Many countries have tried to create their own variants of the Sillicon Valley and almost all of them failed. However, there is an example that is a bit different, succeeding to address the weak spot of the original US enterprise – to host young and inspired founders from abroad and encourage them to stay and work on their ideas. Welcome to Chile!
“Start-Up Chile” is a government programme initiated by businessman Nicolas Shea, selecting and offering promising start-ups and their founders $40,000 and a residency visa to develop further their concepts and projects in Santiago. The objective of the programme is to turn Chile into Latin America’s innovation and technology hub and considering that since 2010 more than 1000 entrepreneurs from around 77 countries have been accepted, it is not very far from achieving it. Most of the admitted businesses come from the US, Chile, Argentina, India, Canada and the UK. Almost 18,000 start-ups from 130 countries have applied to take part in the accelerator program so far.
Mr Shea came up with the idea of creating this “start-up for start-ups” in Stanford where he studied and witnessed a large proportion of talented and inventive students being forced to leave the United States because of visa issues. He had a vision of Chile becoming the entrepreneurial hub on the continent, outperforming Brazil and Mexico in their efforts of doing the same and also inspiring local individuals to follow their true passion by seeing the foreigners’ example. Although to some skeptics the programme seems a bit unfair as foreign entrepreneurs are given the opportunity to build their own business out of the Chilean taxpayers’ money, there is a very valuable and positive effect from the initiative. Those who come from abroad are expected to produce and share ideas and know-how, they are encouraged to participate in events, lead talks and inspire local business ventures. According to The Economist, between 2010 and 2012, “Start-Up Chile” participants held almost 380 meetings and organized more than 1,000 workshops and conferences.
The Chilean government has also seen the benefits of the programme in the rising number of local companies applying for different capital funds and also the increasing interest in educational institutions to teach students about entrepreneurship. A good example of this is the innovation centre, part of The Catholic University of Chile, built in the end of 2014 that was not only designed to look very contemporary from a stylistic point of view, but also aimed to avoid the typical and largely distributed Santiago glass towers with serious greenhouse effect in the interiors. The building’s concrete façade and large recessed openings provide air flow and cooling and according to the architects this has decreased in half the energy consumption that it would normally take for the glass blocks, so dispersed across Santiago’s landscape. The role of the innovation centre is to allow academics and entrepreneurs work side by side, this way enhancing information and ideas flow in both fields.
However, what entrepreneurs find particularly hard, not only in Chile, but also worldwide, is the actual fund raise. Whilst the capital offered by “Start-Up Chile” is a good initial incentive and positively influences young business people’s hunger for development, they also report that there aren’t many sophisticated investors or true start-up advisors in the region to provide significant motivation for them to stay in the long run. Another obstacle for entrepreneurs is that even if they manage to find early-stage investors, in most cases they demand a big stake and exercise a controlling interest in the potential company. There is a common misunderstanding between the two groups as investors want to see the security and the closed deal, they are not willing to risk their money for the benefit of what could turn into a great idea. At the same time, Chile needs diversification as copper – its top export, has declined in the past couple of years, together with the overall economy stagnation.
“Start-Up Chile” crafts an atmosphere of entrepreneurial spirit. Its most important contribution is the inspiration that could expand further to creating not only more local job opportunities, but also to shaping academic programmes and encouraging young people to think out of the box instead of relying on big companies for employment. The youngsters could re-invent themselves in new roles – to be the value creators and influencers in the process of making Chile grow further. This alternative mindset would also teach them the abilities to adapt in today’s constantly changing environment, take smart risks and learn on their feet in order to drive economic, social and cultural change in their own country.
Innovation Centre UC