In the May issue of Entrepreneur Country, Joe Haslam of Stratemic Capital enlightens readers about the start-up scene in Chile. Most Americans know Chile for its rich produce, not its economic strength in South America, and definitely not for the ecosystem that has been created for entrepreneurship that is paying off handsomely.
Going back to the 1970s, Chile has taken a progressive stance on key economic decisions. Milton Friedman and a number of his associates from the University of Chicago inspired free market systems that have been customized by local conditions. Nicolas Shea and Vivek Wadhwa in the past decade have sought to make Chile a destination for entrepreneurship. Shea attended Stanford University and set about to do a Southern hemisphere version of Silicon Valley. Wadhwa challenged the start-up model of some groups who provide office space near a university and hope for something wonderful to happen. Instead, he advocates a people-centered approach:
To create a tech center like Silicon Valley, you need to first attract smart entrepreneurs from all over the world. Then you have to create entrepreneurial networks; instill a spirit of risk-taking and openness; and build mentoring systems. You also need to provide seed financing to start-ups. The money is easy; everything else requires a change in culture that usually takes decades.
Wadhwa and Shea launched Start-Up Chile at the beginning of 2011. Here’s the concept:
- Anyone from anywhere can apply
- Winners would be required to move to Santiago, Chile
- A one-year visa is provided to facilitate entrepreneurship
- $40,000 in seed capital is offered as a prize
- The Chilean government would NOT take an equity stake
When Haslam met with the director of Start-Up Chile and a representative from CORFO, the government agency tasked with improving competitiveness in global markets, he asked a lot of questions about how the program was put together. They admitted that bureaucracy had to give way in recognition of results.
- The website for the contest received more attention than the official national tourism site.
- Visitors of the program spent about as much in tourism dollars as the awards themselves.
- Well-known entrepreneurial icons are “dropping in” on the Chilean scene these days.
- 1600 applications from 70 countries.
- 220 foreign start-ups in Chile now, employing 180 locals and 143 abroad.
- $8 million in VC money has been raised by the first batch of award winners.
Chile has realized some important economic development principles. Notably:
- Start-ups are a strong job creation tool.
- Large companies are more costly to attract and retain.
- Diverse populations experience economic growth.
Earlier this past week, we blogged about Pittsburgh’s Experienced Dreamer contest to attract entrepreneurs to town. Whether the locale is Santiago, Pittsburgh, or Raleigh, the principles work. We need to do all that we can to foster entrepreneurship–it just may be the key to a healthier world economy!
On a purely local note, Innovate Raleigh has followed some of the steps in the blueprint. We need help from Raleigh Wake Economic Development, mentoring organizations like EntreDot, and fresh sources of seed capital. Additionally, more collaborative workspaces like some of the incubators in our area (Cary Innovation Center being an example) will help foster the natural network nurture necessary. We can do this–but it requires “all hands on deck!”