I’ve talked a lot, on this blog and elsewhere (including VentureBeat, All Things D, and peHub) about the coming LatAm technology boom.  I still believe that great things are in store for the region, and I’ve detailed my reasons for this quite extensively.

But for a moment I would like to talk a bit about what tech leaders and public policymakers should look out for.  As we’ve seen around the world in the last few years, no economic growth can be taken for granted.  And in particular, new knowledge economies are vulnerable to a variety of pitfalls.  They are delicate in their early stages; without the right conditions, they can be killed off without ever having a chance to achieve their full potential.

Here are a few things LatAm has to guard against if it wants to ensure a strong tech economy in the years ahead:

Bad public policy

This should go without saying, but the most important things often do.  Policymakers across the region need to continue liberalizing their economies, encouraging privatization of previously state-run monopolies, and supporting efforts to make government more transparent.  Many of the states of Latin America have made great strides in this regard, but more must be done if they expect their new knowledge economies to flourish.

Closed LatAm tech communities

In many parts of LatAm, the tech boom is being led by elite communities, whether economic elites, academic elites, or business elites.   At some level, this is expected and even inevitable, but if the elites try to keep their communities and ecosystems closed, they risk losing the momentum needed to sustain a tech boom.  Growth needs a constant supply of new ideas, and the smaller and more exclusive the community, the harder it is to avoid groupthink.  Tech elites need to start looking beyond their narrow interests and toward larger, untapped sources of new ideas.

Small capital pool

In many parts of LatAm today, there is a notable lack of capital to grow tech-based entrepreneurial businesses (i.e. startups).  While this is changing, it is not happening fast enough.  There is no shortage of capital in Latin America, though some would argue that it is far too concentrated.  The main issue is that entrepreneurs need to convince investors that they can make significant returns by investing in startups.  The tech community needs to reach out to investors to show that they have businesses that deserve investment.  Just as businesses need customers, entrepreneurs need financing.

Shortage of exits (and éxitos)

One way that entrepreneurs can help improve the chances of a sustained tech boom in LatAm is by encouraging exits, i.e. liquidity events that allow investors to recoup and profit from their investments.  In practice for the moment in Latin America that means mergers and/or acquisitions.  Investors from North America and Europe are accustomed to exits after a certain timeframe — if they can’t see a reasonable path to recovering their investments with profit, they will be unwilling to take additional risks in Latin America.  And without exits (i.e. successes), more risk-averse investors will be unwilling to go too far out on a limb.

Lack of globally-scalable ideas

The first wave of LatAm tech pioneers was arguably led by entrepreneurs that wanted to capture their local market by using a business model from somewhere else.  In essence, then, many of these businesses were just clones of other businesses, adapted to local circumstances.  Recently, however, a few brave souls have dared to think bigger thoughts and attack problems outside the region.  It is vitally important that this trend continue.  Capital, exits, good policy and open communities depend on ideas that show vision and the ability to solve a huge problem, not just address parochial interests.  There will always be those that think small and achieve modest success, but the world belongs to those who think big.