Silicon Valley may seem like the only place to launch and grow a start-up. It is, after all, ground zero for some of the largest and most profitable companies in the world and has a culture that celebrates innovation and entrepreneurship.
But developing tech scenes around the world are evolving as interesting and attractive places to run a business — especially in countries like Chile and Brazil, which offer handsome options for entrepreneurs willing to spend some time in those countries.
Latin Correspondent spoke with organizers from two Latin American accelerators, Start-Up Chile and Brazil’s 21212. The existence of programs such as Start-up Chile and 21212 speak to the growing business opportunities in Latin America.
Nicolas Shea, founder of Start-Up Chile, says he was motivated to start the program in response to a devastating earthquake that struck Chile in 2010. Looking at the economic need in the aftermath of the disaster, Shea saw an opportunity to start something unique in the country’s tech sector.
“There was — and still is — a huge opportunity to attract foreign talent,” he says.
“Five years ago, the entrepreneurship ecosystem was almost non-existent,” says Sebastián Vidal, executive director of Start-Up Chile. Entrepreneurship was happening locally, but not with the idea of having “an impact worldwide,” he says.
The Chilean government created policies to make the country hospitable to foreign entrepreneurs, establishing Chile as a destination and hotspot for international entrepreneurs. Start-Up Chile is itself a government-backed initiative that offers start-ups $40,000 in seed funding. Those teams, made of up of participants from all over the world, come together in Santiago, and spend the next six months bootstrapping their businesses.
Vidal says that the entrepreneurship ecosystem in Chile is well coordinated now, with universities working with entrepreneurs and start-ups to offer specialized courses, the establishment of investment funds and newspapers adding new sections on tech and innovation.
Growth across borders
Start-Up Chile entices foreign entrepreneurs to Chile by making it easy for them to get set up — entrepreneurs receive the above-mentioned funding for their companies, and can easily obtain visas and other support in the country. Vidal says that the number and diversity of companies that have applied to the program since it started four years ago is “impressive.” Applications have come from 75 countries, and the applicants’ focus includes biotech, health and all kinds of mobile apps.
“The diversity in countries, ages, and companies creates something so, so rich that I think is impressive,” Vidal says.
Shea echoes this sentiment, saying, “What I love about it is that it has become a truly national and bipartisan initiative which secures its continuity and growth over the years.”
They also have access to a wide range of mentors who can advise them in business and investment matters. In return, they provide “social equity,” promoting the Start-Up Chile mission and experience and sharing knowledge of the country’s welcoming entrepreneurial climate, not to mention sharing their own knowledge and experiences with the local tech community while they’re in the country. However, the companies are not required to continue working in Chile once the six-month program is done.
This is one way in which Start-Up Chile and 21212 differ, as the Brazilian accelerator only accepts entrepreneurs who want to establish themselves in Brazil.
They don’t necessarily have to have a complete plan for how to launch in the Brazilian market, says Frederico Lacerda, founder of 21212. The 21212 mentors will help companies strategize on how to present their offer in Brazil, but “You’re not just going to copy and paste your product,” Lacerda says. “You need to adapt to the Brazilian market, put a team in place here.”
Keeping talent close to home
21212 is helping companies take advantage of the massive digital market in Brazil, and stands to profit as well, since the organization has equity in all of the companies it supports. Lacerda says a major challenge for start-ups in Brazil is attracting top-notch talent. There are plenty of qualified people, but many of them still opt to work for large corporations that pay handsome salaries, rather than young start-ups, he says.
Another challenge is teaching founders how to lead, how to mentor their teams, work with partners inside the company and “scale their businesses with a people perspective,” Lacerda says. 21212 participants learn about growing their businesses, and how to think long-term about profitability, which includes strategies like being open to investors and offering equity.
“We teach them the importance of having a smaller part of something bigger, rather than the whole thing that is not worth more than a coin,” he says.
Once those elements are in place, 21212 helps companies identify which investors to approach and how best to do that. Fifteen lawyers and other professionals work for 21212 full-time, aiding the start-ups as they develop their offerings and prepare to present to investors. Lacerda says that the extensive network they’ve developed helps founders meet who they need to get their business operating in Brazil.
“Here you really need to know people, otherwise you don’t have access to them,” he says.
“Creating conditions to stay”
Now that they’ve seen their model’s success in terms of establishing a start-up-friendly culture, Vidal says the Start-Up Chile organizers’ next goal is to create economic impact with their organization, and to contribute to “how Chile positions itself as an innovation pole in Latin America and the world.”
One way of doing that, says Vidal, is by creating an environment that start-up founders won’t want to leave after the program is over. That includes connecting founders with investors and helping them network with major companies. As Vidal sees it, a small software start-up that partners with a major retailer or corporation will suddenly have massive reach within Latin America. Business-to-business companies in particular stand to benefit from establishing partnerships in Latin America.
Though Vidal and other Start-Up Chile leaders are working to retain start-ups, the decision is still up to the companies, he says. “We’re not forcing anyone, we’re creating the conditions for them to stay.”
Shea believes that Start-Up Chile has already made an impact on the country.
“It showed Chileans that our country is extremely attractive and they are as good as world class foreign entrepreneurs,” he says. “At the same time, it has positioned Chile in the forefront of global entrepreneurship.”
UPDATE: Start-Up Chile is now accepting applications through February 13. Those selected receive about $35,000 USD, a yearlong working visa, and access to Start-Up Chile’s community and resources. Interested start-ups should visit www.startupchile.org/apply to submit their application.