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GBA | 21 November 2017

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Brand new multinational ecosystem is blossoming: Chilecon Valley

Brand new multinational ecosystem is blossoming: Chilecon Valley

When it comes to the subject of entrepreneurship, first thing that comes to mind is Silicon Valley . The place where a new technology emerges every day, full of initiatives that have the potential to change the world at every corner… Silicon Valley partly owes its position today to the fact that USA is the technologic and economic center of the world. Or is it vice versa?

It comes to mind first but it is not the only one. Today, large and small alternatives to Silicon Valley began to emerge. Canada in North America, United Kingdom, Germany, France and Russia in Europe, Israel in the Middle East, Brazil in Latin America and Korea, China and India in Asia draw attention with their ecosystems having reached maturity. The ecosystems such as Turkey should overcome some problems before reaching their greatest potential. There is a country that can guide us: Chile and its carefully built multinational ecosystem, Chilecon Valley.

Chilecon Valley?

It is more than a word game that makes the entrepreneurship ecosystem of Chile remarkable. Being in the shadow of Brazil – hardworking country of the continent – on art, education and technology, Chile is experiencing the same situation for the entrepreneurial ecosystem. However, this is about to change. Chileans might envy their Brazilian friends on many issues (including football), but now Chile has a trump card too: Start-Up Chile.

The bigger something is, the more effort it requires to be taken forward, doesn’t it? When mistakes made in the past and cultural stereotypes come to play, there remains only one way to grow in front of an ecosystem that has already grown. For example, even in the world’s best ecosystem, Silicon Valley, equality between men-women and ethnic equality (numerical terms) is not ensured; and it seems it will not be possible to ensure this for many years to come. This is why the entrepreneurial ecosystem of Chile is exciting; government, private sector and entrepreneurs and investors from around the world create an ecosystem from scratch. The hope of those who build the ecosystem in Chile is to get ahead in the competition by avoiding mistakes made by the previous ones.

At the foot of the Andes, beside the Pacific Ocean

The steps taken to strengthen the entrepreneurial ecosystem in Chile undoubtedly set an example for our country and we will examine these steps in detail. But before that, it is worth taking a look at Chile’s cultural, economic and demographic structure and how they shaped the entrepreneurial ecosystem already functioning in the country.

Chile is a small country located in the coastal strip between the Andes Mountains and Pacific Ocean with a population of 17 million. Combination of small population and a Latin American culture caused a relatively small domestic market in Chile. The fact that the majority of the Chilean indigenous people, who represent 700 thousand people of the population, are engaged in agriculture and live in the countryside in order to protect their culture, narrows the entrepreneurial potential of the population.

Chile’s situation which appears to be disadvantaged is simply overcome by entrepreneurs. For Chilean entrepreneur,s, local market means not only Chile but all of Latin America, and products are developed in accordance with this understanding. In addition, the number of products and services developed for the US and Europe cannot be underestimated. Nevertheless, Chile’s investment culture is not settled yet; the rich of old economy do not participate in the ecosystem with financial power in their hands. Upon the question about the situation of investments of venture capitalists in Chile, co-founder of Chile-based online restaurant reservations venture TableGrabber, Pawan Marwaha says, “It’s unprecedented.”

When there are poster ventures such as Yemeksepeti in Turkey, Naspers in South Africa, Zomato in India and Buscape in Brazil, we have not seen a unicorn from Chile. Nevertheless, that may change with the Start-Up Chile program.

If the government rolls up its sleeves: Start-Up Chile

Start-Up Chile is an incubator program that makes us focus on Chile and it has something that makes it different from others of its kind in the world. Completing its fifth year, the program was established by the state itself and resolutely trying to improve the ecosystem called Chilecon Valley by local entrepreneurs.

Doors of this 6-month program focused on technology initiatives are not only open to Chilean entrepreneurs but also initiatives from every country in the world. So, bringing foreign enterprises to Chile is one of the main goals of Start-Up Chile. Since its foundation, it has managed to bring 1.000 early stage venture cases from 75 countries to the country. Initiatives that came to the country have collected a total investment of USD100 million and created more than 1.500 jobs.

It is one thing to train and equip initiatives and another thing to grow them. In this context, the program has encountered a problem which Turkish ecosystem is yet unable to overcome: Investment. Aslanoba Capital’s founder Hasan Aslanoba once said, “What is missing in Turkey is not good ideas and professionals, it is investment.” While Chile is also full of good ideas and professionals from around the world, another government project to overcome the investor deficiency in the country, Start-Up Chile SCALE fund, was launched.

When the Start-Up Chile and allocated Treasury-backed SCALE fund came together, Chile ecosystem became a very tempting stop for entrepreneurs. What Start-Up Chile program requires from early-stage entrepreneurs who want a 1-year work visa, USD 40 thousand investment and office space, is to come to Chile. Besides, entrepreneurs get the chance to win an extra USD 100 thousand for their initiatives with a new contest. In his interview with Inc.com, Chief architect of the program, Nicols Shea from Chilean Economic Development Agency, emphasizes the importance of creating the right conditions for early stage initiatives and explains what other countries that wish to develop an ecosystem should do: “Start inviting entrepreneurs. Do this in a direct manner. You can be sure that they will come.”

Thanks to the exemplary program of the Chilean government, thousands of entrepreneurs have tried their luck in Chile. What happens to the initiatives that have been trained, equipped and acquired seed investment? The program aims to make entrepreneurs stay in Chile. Moreover, two requirements of the program are that entrepreneurs should be in Chile for 6 months and participate in local social activities. The second requirement sounds strange but the program wants to make entrepreneurs warm towards the country. Shea says up to 200 thousand Chileans have interacted with a Start-Up Chile entrepreneur to date. Shea’s favorite statistics is that entrepreneurs who visited the country in the last five years has born 5 children with Chilean partners and this reveals the power of social aspect of the program.

No place like home

However, it is not possible to convince every entrepreneur to live in this small Latin American country. Every month, hundreds of entrepreneurs go back to their own countries with material and spiritual gains they acquired. And now, Chile will be unforgettable for each one.

Although the main purpose of the program is to attract entrepreneurs to Chile, Shea says even the outgoing entrepreneurs serve for the purpose of the program. Stating that 200 entrepreneurs returned to their home countries last month, Shea said an initiative took two Chilean engineers to Berlin. Through the program, Chilean professionals get the chance to play a part in ecosystems around the world.

Confronting the unpleasant reality

Start-Up Chile director Sebastian Vidal states the program has been designed to overcome situations such as volume of local market, lack of investors and immaturity of entrepreneurial culture thanks to the dedicated support of the state, and says they managed to progress in the direction they want in the past five-year period.

We can associate the Silicon Valley’s success to many things, and multinationality is one of them. What allows this is that the valley has become an attraction centre; entrepreneurs around the world organically choose here. Chile managed to take the first and probably the most difficult step accepting that there is no other solution.

Vidal says that they know the problems to be overcome and tells the domino effect expected from this carefully constructed program: “We want initiatives to grow first in Chile, then in Latin America, then in the world. They will create employment for Chileans and will establish operations in Chile; this is the only way we can create greater social and economic impacts in the country. At the same time, these developments will motivate domestic and foreign investors who want to have the opportunity to invest in international initiatives.”

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