Why is there a Startup Boom in Chile?

Across the map, the market is opening up to the creation of new business and it has never been easier for a company to establish operations abroad. However, there is something different about Chile that is making it stand out from the other ‘startup’ capitals in the region.

Chile has for some time now been held up as the ideal economic model for Latin America. It was first distinguished internationally as the continent’s only OCED member, and now for an innovative startup initiative that has been crucial in redefining the landscape of a Chilean market that has traditionally been limited to mining and excavation of natural resources. The project was launched as a method to ensure that Chilean companies lead the startup marathon. How have they been able to achieve this? How did Chile turn itself into an inviting environment for startup businesses?

1939 saw the establishment of the Corporación de Fomento de la Producción de Chile (CORFO). Tasked with pushing the government’s desire for sustained economic growth, it boasts a decades-long track record of successfully promoting the Chilean economic development. Initially set up to promote, anticipate and encourage all industries, from banking to telecommunications, that could impact the Chilean economy, it has become more streamlined in recent times.

CORFO has, in recent times, turned its attention to startup concepts. As of 2016, its annual innovation budget had risen to USD$45 million, with spending focused on research and development. Although this may seem a relatively modest figure in the wider scheme of things, the limited budget has proved a blessing in disguise. CORFO have had to develop a resourceful approach and has encouraged the whole team to carefully analyze the benefits of every expense. The results have been emphatically spectacular.

By the end of 2016, some 200,000 Chileans had benefited in some way from the entrepreneurship programs pushed by the government. Many startups have benefited a great deal from its narrowly targeted investments. Despite the positive results that were being enjoyed, the government had more ambitious plans and wanted to develop an unprecedented movement that would redefine, and reshape, the entire landscape of the Chilean market. It is with this in mind that Start-Up Chile was born.

Start-Up Chile: A Final Step on a Powerful Startup Revolution

It is impossible to discuss the startup revolution to have taken over Chile’s booming economy without discussing the critical role of Start-Up Chile. A pioneer accelerator program, Start-Up Chile aims to provide equity-free funding for young entrepreneurs in the country. Its tremendous marketing efforts and capital provision sets about globalizing Chile’s economic expansion efforts, with a strong focus on incubating technology startups.
But the program is not limited to just that. The program goes further to create a facilitating environment for these small startups to operate through its provision of co-working spaces such as the CETOF. These co-working spaces offer all of its members lightning-fast Wi-Fi access and unlimited coffee — two essential elements of every modern work space.

Start-Up Chile is determined to provide an enabling platform for promising young entrepreneurs in Chile, and it’s not just home grown companies that have benefited from this initiative. With low capital costs, a thriving young and educated population, and low labor costs, interested startups from around the world are also benefiting from this initiative.

Its bourgeoning similarities to Silicon Valley — notably the crowdsourcing and fundraising processes employed by many successful American startups– has led many to dub it “Chilecon Valley”. While fighting hard to address underlying structural problems, it has set about building a local entrepreneurship culture and elevating Chile’s international profile. It has achieved both mandates with aplomb. As of 2012, over 500 companies from some 37 countries had benefited from this accelerator program. That number has steadily increased ever since

A Favorable Startup Economy

While all of its initiatives and policies have been geared towards encouraging startups to invest in its economy, this would not be possible in a chaotic economy. Chile maintains a controlled debt ratio standing at just 10% of its GDP — a major indicator of its stable economy.
The country’s government has continued its long standing belief that startups have a key role to play in its economic development as a nation. As a result, it has consistently introduced policies and push through revolutionary initiatives aimed at boosting the startup economy. One such example is its relaxed tax policy for startup businesses. At 22.5%, it is much lower than that of the US.

As its economy continues its impressive rebound, the country has taken steps to execute a sufficiently modern-day infrastructure required for business growth. A massive investment portfolio includes improving its internet infrastructure and broadband accessibility that has brought about a more connected population and a rapidly shrinking information gap in the country. Recently, this has allowed more and more online businesses set themselves up at low operation costs.

Chile has made significant ground through a number of brave decisions to ensure that it can claim the illustrious title of the “startup capital” in the world. It distributes $40,000 in capital provisions for startups, and can provide invaluable advice on interesting tax cuts. This sort of service is the major contributing factor to creating such a welcoming and attractive business environment.

So how to get started?

Chile’s pioneer accelerator program Start-Up Chile will forever be in the news for the kind of support it provides startups in the country. The incubation of companies is facilitated in Chile by an expanding repertoire of booming industries that encompasses all features of the economy. Now is the perfect time to team up with a local agent to make the most of a country that has an abundance of natural resources, one of the largest and most lucrative mining industries in the world. Chile remains one of the most business friendly countries in all of Latin America in order to form a company and is doing everything in its power to continue nourishing this impressive wave of startup success.