toolkit composed of physical and digital tools and one month to develop and plan their business model. Every participant would engage with the potential clients sourced throughout the Community I-Corps stage and quantify their potential revenue streams, cost structures, and distribution channels throughout this step. Bonderenko stated that during this step, one of the biggest lessons for participants is learning that: “in Puerto Rico, there are funds, there are resources available, and we only need to learn how to use them for economic development properly.” The best way to achieve this, Bonderenko mentioned, “is by developing a coherent ecosystem that has a beginning and a continuous process so that every person can operate and develop their business.”
INprende, founded in 2015 by Alessandra Correa, a serial entrepreneur, developed an entrepreneurial toolkit packed with physical and digital tools for anyone to build their own business. In the past seven years, the for-profit organization has aided over 1,500 entrepreneurs to start their journey, deployed over 50 gratuitous programs, and forged strategic partnerships with banks, academia, and public government organizations. The driving force behind the organization’s commitment to the island is rooted in the premise that all entrepreneurs can prosper as long as they’re appropriately educated, committed to change, and giving back to society [5]. However, the passion behind INprende’s team does not cloud the goal ahead. As Bonderenko expressed”, “Puerto Rico still has a high rate of people desiring to build a new business […], but we’re not seeing it translated to actual businesses being established.” She then stated, “these rates need to be proportional.”
Step #4: Navigate Regulative Frameworks (StartingUp in Puerto Rico)
Befitting the frustration most entrepreneurs expressed throughout the Emprende360 program regarding permits and government bureaucracy, the fourth step of the program tackles the paperwork of establishing your business in Puerto Rico. As the second programming component led by Centro para Emprendedores,” Nerma Albertorio recalls her opening message to all founders, “no nos quedemos con las ganas” – or “let’s not leave ourselves wanting.” Government bureaucracy, identified by over 80% of the participants as the number one hurdle to beginning operations, Centro para Emprendedores and their team invested two months in ensuring all applicants understood the regulations and permitting processes. Although formal corporate registration was not part of the requirements, business owners were encouraged and educated when they did. During a series of eight workshops, participants delved deep into the mechanics of business law, permits, accounting, payroll, compliance, and tax obligations, as well as other business opportunities that could ease the selected operating framework of their business. Alongside the legal advice and mentorship provided by Centro para Emprendedores, their workshops included the opportunities to legally sell online.
Step #5: A Digital Transformation (Digital Presence Workshops)
The fifth step of the Emprende360 program was designed to expand the digital presence and offerings for businesses reliant on traditional in-person and brick-and-mortar operations. Led by Gio Camacho and Alan Taveras, participants received an entire month of technical assistance and workshops oriented toward marketing and online presence. From clothes, tourism experiences, and an equestrian business, each participant explored unique platforms to showcase their enterprise through the internet and social media to strengthen their brand and digital strategy.
Step #6: Get Feedback & Iterate (Community Enterprise)
The sixth step of the Emprende360 program begins when participants have developed their idea, and some have started introducing them to physical and digital marketplaces. Each participant, Sánchez-Roig, explained, “has seen their idea transform, and they have learned to listen to what the market wants and the consumer needs.” Sánchez-Roig recalls the shift entrepreneurs underwent as they began practicing thought and action inside their organization, a complex and happening process, specifically when the entrepreneur has been developing their product for months.
The original design of the Emprende360 underwent adjustments to respond to the circumstances faced after the tremors and the arrival of COVID-19 in Puerto Rico. Initially, the Enterprize component, designed in 2005, would start with a series of interpersonal lectures and transition to a business plan competition and other forms of competitive engagements. “With tender love and care,” stated Sánchez-Roig, the founders were exposed first-hand to the culture and lessons of the startup ecosystem in Puerto Rico. Grupo Guayacán adjusted the seven (7) month curriculum to two (2) months. This summarized curriculum aided founders to progress faster through the lessons provided by Grupo Guayacán and improve their communication skills with team members and other educational assets. At the end of the Community Enterprize, each participant finished with a seven-minute pitch that enabled them to go on in front of judges, and industry experts, pitch their business, and raise capital.
Step #7: Access to Capital (Access to Capital Program)
The next step in the Emprende360 program is designed to aid entrepreneurs in understanding their finances and how to access capital. Through h two months of financial literary courses, each participant weighs the best course of action to raise funding. For these early-stage startups, the three options presented by the team at Causa Local & KIVA are:
Zero percent interest microloans.
Crowdfunding through Kickstarter or Indiegogo.
Crowdlending through platforms like WeFunder.
Ana Maria Cintrón mentioned, “what blows my mind is that you can now raise $5M (on the internet) through WeFunder in a matter of days.” At the same time, Cintrón stated that KIVA, the global platform for micro-lending, democratized access to non-traditional capital by “injecting capital from all over the world into our community.” “These interest-free loans help build the founders’ credit and allow each of them to repay a year later,” she clarified in the past eighteen months, Causa Local, through KIVA, has disbursed over nine hundred thousand dollars ($900K) in loans, “at a time where most businesses needed $10,000.00 to survive the crisis,” Cintrón stated, emphasizing the damage created by the tremors preceding the global pandemic.
“There is an opportunity,” Cintrón mentioned, “to help these entrepreneurs reach the level of profitability where they would knock on the doors of larger venture firms, angel investors, and private equity firms. In a recent Impact Report published by Causa Local, the $900K disbursed in 2020 and 2021 generated an economic impact of one million and seven hundred thousand dollars, $1.7M. The nonprofit achieved an economic multiplier effect of 1.88X for every dollar loaned at zero percent interest. Since the organization’s start, KIVA and Causa Local have disbursed over three million dollars ($3M), funded over 200 early-stage entrepreneurs, and sustained a ninety-seven percent repayment rate (97%) to all lenders.
Cintrón elaborated on her experience during the Emprende360 program and shared one of the lessons learned when engaging with potential funders and investment-hesitant founders. Local business owners “must lose the fear of raising capital; otherwise, you don’t have a scaling and growing business. You have a costly hobby in your backyard,” Cintrón expressed. These remarks are rooted in the belief that there are two ways of “me “ring the impact of a dollar invested in a small business: (1) Return on Investment and (2) quality of life. “When we invest in business owners, you are also investing in yourself […] and sustaining the quality of life you experience today,” explained Cintrón.
Step #8: Forging A Runway (Technical Assistance and Individual Support)
With a 7-Minute pitch ready, and the potential options for fundraising explored, the last step before demo day was led by INprende. Natalia Bonderenko and her team took each founder to their drawing board and designed the next 12, 24, and 36 months of their ventures. During this design process, each company elaborated an investment plan, financial projections, and potential opportunities to accelerate sales and brand placements and designed a complete action plan for the future. Armed with these tools, each of the founders that made it to this stage was now prepared to showcase the results of 12 months of programming. In a recent interview, Bonderenko shared one of her biggest lessons at the near end of this program, “Aquí si hay deseo y compromiso para innovar y crear nuevos negocios.”.
From a starting cohort of 32 participants, Emprende360 closed off one year of programming in December 2021, with eleven (11) companies graduating. These corporations include equestrian therapy, e-commerce for tailor-made clothes, artisanal cosmetic products, ketogenic-friendly desserts, electronic gaming, and outdoor tourism activities. As the program came to a close, the challenge set forth by Ewing Marion Kauffman Foundation was met. The organizations impacted entrepreneurs from all socioeconomic backgrounds, geographic locations, and industries outside the metropolitan areas.
Leading The Cohort
One of the beneficiaries and alums of Emprende360 is Giovanny Sanjurjo of PR SOAR. Giovanni, an avid explorer, and adventurer with experience in developing nature & tourism ventures, returned to the island after four years of exploring and living in California and Florida. Obtaining certifications in outdoor recreative education in Colorado and California, Sanjurjo reminisces “that my love for nature started when I was young.” As a Niño Escucha (Boys Scouts of America), he learned to “love and respect nature early.” During his time at college, Universidad de Puerto Rico, Recinto de Ponce, “I would often plan weekend trips and take all my classmates to saltos, hikes, and other secret spots that Puerto Rico has to offer,” Sanjurjo affirmed. It was not until he became a certified outdoor recreation professional that he saw the potential to turn his passion into a business.
Although his first venture failed, Sanjurjo expressed during a recent interview for BASED that “Emprende360 allowed me to try one more time.” With his certifications ready, and at a time when citizens craved getting outside of their homes, Sanjurjo developed three types of services for anyone interested in submerging themselves in nature, certifying themselves in safe camping plus rappelling practices, as well as a complete course on sustainable systems, like the Leave No Trace philosophy, for explorers and groups. During the Emprende360 program and the months after, “PR SOAR generated over $3,000 in revenue and is setting up a foundation for the next expansion of their venture.”
“My dream is to expand our operation to include camping sites across Puerto Rico,” Giovanni stated. As the founder of PR SOAR, he continues to operate for more than one year after graduating from Emprende360. Currently, he is working from Isabela and soon launches in Ponce, where he plans to expand his business into agrotourism and hospitality. “My dream is to build a camping circuit across Puerto Rico with four main destinations,” Sanjurjo shared. This next phase of the project, he dubbed BaseCamps, would serve as an opportunity to increase internal tourism, connect with agricultural lands and practices, obtain certifications from PR SOAR, and enjoy unique experiences paired with camping opportunities. Sanjurjo shared some rough numbers at “the end of the interview and disclosed that “We would need to raise somewhere north of four hundred thousand dollars,” the capital required to deploy at least our “Basecamps” across Puerto Rico and employ additional staff. When PR SOAR reaches that goal, the enterprise is poised to become one of the first companies of Emprende360 to raise a Seed Round.
Programming & Businesses Impact
The culmination of Emprede360 and its graduates highlights the importance of communication between entrepreneurial support organizations and the potential for further collaboration. This program serves as a call-to-action with a graduation rate above 30% during this first programmatic effort and a suite of tools made readily available through their case study. As entrepreneurial-support organizations rise in dense urban and metropolitan areas, yet indicators for entrepreneurial development lag behind neighboring counties, the first-hand experience of these leading organizations serves as examples to follow and emulate.
Narrating their lessons in a 56-page study, Anneliz emphasizes the “importance of taking these experiences from adversity and strengthening your proposal when you design your support program.” The case study summarizes and addresses the best practices for organizing, coordinating, deploying, and measuring economic development programs when disaster, uncertainty, and pandemics strike. With the hope of seeing additional ecosystems similar to Puerto Rico and leaders located here adapting these findings, Oliver-Ortiz accentuated their readiness to collaborate: “aquí estamos para brindar apoyo y ayuda.”
