Importing Entrepreneurs in November
Jonathan Ortmans @jortmans
Oct 02, 2012
Many nations that participate in Global Entrepreneurship Week enjoy being a part of this movement to gain exposure to entrepreneurs and programs outside their country. GEW itself offers an opportunity to test one strategy for fueling a more robust startup culture at home—importing a few good nascent entrepreneurs as catalysts.
Start-Up Chile is one nation’s effort to capitalize on the globalization of the startup movement. This two-year old initiative has rapidly gained traction around the world and deserves another look ahead of November when many governments will be discussing how to attract more high-growth startup talent.
First, it should be noted that while Start-Up Chile carries a similar name to some national campaigns around the globe, it has a very different approach. Unlike the Startup America or StartUp Britain movements, Start-Up Chile works more like a focused incubation program than a platform for initiatives or public relations. Startups from any part of the world can apply for the program and those selected receive a US$40,000 government grant as seed capital, a one-year work visa, office space and unlimited access to its extensive network of local and global contacts. The selected businesses must come to Chile for a minimum of six months, after which they are free to take whatever steps necessary to grow.
As Vivek Wadhwa, an advisor to the program’s creators pointed out in some of his many articles on Chile´s approach to innovation, the Chilean government is capitalizing on a turning point in the American tech sector as U.S. visa difficulties combined with a slow recovery are pushing talent toward other economies. It was a risky political move, but its impact on the economy soon became evident.
The success of Start-Up Chile has expanded beyond attracting talent. It is creating an increasingly fertile entrepreneurship ecosystem by fulfilling the mission spelled out in one of the program´s promotional videos: "They arrive. They work. They connect. They leave—and Chile stays connected." The program now has an annual budget of about US$15 million per year and a pile of more than 1,600 applications from 70 countries. With nearly 500 participants, there are now 220 foreign startups in Chile that employ 180 locals and 143 abroad. In fact, Horacio Melo, executive director of Start-Up Chile, recently told The Santiago Times that he had been visiting Silicon Valley to advise others on the Start-Up Chile model.
That Chile is so focused on innovation is great news. Granted, the Chilean economy has been recognized as one of the most competitive of Latin America—it was the first South America country invited to become a member of the OECD. However, until recently Chile was not yet a startup culture while innovation still played a minor role in the creation of new enterprises, according to the infoDev Incubator Support Center service from the World Bank.
But that has begun to change.
Beyond the powerful network of mentors, entrepreneurs and local talent it has created, the program is putting Chile on the maps of investors. This is an important step for Chile, which is still lacking in terms of available startup capital. According to Melo, of the 84 teams that were in Start-up Chile´s first generation of companies, only about 15 to 20 percent stayed—the rest couldn’t find investors there. Now starting with its third generation of companies, the program's leaders report much growth in terms of local and foreign investment. For example, the Harvard Business School graduates behind SaferTaxi, which was part of the second round of selected companies, received US$1 million from a U.S. investor, and have since extended their company´s operations from Chile to Brazil, Argentina and the U.K. The first batches of foreign startups have raised so far a total $8 million in venture capital financing from firms in Argentina, Brazil, France, the U.S. and Uruguay. Results like these remind the program's architects, as Vivek Wadhwa recently put it in a piece in BusinessWeek, Want More Startups? Learn From Chile, that the argument against the program that you can’t build a Silicon Valley without venture capital, is moot.
The mere exposure to working in a startup can become an important outcome of this program for Chile, especially if it encourages more locals to do the same. Endeavor Chile found that the profile of the successful innovative entrepreneur in Chile includes previous experience in one or more ventures prior to founding a successful enterprise. This impact will complement efforts at universities like the Universidad Técnica Federico Santa María and its International Institute for Innovation and Entrepreneurship (3IE) which is helping convert knowledge and ideas into prototypes, products, and new companies. My bet is we will see more Chilean startups on the global entrepreneurship scene, like BioFiltro, the company that is commercializing a waste-water treatment system first developed at the University of Chile and that became last year´s Cleantech Open Global Ideas Competition winner.
We hope Chile’s leadership will continue to translate its faith in the private sector as an engine for growth into concrete policies that reduce the barriers to starting and growing businesses. If it works towards this goal beyond immigration to education, access to finance, regulation and other areas intersecting entrepreneurship, Chile is sure to be a top startup nation and fierce competitor in the race to build the most attractive startup ecosystem. We hope more nations—keen to empower local nascent entrepreneurs to create firms and jobs—will explore this idea further at events with their own entrepreneurial leaders during GEW in November.
[photo credit: @Photo.]