Editor's note: Ramphis Castro, no relation to Cuban leaders, is a Kauffman Fellow and founder of Mindchemy, a startup bringing technology entrepreneurship to the developing world. He is also the managing director for the Founder Institute NYC, the largest conception phase accelerator in the world.
(CNNMoney) – A recent event at the Hotel Panorama in Havana provided a unique insight into the future of Cuba. Some 50 aspiring business owners attended Cuba's first-ever Startup Weekend, listening to presentations, taking part in workshops and refining business models. Listening to the young entrepreneurs in attendance reinforced my conviction that Cuba is a huge opportunity for venture capitalists.
Over the next decade, US venture capitalists will likely fund hundreds of projects in Cuba and find a way to bridge infrastructure deficiencies and work with the socialist government to help foster a new era of economic prosperity. If that sounds too optimistic, remember Vietnam.
After a long war that ended in 1975, Washington cut ties with Hanoi's communist government until 1995. Since then, the economy has flourished and venture capitalists, including US firms, have invested heavily there. American companies have invested $11.000 billion in more than 700 projects in Vietnam, ranging from manufacturing to hospitality. Intel, Ford and Microsoft are among the American companies operating in the communist nation.
Venture capitalists are looking for an opportunity that could rival the kind of explosive growth seen in Vietnam looking no further than Cuba. The seeds of that growth could be seen in the ingenuity and enthusiasm of those who participated in "Startup Weekend Havana." The event was organized locally through a grassroots effort and was like others that have been held in places like Burma, Afghanistan and the Palestinian territories.
Early-stage venture capitalists want to see two things: the pool of talent and the need for a particular solution. Cuba has both and in abundance.
In Cuba, the flow of talent is deeper than in most of Latin America thanks to a free education system that has more than 47 universities and 400.000 students. A World Bank report credits Cuba with the best education in Latin America.
The need – or the problems that the new businesses will address – is clear after more than half a century in which the economy has been largely insulated. Cuba lacks basic infrastructure, such as reliable internet and even supermarkets, which means new business opportunities are limitless.
There are four main areas that can pay big dividends:
In Cuba you need everything from food to entertainment and transportation. An entrepreneur at “Startup Weekend Havana” launched an app to locate a pharmacy that has the drug you need in stock. There are opportunities to create businesses that offer everything from taxi services to dating platforms and concert listings.
Banking and financial technology
Financial services in Cuba are largely informal and present a huge opportunity for businesses that can make finance on the island more sophisticated.
Cuba is a leader in organic cultivation and agriculture with organisms that are not genetically modified, since isolation has meant the absence of genetically modified seeds. Businesses can use technology to scale these operations.
Tourism technology that connects people with experiences and services is another strong area for investment.
Venture capitalists can visit Cuba if they travel under one of 12 exceptions approved by the US State Department. Once there, you can get the lay of the land, seek out entrepreneurs who have been successful in small, state-approved activities (usually cash only), and begin to understand the opportunities and challenges ahead.
Anyone who doubts that there is an abundant race of businessmen in Cuba should familiarize himself with The package, a weekly hard drive that costs five Cuban pesos and contains the latest TV shows, music, movies, apps, magazines and news. Subscribers have 24 hours to download what they want before they pick up the hard drive the next day.
That's just one example of how, for half a century, Cubans have navigated the technological and logistical challenges of a primitive economy that has been semi-insulated by a US trade embargo, as well as Cuba's own restrictive policies.
Those lucky venture capitalists who visit Cuba will be like the Americans who went west during the gold rush, pioneering one of capitalism's last open frontiers. What we do is help entrepreneurs succeed by navigating their way through such difficult challenges.
Available on: http://cnnespanol.cnn.com/2015/12/11/por-que-cuba-es-adecuada-para-la-inversion/