Puerto Rico’s history is one of resilience, adaptation, and strategic importance. As a U.S. territory since 1898, Puerto Rico enjoys a unique position: it benefits from U.S. federal systems and protections while maintaining its cultural and legislative autonomy. This blend offers startups and entrepreneurs an unparalleled advantage — access to U.S. markets, legal frameworks, and capital, paired with the tax incentives and cost efficiencies of operating in Puerto Rico.
After World War II, Puerto Rico launched Operation Bootstrap, wonderfully using the term “bootstrap” well before its population in modern entrepreneurship, then, in transitioning its economy from agriculture to manufacturing, and later to services and innovation. This foundation fostered a culture of ingenuity and resourcefulness — traits critical for entrepreneurship. Today, the island’s tax-friendly policies, such as Act 20 and Act 22 (now consolidated into Act 60), provide additional fuel, offering incentives to companies and individuals who relocate to the island.
Puerto Rico in Innovation
The Commonwealth has emerged as a quiet powerhouse in several areas of technology and engineering. Historically, the island played a pivotal role in the pharmaceutical and biotech industries, hosting manufacturing facilities for global giants such as Pfizer, Amgen, and Johnson & Johnson. Its highly skilled STEM educated workforce, combined with affordable labor costs, makes it an ideal hub for innovation in advanced manufacturing and biopharma.
Puerto Rico has also become a significant player in renewable energy innovation; in which, with my roots in Texas, my attention was first drawn. In the aftermath of Hurricane Maria, the island adopted a proactive stance on rebuilding its energy infrastructure. Microgrids, solar energy initiatives, and resilient power systems have attracted clean tech startups eager to test and scale solutions.
As with most of the world in the time passed since internet experience emerged beyond Silicon Valley, the ecosystem in Puerto Rico is maturing, with emerging strengths in software development, fintech, and blockchain. Much of our assessment is drawing from the impact of the strong university system, particularly the University of Puerto Rico, which consistently produces top talent in engineering and computer science.
- At the UPR Medical Sciences Campus, the Biomedical Innovation Unit (BIU) plays a pivotal role in promoting biomedical research with commercial potential. The BIU assists in identifying ongoing research activities that can be commercialized and supports the protection and commercialization of new and existing patents.
- The UPR Mayagüez Campus (UPRM) is renowned for its engineering programs and research centers. The College of Engineering offers advanced laboratories for teaching and research, focusing on areas such as fatigue and fracture analysis, product design, and manufacturing processes. Research initiatives include the development of solar-powered vehicles, satellite imagery analysis for earth phenomena, and environmental impact studies of industrial toxins.
- UPR fosters innovation and entrepreneurship through various programs and centers. The Center to Foster Innovation and Commercialization adapts programming to support local entrepreneurs, helping them pivot and excel in changing environments. The Business and Economic Development Center (BEDC) at UPRM offers resources and support for business development and economic growth
More, UPRM is a significant center for tropical marine science research. Facilities like the Puerto Rico Water Resources and Environmental Research Institute and the Caribbean Coral Reef Institute (CCRI) support studies in marine ecosystems, water quality, and environmental conservation while The Puerto Rico Seismic Network, based at UPRM, monitors seismic activity in the Caribbean region, providing critical data for understanding and mitigating earthquake risks.
Recent Developments in Startups and Venture Capital
Puerto Rico has caught the attention of major venture capital funds and accelerators, most notably Rebel Fund., which has launched a $175M seed-stage venture capital fund located in San Juan, Puerto Rico, and investing exclusively in Y Combinator startups. Rebel Fund’s work is rooted in the Rebel Theorem, which posits that the best way to identify and support transformative startups is to find and back individuals who are intrinsically motivated to solve significant problems. The theorem suggests a heavy reliance on data-driven analysis and rigorous founder evaluation — methods that align well with Puerto Rico’s emerging culture of high-quality, purpose-driven entrepreneurship.
“Rebel Fund has now invested in nearly 200 top Y Combinator startups, collectively valued in the tens of billions of dollars and growing. As an extremely data-driven fund, along the way we’ve built the world’s most comprehensive dataset of YC startups outside of YC itself, now encompassing millions of data points across every YC company and founder in history.” – Jared Heyman, Managing Partner
In addition to Rebel Fund, programs like Parallel18, an internationally recognized accelerator run through the Puerto Rico Science, Technology & Research Trust, have contributed to Puerto Rico’s reputation as a startup hub. Parallel18 not only provides funding but also access to mentorship and a global network. The island’s government has doubled down on these efforts with initiatives such as Invest Puerto Rico, which seeks to attract foreign investment and foster local economic growth through entrepreneurship… I just need one of Parallel18’s t-shirts: #workhardplaytropical
Puerto Rico’s vibrant culture is one of its greatest assets. Its unique blend of Spanish, African, and Indigenous influences is reflected in everything from music and art to cuisine. The island is home to world-famous beaches, a thriving culinary scene, and rich historical sites like Old San Juan.
For entrepreneurs, this cultural richness translates into a creative and energetic environment. Networking events are just as likely to happen at beachfront cafés as in boardrooms, fostering a laid-back yet productive atmosphere. English and Spanish are widely spoken, making it easy for U.S.-based entrepreneurs to integrate while benefiting from bilingual and bicultural talent.
The island’s sense of community and pride also extends to its startup scene. Founders, investors, and policymakers are deeply invested in Puerto Rico’s future, creating a collaborative ecosystem where partnerships are encouraged and celebrated.
How to and Why Work with Puerto Rico in Innovation
Puerto Rico’s status as a U.S. territory means businesses operating there have direct access to the U.S. market — the largest consumer economy in the world — without the complications of international trade barriers like tariffs, customs, or additional regulatory hurdles. Startups can scale and export products or services to mainland markets seamlessly while enjoying the protections of U.S. intellectual property laws, a stable currency (the U.S. dollar), and federal agencies such as the FDA and SEC. Puerto Rico offers a unique mix of tax benefits, such as low corporate taxes under Act 60, without losing the security of U.S. financial and regulatory systems. For entrepreneurs, this means they can enjoy cost savings similar to those in international tax havens, but with the reliability and transparency of operating under U.S. governance.
Cultural and legislative autonomy allows Puerto Rico to retain its distinct heritage, language, and identity, creating a bilingual environment where English and Spanish fluency are common. This positions Puerto Rico as a bridge between the U.S. and Latin America, ideal for companies looking to expand into global markets. Businesses based there can tap into diverse perspectives and operate effectively in both English-speaking and Spanish-speaking markets. While businesses in Puerto Rico must comply with certain U.S. labor laws, the island also has unique legislation that provides additional flexibility. For example, wage structures and work-hour requirements are often more favorable to startups and small businesses than those in the mainland U.S., allowing for cost-effective scaling of operations.
Resilience and Entrepreneurial Mindset
Autonomy has fostered a sense of community-driven problem-solving and resilience, especially in the wake of the natural disasters of hurricanes. This culture of ingenuity and adaptability makes the local workforce and entrepreneurial ecosystem particularly dynamic. Startups that base themselves in Puerto Rico benefit from working in an environment where innovation is often driven by necessity and collaboration. For international entrepreneurs, Puerto Rico offers the credibility of a U.S. jurisdiction while still feeling distinctively global. It provides a safe and regulated platform to test ideas, attract international capital, and establish credibility with U.S. investors while maintaining flexibility in operations.
To engage, tap into its networks and incentives. Startups and investors can explore the tax benefits of Act 60, which offers significant reductions on corporate income tax and personal income tax for qualifying businesses. Partnering with accelerators like Parallel18 or connecting with Rebel Fund can provide access to resources and mentorship.
What I can offer is that I’d love to hear from everyone there, there seems to be much more that can be done for entrepreneurs, together.
If you’re a tech founder focusing on building great products, consider how Puerto Rico’s environment can help you rethink the importance of community in business. Just like how open-source projects thrive through collaboration and shared knowledge, Puerto Rico’s startup scene emphasizes strong networks and mutual support. Linus Torvalds once said, “In real open source, you have the right to control your own destiny.” This is what Puerto Rico offers—a supportive ecosystem where founders can control their destiny by tapping into local talent and resources while enjoying U.S. market access. As you develop your product, remember that building relationships and engaging with the community can be just as critical to success as coding the next feature. Explore how partnering with local mentors or joining programs like Parallel18 could offer fresh perspectives and new opportunities for growth beyond traditional routes.
A very appropriate place for finding start-up gold….. ?
Initially, Columbus christened the Island San Juan Bautista (St. John the Baptist). The name was soon changed to Puerto Rico, or “rich port,” when the Spaniards realized the impressive amount of gold found in its rivers.
Andrew Graham Cutkomp – I’d invite you into these comments. I appreciate what I’ve learned from you about Puerto Rico
Thanks Paul O’Brien for including Rebel Fund and Jared Heyman, our Managing Partner, in this excellent piece on innovation and startups in Puerto Rico ?
“Puerto Rico has caught the attention of major venture capital funds and accelerators, most notably Rebel Fund, which has launched a $175M seed-stage venture capital fund located in San Juan, Puerto Rico, and investing exclusively in Y Combinator startups. ” ?
Rebel Fund, my distinct pleasure. I expect there is much more we can and should be doing, between Puerto Rico and the rest of the United States, to globalize innovation and venture capital.