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Legislation that supports entrepreneurship: Is it really necessary?

The Development Center of the Organization for Economic Cooperation and Development (OECD) in its study “Startup Latin America” details that the countries of the region still invest little in science, technology and innovation. The investment in research and development (R & D) of each country on average with relation to GDP went from 0.63% to 0.74% between 2009 and 2014, contrary to the countries that are part of the OECD that invest around 2.3% of the GDP in R & D.

Emerging companies

Government policies in some countries of Latin America on the promotion of emerging companies is generating new information to better explain this phenomenon, for example, Chile, according to data from the Corporation for the Promotion of Production (CORFO), has 1 unicorn , 4 centaurs and 31 little ponies; On the other hand, Mexico, according to data from the Mexican Association of Private Capital (AMEXCAP), has 1 centaur and 26 little ponies. These data are comparable only with powers such as Singapore that have a universe of approximately 1,000 “start-ups” with 2 unicorns, 12 centaurs and 27 little ponies.

In spite of the excellent entrepreneurship ecosystems that Chile, Argentina and Mexico have, the rest of the countries of the Latin American region are not on the same page, the “start-ups” are not born by spontaneous generation, they need public policies , institutions and networks for its creation and expansion, as well as the existence of a good scientific base, a favorable business environment, legal security and a financial sector available to invest in high-risk projects. According to the OECD study, the five areas in which public policies to support the entrepreneurial ecosystem should be promoted are the following:

Financial gap

Information asymmetry

Absence of demand

Scarce business and innovative culture

Legal and administrative barriers.

El Salvador currently has programs and initiatives promoted by various institutions from both the public and private sectors, unfortunately many of these efforts are scattered, which does not allow the substantial impacts needed by the Salvadoran entrepreneurial ecosystem.

Supporting entrepreneurs

That said, it becomes imperative to create legislation that regulates and allows the development of the areas previously identified by the OECD, such as the creation of effective seed capital programs, incentives to the financial sector to support start-ups. , promotion of venture capital (VC), angel investors, collective financing, support services for entrepreneurs, such as platforms, mentor networks, connection platforms between large taxpayers and start-ups, reforms of legal and administrative systems focused in response to the different requirements of the start-ups. Thus, after more than 12 months of various efforts, El Salvador will begin with a broad technical process that will include the development of the draft legislation that supports the entrepreneur ecosystem that will regulate some of the following areas.

  1. Creation of a registry of institutions that support the entrepreneur ecosystem (RIEE)
  2. Tax benefits (BIM)
  3. Mixed fund for the financial development of the entrepreneurial ecosystem (FMIX)
  4. Collective financing systems (SIFICO)
  5. Reforms to the Salvadoran corporate system for the inclusion of the Simplified Shares Companies (SAS)
  6. Constitution and express registration of corporate vehicles (CYREX-VS).
Published inStartups

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