Student Sofía Gracia Hilario Nakasone defended her Final Master’s Degree Project before the evaluation committee of the Official Master’s Degree in Law, Business and Justice.

Legal mechanisms for the promotion and development of startups in Peru

In recent years, startups have become one of the main driving forces of innovation and economic development globally, thanks to their capacity to introduce groundbreaking business models and attract venture capital investment. This phenomenon has led different states to design specific legal mechanisms aimed at supporting their creation, growth and consolidation. Peru has not been oblivious to this trend: in the last years, the country has incorporated several legal mechanisms, both public and private, to foster its ecosystem. However, the mere existence of these instruments doesn’t guarantee their effectiveness. 

From this background, the Final Master’s Degree Project entitled “Legal mechanisms for the promotion and development of startups in Peru” arises. It was developed within the framework of the University Master’s Degree in Law, Business and Justice at the Universitat de València, under the supervision of professor Guillermo Palao Moreno. The research starts from a central question: are the existing legal mechanisms in Peru actually effective in promoting and developing startups, or do they present limitations that justify the adoption of new regulatory measures?

The work is structured into three chapters. The first establishes the conceptual framework, defining what a startup is from a legal perspective —its technological basis, scalability, and particular risk profile— and identifying the individuals involved in its ecosystem, from founders to angel investors and venture capital funds. This definition is key to explaining why startups may require a different legal treatment from traditional companies or small and medium-sized enterprises.

The second chapter analyses the legal, public and private mechanisms that exist in Peru and in Spain, the latter being used as a comparative reference because of its more articulated regulatory framework, centred on Law 28/2022, known as the Startups Law. While in Spain tax, work and corporate incentives coexist in a single regulatory body —along with the emerging enterprise certification managed by ENISA—, in Peru, existing mechanisms such as the StartUp Peru programme, ProInnóvate, or the Emergency Decree 013-2020 are spread across different regulations, without a comprehensive framework that articulates them. 

The third chapter, core of the research, assesses the effectiveness of the Peruvian mechanisms through an analytical framework, based on three criteria: the legal purpose of each mechanism, its legal design and its practical implementation. This methodology draws on the doctrine on regulatory quality and the recommendations of the OECD concerning the assessment of laws and regulations. The analysis reveals that the main problem of the Peruvian legal framework is not the lack of mechanisms, but rather the limitations that prevent them from efficiently achieving the objectives for which they were created: the high rate of early failure of startups, the small participation of private capital at early stages, the predominance of debt instruments over equity financing, and the lack of sectoral specialization among support entities are some of the findings that back up this conclusion.

This way, the research confirms its starting hypothesis: the limitations of the Peruvian entrepreneurial ecosystem don’t only answer economic or market factors, but also shortcomings in the legal configuration of its promotion mechanisms. In this sense, the work supports that strengthening the Peruvian ecosystem of startups doesn’t necessarily require the creation of completely new instruments, but perfecting, articulating and specialising the ones that already exist; a contribution that wants to proportionate, from Law, reflection upon how to support innovative entrepreneurship development in Perú.