How Venezuela has become an unlikely land of opportunity for tech startups

Ramos currently lives in New York, but is working with a team of engineers in Venezuela to build Dada, a social network that allows artists to make and share digital drawings. The site already has 80,000 drawings and will serve as a platform for artists from all over the world to license their work to companies like book publishers, retailers or anyone else who needs art for their products.

“I couldn’t have done this without Venezuela,” says Ramos, who has been working on the social network for the past two years, with a budget of under $300,000.

Her company is now in conversations with Apple to develop a Dada app that will work with the ipencil. “That will boost our number of users tremendously,” she said.

It’s not just programmers who come on the cheap. Diego Calvo, the 31-year-old owner of the Naked Language Academy, says he can hire cameramen for $50 a month in Caracas, a sum that sounds ridiculously low yet is nearly three times the minimum wage in Venezuela.

Few people at his company seem to be complaining about the wages. Most are in their twenties and are just happy to have a job that pays more than the local industry standard.

“This can be a land of opportunity for those who know how to navigate it,” says Calvo, who started out by doing infomercials for U.S. clients.

Calvo’s thrifty business empire also includes a “naked news” website where models strip as they read current events.  The site has a few thousand subscribers in Argentina, Mexico , Florida and Colombia, who pay $10 a month for access to booby news in Spanish.

“Our goal is to develop products in Venezuela that we can sell abroad (in U.S. dollars),” Calvo says. “That gives us the hard currency that helps us to keep growing.”

Despite the low labor costs and potentially high profit margins, doing business in Venezuela is still quite challenging.  Entrepreneurs say the country is full of problems that distract them from their work, such as high crime rates, faulty services, and even the lack of basic office goods.

Ramos, the Dada developer, says she was forced to close her office because it became too much of a hassle for her employees to get to work through all the crime and traffic. Now her Venezuelan software developers work from home.

“We had someone who was robbed outside the office three times,” Ramos said over Skype. “Then you also have to spend energy thinking about stuff like how you are going to find toilet paper for the office bathroom.”

Hernan Zapata a software developer who has run his business in Venezuela for two decades, says it has become increasingly hard to retain talent as young people try to emigrate to escape the country’s crisis.

“Most talented engineers will take the first chance they have to get out of Venezuela,” Zapata said.  “I used to be able to retain people for up to five years by giving the best ones a share in the company…but now hardly anyone lasts more than eight months.”

Zapata is currently developing an online platform that connects with cellphones and helps retailers see how many people are visiting their stores each day and at what times. He says he has to keep his data on a server in the U.S. to avoid losing information on Venezuela’s slow and unreliable internet connections.

“I’ve found a way of connecting to my cloud with a microwave system so that I don’t have to depend on local ADSL,” Zapata tells me over a coffee.

The challenges don’t stop there. Bringing dollars into the country and trading them for local currency can also be a problem for startups that want to reinvest in their business.

Calvo says he circumvents the Venezuelan government’s exchange controls by purchasing nutritional supplements in Florida with the dollars he earns off his websites, then he imports the supplements to Venezuela for resale in local currency.  Fortunately for Calvo, the Venezuelan government still hasn’t slapped price controls on his muscle building pills.

“I think we’ve been successful because we are used to this environment,” says Calvo, who has been running businesses in Venezuela since he was in college. “You won’t find some of the stuff I do in the good practices manual of a big corporation,” he jokes.

Despite the obstacles, dozens of tech entrepreneurs continue to find ways to make things work in Venezuela. In an economy where the government makes it hard to import physical goods, and regulates the price of many manufactured goods, there are strong incentives to invest in global tech services.

Wayra, a start-up accelerator in Caracas, says it has invested in 40 tech companies over the past four years.

Each year, it weeds through a couple hundred proposals then selects 10 companies that are provided with mentoring, a shared office space, and seed capital.

The accelerator is owned by Telefonica, a Spanish multinational that sells telecom services in 15 countries, and is hoping to use Venezuela as a testing ground for new ideas. Seven of its Venezuelan projects have already moved abroad, including an app that employs motorcycle owners as part time delivery men.

“We are looking for solutions to regional or global problems,” says Gustavo Reyes, Wayra’s Venezuela director.

Reyes says that the number of applicants to his program fell by about half from 2014 to 2015, as Venezuela´s economic crisis got worse.  But he still think companies with a good idea have a shot at international success. Access to U.S. dollars is also important, as there are operational inputs, like cloud services which must be paid for in hard currency.

“It’s cheaper to make mistakes in Venezuela than in the U.S.,” Reyes says. “And when you’re in a place with necessity and talent, entrepreneurship rises.”

Manuel Rueda is a correspondent for Fusion, covering Mexico and South America. He travels from donkey festivals, to salsa clubs to steamy places with cartel activity.