Latin America continues to be an attractive environment for entrepreneurs and startups. Increasing political stability, rich natural resources, advantageous geographical location and beneficial trade agreements all contribute to the region’s favorable image for startups. However, one country in particular has been leading the charge for innovation, invention, and entrepreneurship for quite some time now. Chile is perhaps one of the most attractive countries to form a startup in Latin America. For a deeper dive into startups in Chile, The StartupVC gives holistic insight into the country’s economy, startup history, and best industries for future entrepreneurship development.
Economic overview for startups in Chile
As one of Latin America’s most prosperous nations, Chile is home to a high-income economy. With a GDP of over $298 billion, it is Latin America’s most economically competitive country. The country’s competitive, innovative spirit is recognized well beyond Latin American borders as well. In 2010, it ranked 30th for most competitive country in the world. Moreover, it has extremely high levels of globalization, economic freedom, and a high income per capita.
Beyond favorable internal characteristics of the economy, startups in Chile also thrive on the country’s many trade agreements and partnerships. Agreements like the Pacific Alliance, Trans-Pacific Partnership, MERCOSUR, and those with the United States, Canada, Australia, and the European Union all encourage a globalized economy in Chile. Moreover, free trade agreements and packs with countries on five continents encourages globalizing startups in Chile that much more.
The history behind startups in Chile
While Chile’s economy is strong and prosperous now, it wasn’t always that way. From the economic perspective of the 1930’s & 1940’s, the recovery, stabilization, and flourishment of today’s economy seemed unrealistic and unattainable.
After Chile’s depression in the 1930’s, a time of unrelenting debt and economic despair, recovery and redemption seemed out of reach for the country. Despite this bleak outlook, Aguierre Cerda, president of Chile from 1938-41, focused on supporting the middle class. He aimed to stimulate and increase industrial production and reduce the availability of imported goods. This action prompted the creation of the Corporacion de Fomento de la Produccion, or CORFO, in 1939. Seventy years later, this government entity became the impetus driving economic stimulation, innovation, and entrepreneurship. Startups in Chile finally had the support they needed.
CORFO & Start-Up Chile
In 2010, CORFO set out to make Chile the world’s cutting-edge entrepreneurial location. Since this decision, CORFO has lived up to its founder’s expectations of stimulating the Chilean economy. One of the hallmarks of this decision was the creation of “Start-Up Chile,” a program launched and funded by CORFO. Since its genesis, Start-Up Chile generated a portfolio worth over $1.4 billion and helped fund over 1,600 different startups from 80+ countries.
With such an expansive financial reach, Start-Up Chile has had the opportunity to fund and accelerate startup efforts in Chile. At the base of this accelerator track is a seed program. In this seed program, startups from all around the world have access to equity-free funds up to $80,000, work visas, training, office space, and networking resources within the community. If these startups are successful, they are eligible to apply for continued monetary support from CORFO.
As a public accelerator, Start-Up Chile has become an integral part of the country’s startup environment. Beyond its impact in Chile, the organization influenced much of how Latin America transitioned into being an entrepreneurial hub. Thanks to its roaring success and welcoming platform for foreigners, Start-Up Chile is now a world-renown organization. Global onlookers recognize the growth in entrepreneurial spirit and success in the region. This has given rise what many are calling “Chilecon Valley”: a supportive, thriving business environment which serves as Latin America’s own globalized business incubator.
Female entrepreneurship in Chile
Beyond Start-Up Chile, CORFO founded and supports other public startup support systems. Specifically, for female entrepreneurs looking to form their own startups in Chile, Start-Up Chile offers a pre-acceleration program. The S Factory seeks cunning businesswomen with ideas and/or plans for startups in the tech industry and helps bring those ideas to life. Approved applicants receive $25,000, a year-long working visa, and working space. At its core, The S Factory is seeking foreign female entrepreneurs to bring their ideas and startups to Chile, further propelling the nation’s reputation for being an innovation hub.
To be eligible for the program, startups must be under a year old and run by a female. Moreover, the company must have a genuine interest and business plan for working in Chile. Expansion strategies must be provided as well so the startup has a clear map for success.
The country’s rich natural resources, hunger for innovation, and supportive startup entities make many industries attractive for startups in Chile. As a result, each one welcomes and encourages invention and ingenuity.
As the country’s strongest and most well-known industry, mining presents many opportunities for startups in Chile. Minerals and metals like copper, iron, gold, silver, lead and many others top Chile’s list of exports. Global demand across all industries for these metals is steady, constant, and gradually increasing. Many global operations, infrastructures, and machinery rely on these materials to function.
As demand grows, so does the industry’s need to innovate and find ways to increase production. That is where startups come into play. Startups in Chile that pursue the mining sector have the opportunity to revolutionize practices within the industry. More efficient and effective mining techniques and technologies can help take the mining companies to the next, necessary levels of production. With the right background, education, and experience, forming startups in Chile in the mining sector can be extremely lucrative.
The Chilean wine industry, though relatively new compared to other famous wine regions, has found great success. Currently, the country is the fourth largest exporter of wines in the world and the seventh largest producer. There are five distinct regions in which grapes are produced and harvested. Each region has unique geographic properties and characteristics in terms of weather, soil, and location.
Entrepreneurship and startup competitiveness have already greatly impacted the Chilean wine industry. There is still more opportunity and success to be realized though. Innovation and experimenting with ideas on taste, technology, and growing practices could further differentiate Chilean wine from other regions. Moreover, as with mining, increasing access to technology and better harvesting techniques could make production more efficient and even increase quantity.
FinTech is another promising industry for startups in Chile. Foreign investors look to Latin America as the second most promising market for FinTech, after the United States. Within Latin America, Chile nearly tops the list as the most desired market, coming only after Mexico. Starting in 2006, the industry experienced relatively slow growth in Chile. However, since 2014, the FinTech market and its investments have grown astronomically.
Startups nearly built this sector in Chile. Despite its recent popularity and success, the industry is still very open to startups and new technologies. Established companies are constantly looking for the latest startups, tech, and practices in this industry. They aim to create partnerships with the smaller, newer companies so that both parties can benefit. Understanding technology and financial practices sets a solid foundation for revolutionizing the industry.
Learn more about opportunities for startups in Chile
Chile presents an attractive market for foreign startups and entrepreneurs. Publicly funded startup organizations and support systems have institutionalized an entrepreneurial spirit in the country. Moreover, as Latin America’s innovation and technological hub, Chile has already captured the eyes and the investments of many foreign investors. Continually supporting invention and ingenuity has led to competitive industries and efficient practices. Startups in Chile have the opportunity to join this movement and make an impact in any industry they deem worthy.
The startup market in Chile is constantly evolving, and so is that of Latin America. To stay informed on Chile’s advancements, its future, and its startup environment, stay connected to The StartupVC. By following the accounts on LinkedIn, Facebook, Instagram, and Twitter, readers will have access to up-to-date information and insight into the most sought-after markets in Chile and all of Latin America.