"Discover why innovation expert Dan Herman believes the best fintech startups are emerging from Latin America and how AI is shifting the global economy."
(This story was originally published April 26, 2026 in Latin newspaper Estadão)
Canadian innovation policy expert, professor, and documentary filmmaker Dan Herman argues that the recipe for creating successful startups in any country is to encourage them to be globally competitive. Herman cites the case of Nubank , created in Brazil, which is taking its first steps in the United States after obtaining a license to operate as a bank in the country earlier this year.
“Particularly in finance, American and Canadian companies have always felt secure. Now, we are going to learn that the best technologies, especially in fintech, come from Latin America. Whether it's open banking in Uruguay or innovations in Brazil, the world is about to realize the potential that comes from São Paulo and the region,” he says.
Herman is a strategic consultant on innovation policy at Northguide Inc. and Startup Genome, drawing on his experience as head of innovation policy in Canada, where he helped shape the country's innovation and skills blueprint, as well as his role as special advisor to the Government of Ontario and later as executive director of Intellectual Property Ontario. He also teaches at the Munk School of Global Affairs & Public Policy at the University of Toronto.
According to him, the world is at a point where innovation can come from anyone and anywhere, including countries that were not previously known for creating global or disruptive businesses.
According to Herman, companies and countries must accelerate investments in innovation to find new business partners in the face of the turbulent geopolitical landscape.
"Although this period of uncertainty always has an immediate effect on balance sheets, with companies concerned about ensuring they don't lose their markets in the short term, they will fundamentally need to find new business partners due to trade difficulties and geopolitics," he says.
Q&A
What I see happening in places like Brazil, Colombia, Argentina, and Uruguay, and in emerging markets around the world, in Africa, Latin America, and Southeast Asia, is the development of startups and ecosystems that are as competitive, technically competent, and, in some cases, transformative as any other. However, if you live and work in North America or Europe, you tend to think that none of this could come from those places. Let me share a very good example: Nubank, from Brazil, is coming to North America and the United States. I talk to fintech companies from Colombia, Mexico, and Africa that are coming to North America because they want the market here. I believe this is part of an absolutely transformational shift that has occurred in the last ten years in technology, where suddenly these places that weren't on the global innovation map are now present and, in some cases, will redraw the map.
I believe it will be the opposite. While this period of uncertainty always has an immediate effect on balance sheets, with companies concerned about ensuring they don't lose their markets in the short term, they will fundamentally need to find new business partners due to trade difficulties and geopolitics. Canada, for example, is a country and an economy that, for almost 70 years, has sent about 80% of everything it economically produces to a single market, the United States. We always knew this was a problem, but it was only in the last 18 months that we realized we needed new friends. Thus, our companies need to travel the world and find new partners. But, in doing so, they need to be the best. Often, in every market, we think that if we are number one in Brazil, we will be number one in Canada, but often we don't know what is happening in those markets. Therefore, for companies worldwide, this period of uncertainty means they should invest more in innovation.
I believe so. As every policymaker tries to encourage, the recipe for building successful startups is to create businesses that are globally competitive. Those who work in economic policy want to create companies that will eventually go from São Paulo to Toronto or New York and bring capital back to São Paulo, and vice versa for Canadian companies. To do this, it's not just about technology or research and development, but about building a cohesive vision of how the world works. It's about having deep engagement and trusting relationships in these markets, so that people know they can trust you when doing business, whether in Brazil or Toronto. Innovation needs to meet the realities of how human beings interact and how we build trust and social engagement.
From a Canadian perspective, given how dependent we were on the United States, we now need to build engagement everywhere else. Think of the connections between Latin America and Africa, between Africa and Southeast Asia, or the Gulf. Before, we considered all these places as small markets. Now, they are huge, growing markets with which we need to build social engagement to establish long-term, trusting relationships.
We dealt with this issue during my years in government. We like to think that we will see an immediate impact of an innovation investment policy on business growth and, consequently, on GDP per capita or productivity. Ultimately, these are the numbers we want. We want people in our countries to feel more prosperous and have more resources available to them. For this to happen, we need companies selling something that others want to buy. Thus, the immediate measure of innovation policy is the success rate of our companies. How many of them are becoming global, how many are exporting, and how many are creating jobs domestically.
In the medium term, we can measure the contribution of these companies to productivity data, but how does multifactorial productivity, which combines technology and labor, and, fundamentally, how does this affect people's income? That's what matters. If people don't have enough for their basic needs or don't feel prosperous, we lose focus and our innovation policies cease to be relevant.
For about 20 years, the Canadian innovation system has grown rapidly, but we have always struggled to create large companies. In 2015, a new generation of technology emerged, especially software-as-a-service (SaaS) and e-commerce companies, led by Shopify, but there were few examples. In government, we thought about how to help build a new generation of scale-ups (startups in the expansion stage) . We created programs to develop these companies because we already have a very rich ecosystem for research and early-stage startups. The challenge has been how to transform these companies into organizations that can go overseas, conquer markets, and bring profits back home.
We've been working on this from a public policy perspective for 15 years, and now we see a long list of companies with revenues exceeding US$100 million worldwide. However, we still don't have that class of recognizable companies that someone in Brazil would readily say, 'Yes, I know they're Canadian.' We have some, but there's still a lot of work to be done to create them.
What we did very well in Canada was focus on talent, attracting the best and brightest people in the world. Technology, business building, and innovation ecosystems depend entirely on people, on how intelligent, determined, and ambitious they are. And these people aren't just in São Paulo or Toronto; they're everywhere. There's a huge global race for this unique talent. In Canada, we changed our visa policy for technology and researchers to make moving to the country very attractive, which sustains the growth of our ecosystems. Our current government also works to ensure sufficient capital, both for early-stage entrepreneurs—since starting a company is a lonely and difficult task—and for the growth phase. When a company reaches 500 employees and two markets, it needs domestic capital to reach 10 markets and 5,000 employees, keeping profits in the country.
The third element is ensuring access to cutting-edge research. I was CEO of an intellectual property agency where we helped entrepreneurs protect their creations, but we also worked with universities to ensure that the knowledge produced by professors reached industry and had practical applications for the economy. The way we connect public research with entrepreneurs is something that some Canadian agencies do exceptionally well.
This is a problem worldwide. In Canada, unfortunately, one of our challenges is that the business sector has been a weak investor in research and development. We are lagging behind in this area, and we have created tax incentives to try to encourage them. However, fundamentally, what matters now is that we live in a world where you need to be exceptionally competitive. Perhaps a company has a guaranteed domestic market today, and in Canada we were a little complacent because we had a comfortable domestic market and the world's largest economy on our side wanting to buy everything from us. But that world has changed. Now, we need to think about how to sell to Brazil, Nigeria, or India. To do that, you need to be as competitive as possible. These companies are realizing that they need to invest; otherwise, they won't conquer new markets, and secondly, the Brazilian company will come to Toronto and occupy the domestic market here. Competitive pressure will now separate the companies that survive from those that don't.
When I was in government, we grappled with this dilemma. We want to take risks, but at the same time, it's very difficult for the government to take risks. This is where political vision matters a great deal. When a head of state, like our prime minister in Canada, says we should be the most competitive economy, policymakers suddenly gain some leeway to define what is safe to do in the field of innovation. The risk is about intelligent or calculated risk. How do you allocate capital not so that the government picks all the winners, but to incentivize private sector actors to make the right decision? How do you build public procurement systems so that the government buys nationally instead of just acquiring from large multinationals? There are very intelligent risks that the government can take to facilitate the growth of its innovation ecosystems.
It's necessary to accept that, since there will be risks, there will always be some level of inefficiency. No system is perfect. However, we need to look at the public perspective on innovation and investment in the economy in the same way our Venture Capital friends do. They make numerous bets and understand that some will be lost. We should be willing to accept that, occasionally, we won't make the right investments or that we'll make inefficient ones. But we need to work to ensure that at least 90% are effective and that, at a minimum, we are creating the infrastructure for others to build upon.
Therefore, when discussing the relationship between industry, government, and academia, the real focus should be on how to create the 'connective tissue' between these agents, especially between academia and industry. The goal is for what we, as a society, envision and pay for in the form of research to have a direct application. There are many examples around the world, including excellent cases here in Canada, where we bring these two actors together and the government acts only as a facilitator. The government says: 'If you two are doing something together that is truly productive and has great potential, how can we nurture it so that it grows?'
Part of me thinks there's a sense of euphoria and that perhaps we're overthinking the issue. However, when you look at the capabilities of these new tools, you realize this is an incredible moment in history, where suddenly machines can do almost anything. From a public policy perspective, we need to think very carefully about how these new AI tools will impact the job market.
In many areas, we told young people: 'learn to program' or 'study to be lawyers'. Now, we see AI absorbing these components of the workforce. In this sense, we need to take this matter very seriously. We also need to reflect on who is creating these tools. Today, about 90% of investment in AI startups is concentrated in two places: Silicon Valley and China. For countries like Canada and Brazil, this should be a question mark. Do we want all our tools to be built by these multinationals? How do we create our own? We need to create vibrant ecosystems of AI startups so that, even if there is disruption in the job market, we still retain some of the profits to reinvest in our social and education systems, ensuring the creation of the next great technology after AI.
Actually, no. Everyone is trying to understand this, and there's a battle between optimists and pessimists. In economic history, there has always been the fear that technology would replace work, but we have been fortunate because, for 250 years, we have always created new forms and uses for human labor that have surpassed technology. Now, for the first time, we need to think: where are these new sources? Every country is trying to figure out how to reorient itself if lawyers and software engineers are replaced by these tools. What skills are needed to ensure that people remain productively employed? Fundamentally, from a public policy perspective, we need people to be happy and prosperous; otherwise, we will all face problems. Everyone is rushing to solve this. The French may be a little ahead, Singapore also has examples, but everyone is still trying to understand the real impact. At the same time, I reiterate: everyone is in a race to say that, although they know there will be disruption, they want to contain some of it so they can control it.
Traditionally, this has been the case. However, what we have seen, particularly with large technology companies, is a fairly significant reduction in personnel in a very short period. If you read the newspapers from the last few months, you will see many companies, both in technology and finance, replacing large portions of their workforce due to the adoption of these new tools. We may be at a different inflection point in economic history than before. Therefore, the pressure on policymakers is to react quickly and work with companies to ensure training and skills development programs, educating people so that they are always ahead of this technological disruption curve.
Whether it's an excuse or not, the fact is that we live in a capitalist society where companies have a primary objective that hasn't changed in a hundred years. Ultimately, some of these layoffs are linked to the desire to maximize profits, and that's the system we live in. How or why they achieve this is something for the boards of directors to decide.
I have two children, ages 10 and 13, and I think about this question all the time, wondering what I can do as a father for them. What would be the protected jobs? In Canada, for a long time, people didn't want to enter what we call skilled trades, like electricians or plumbers. Today, that segment of the workforce is exceptionally well-paid and respected, but there are few people available. So there's a great opportunity there. The other issue is that I believe that, despite the strength and power of AI, we will still need people who can think beyond it and help design and limit these systems. This is where expertise in real strategic thinking comes in; I don't believe that will go out of style. The challenge is how to create educational systems, not just at university, but starting in elementary school, that create a population that truly knows how to think and ask questions. If we have tools that make everything simple, we will need people who think critically about the societies and policies we design.
The ecosystem in São Paulo is exceptionally vibrant, and I'm actually very impressed with Brazil as a whole. I was in Natal at the end of last year and I know Florianópolis. There are truly exceptional ecosystems in Brazil, centered around São Paulo because it's the largest, but I believe the world still doesn't know much about it.
Those outside Brazil still think of it as a place of pleasant beaches and lush nature. Changing that narrative to say that, in fact, this is where the next big technologies and startups in the world will come from is the next chapter for São Paulo and the Brazilian ecosystem. This is already happening, as there is one company in particular now raising the Brazilian flag and arriving in North America, putting down roots. This will quickly open people's eyes. Particularly in finance, American and Canadian companies have always felt secure. Now, we will learn that the best technologies, especially in fintech, come from Latin America. Whether it's open banking in Uruguay or innovations in Brazil, the world is about to realize the potential that comes from São Paulo and the region.
Time is the most precious resource for all of us, especially when building a business. I've founded two companies, so I know how valuable time is. How you allocate it between building, selling, and networking is an individual choice. However, events like São Paulo Innovation Week or Toronto Tech Week are places where you need to be to make contacts. You need to meet the people who will be signing the checks and find clients. If you can't sell your product, you can have the best technology in the world, but if nobody knows about it, it's useless.
We filmed a documentary series called Magnetic Cities in 18 countries. The central thesis of this series was what I call 'everyone everywhere': for the first time in human history, every person, in every country, has the possibility of climbing the ladder of economic opportunity. It's no longer just about heavy capital or large infrastructures. Now, if you have a laptop, you can program something, build a system, write an application and sell it. It's the first time that everyone, everywhere, has this ability to create and market something.
Perhaps this is one of the best moments in history for this type of opportunity. Of course, many challenges still exist, depending on where you're from and what the local public policy framework is. But this opportunity is a huge new reality. At the same time, it represents both a chance and a challenge for everyone else. If you're in Canada now, we have a world of new competitors building the same tools and technologies that we once thought we were the best at. Therefore, we need to understand where these people are coming from and better understand what they are building. In this highly competitive world, we need to be much better at prospecting and learning what's happening. This has become more difficult, but simultaneously, there are far more opportunities today than there were 15 years ago.
