Costa Rica’s Entrepreneurial Ecosystem – Interview with Adrian Garcia and Allan Boruchowicz

Adrian Garcia and Allan Boruchowicz are the Founding Partners of Carao Ventures, an early stage venture capital firm and startup accelerator in the capital city of San Jose, Costa Rica. While their accelerator space is currently undergoing a major remodel to create the perfect environment for emerging companies to thrive, Adrian and Allan have already jumped into working with entrepreneurs and building up the San Jose startup community.

Both men were educated outside of Costa Rica and then returned to the country to develop their skills working at the premiere private equity firm in the nation. Having established themselves in the PE arena, they decided to leave the corporate world behind and create Carao Ventures to support the entrepreneurial community in Costa Rica and haven’t looked back since. These experiences give the pair a unique take on where Costa Rica’s entrepreneurial ecosystem stands in relation to those in the United States and in other Latin American countries.

Firstly, unlike many others whom I’ve spoken to throughout Latin America, neither Adrian nor Allan felt that access to capital was the true issue in Costa Rica. Rather, they felt that the entrepreneurs in the country need to develop their understanding of the entrepreneurial journey as it applies to high-growth companies  and to develop their ideas, their companies, and their skills in a way that would make them attractive to investors. Adrian put it simply saying:

“Money is never an issue when there are good ideas.”

They both do admit, however, that, “there’s a bridge that needs to happen between U.S. or developed economy-based VC money or institutional financing and Latin American startups.” Adrian describes the search for funding as akin to the dating game arguing that while,  “if you ask entrepreneurs they’ll complain that there’s no access to capital,” they feel that way because they don’t appreciate that you can’t just walk up to the first person at the bar, by them a drink, and expect them to be your soul mate, so to speak. To develop a good relationship it’s much more difficult and the same is true for entrepreneurs talking to investors.

Additionally, step one of building a successful relationship is to be prepared and to be an attractive potential mate, or potential investment, as the case may be, and both Adrian and Allan think that Costa Rican entrepreneurs need to work harder to be prepared before seeking out investment if they want to be successful. According to Allan,

“an American entrepreneur already knows what he needs to do before he approaches an investor. In Costa Rica, they don’t.”

He also feels part of this may be cultural. His take is that part of the culture in the U.S. is that people don’t have much patience so you have to come prepared to a meeting, whereas Ticos are much more willing to have a 4 hour conversation.

In addition to the differences between the entrepreneurs’ level of preparedness that both men mentioned, there are also quite a few structural differences between the United States and Costa Rica that affect the entrepreneurial ecosystem – some for the better, some for the worse. Firstly, the size of the market is clearly an obstacle for Costa Rican entrepreneurs. A U.S. based company can focus only on the domestic market and still have a huge number of potential customers to target. A Costa Rican company, however, really needs to look outside its own borders and be, at least, a regional company in order to be able to have even the hope of the success that would make the company attractive to investors. As Adrian says,

“we don’t encourage entrepreneurs to start a business that will focus on Costa Rica only because you won’t have the critical mass to succeed. You can’t really think of Costa Rica as your market, you need to look at all of Latin America.”

Additionally, because the startup ecosystem has not fully developed, it’s difficult to find lawyers, mentors, or other resources with experience focusing specifically on startups and the unique challenges they face. At the same time, however, Costa Rica has a highly educated work force coming from top universities, it’s within close proximity to and shares a time zone with at least part of the United States, and its workforce speaks very good English, all while salaries can be as little as half what they would be for equivalent talent in the United States.

So what do the two see for the future of Costa Rica’s entrepreneurial ecosystem?

“In 5 or 10 years I think the ecosystem is going to be about the same,” says Adrian, “but everyone – entrepreneurs, investors, incubators – will be able to play a better game. We’ll be able to play in the major leagues where right now we’re playing in the minor leagues.”

He doesn’t see any major catalysts that will change everything, but hopes that Costa Rican entrepreneurs and supporters, like Carao, will be able to connect the dots much faster with U.S.-,Europe-, or Isreal- based institutional sources of financing. “And we’d like to think that some people will remember or think of Costa Rica as a place to start a business.”

Allan expects to see the creation of role models. “In 5-10 years, to be realistic,” he says, “we probably will see a couple of success stories that will come from the private sector…maybe between 5 and 10 success stories of local entrepreneurs that followed the typical path, raised outside investment, go to accelerators in other countries, and come back and set up a regional business.”

And they both hope to be a part of that change through their work with Carao Ventures. “It’s like any other innovation,” says Adrian, “you have to take what others do best and try to adapt it to your own environment, and that’s what we’re trying to do here.” “I have this secondary objective of helping Costa Rica, but the first objective is to grow businesses,” states Allan. He continues,

“We know how to help businesses with potential realize their potential.” 


Do you have experience with Costa Rica’s entrepreneurial ecosystem? Let me know your thoughts on what Adrian and Allan had to say in the comments below.