Business Management

Kathryn Cave (Chile) - Tech Race: Chile Offers Free Money… but India May not be Far Behind

Santiago boasts beautiful 19th century architecture, winding side-streets, along with stunning modern buildings. Bisected by the Mapocho River, luscious with green parks, and overlooked by the Andes mountains, the capital of Chile is already many people's ideal travel destination. Now the Chilean government, in association with Start-Up Chile, is inviting global entrepreneurs to go and live there for six months to launch their dream business... and they're offering to pay hard cash for the privilege.

There is no catch. In a programme which smacks of reality TV meets extreme marketing - Horacio Melo, co-founder has a marketing background with a Proctor and Gamble - Start-Up Chile aims to nurture US $1M companies. The process for this year opened on 11th March and anyone can apply (I love the promotional video). Successful applicants will be awarded $40,000 in seed funding from the Chilean government - asking for no equity in return - plus a one-year work permit. The only stipulation is that they must stay for six months - after that they're free to leave. They system aims to incubate 1,000 entrepreneurs over 2013 at a cost of $40 million.  It seems there is a global competition afoot to become the world's biggest tech hub...

Not surprisingly, the global reaction has been fantastic. This is a truly brilliant PR coup and there is some evidence that Silicon Valley is getting scared (although I'm not fully convinced). In a blog published yesterday on KQED entitled ‘Is Silicon Valley Losing its Talent to Foreign Investors?' Indian citizen Jeetu Melwani was quoted saying, "Am I going to wait 10 more years in Corporate America to get a Green Card when I can go anyplace else in the world like Chile, where they want us to come and start business and give us money to do it? Hell yeah, I'm going to Chile."

Interestingly, the scheme does seem especially attractive to Indians. This was the fourth largest country group - after those from Chile, the US and Argentina - who applied last year. And Live Mint reported yesterday that Google is planning to back a similar programme in India "[which] will help the country compete more effectively in attracting the best entrepreneurial talent... The idea behind this programme "is to bring all important investors, companies and stakeholders under one umbrella and ensure that Indian start-ups do not lack ingredients of money, mentoring and access to markets", said [an] official familiar with the initiative [who] declined to be named."

As co-founder Horatio Melo explains, "We don´t ask the Start-Up Chile entrepreneurs to stay in Chile after the six months of the programme because, during those six months they are here, we make sure they impact local entrepreneurs. ‘Suppers' [as they call people involved] share their knowledge, give away tips and contacts, mentor Chilean entrepreneurs, teach in local schools and Universities." The overall aim is to get Chileans to think more innovatively, to kick-start a local start-up scene through outside influence and to build a network of successful companies with clear links back to Chile.

Of course, all this does require a fair amount of effort on behalf of the entrepreneurs involved. The programme attracted over 3,000 applicants last year, so there is no guarantee of success... and that number is set to rise again this year. Plus, as Claire Pelletreau, the Supper behind Ombushop put it, "You do have to invest a lot in order to move your life to Santiago. You spend time on tramites (the Spanish word for "bureacratic errands" that is so unique to the region that there's no translation). You toil over reimbursement forms only to have some expenses rejected. You invest about 10K of your own money (that you hopefully get back) to get to and set up life in Chile before you see a single Chilean peso from Start-Up Chile."

Melo is very positive about the results generated for Chile though. He claims that the initiatives have already incubated, "10 startups that raised more than US $1M. Some of our most recognizable... are: cruisewise.com, babelverse.com and Wehostels.com." Whilst, "The suppers have raised more than 20 million USD, and have hired hundreds of Chileans." And the ideas don't stop there. This weekend Santiago plays host to ‘Start-up Weekend, tagline "No talk, all action. Launch a start-up in 54 hours".

Who know what will come out of all this... and which countries will emerge next in the global competition to become the world's premier tech hub. Perhaps ‘Cwm Silicon' (the Welsh tech hub in Newport) will be trying to entice entrepreneurs into the old mining valleys? Or maybe Silicon Glen will be looking to rejuvenate Scotland? I can just picture the promotional materials now...


By Kathryn Cave Editor at IDG Connect



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