Chile Aims to Attract Foreign Startups
Like so many young entrepreneurs, Stanford University grads Amit Aharoni and Nicolas Meunier had an idea for a business: a website to help Americans find deals for cruise-ship vacations. Unlike many other entrepreneurs, though, they didn't launch their company in Silicon Valley, opting instead to go nearly 6,000 miles south, to Santiago, Chile.
Aharoni, a 30-year-old MBA who spent nine years in the Israeli Defense Forces, and Meunier, 25, a programmer from France with a masters in electrical engineering, are the first participants in Start-Up Chile, a government program to woo foreign entrepreneurs. The goal is to put Chile on the map as an innovation hub. "We wouldn't have come to Chile if it hadn't been for the program," says Aharoni. "It's not something that you might consider naturally."
Start-Up Chile is trying to tackle what President Sebastián Piñera calls an obstacle to growth: a dearth of entrepreneurs. Shortly after taking office in March, the billionaire, who made his fortune introducing credit cards to the country, pledged to add 100,000 businesses and 800,000 jobs by 2014. In a July speech, Piñera said Chile needs to look outside its borders and "work hard to regain its entrepreneurial and innovative culture."
Nicolas Shea, a Chilean who had been running an e-learning company in Silicon Valley, moved back to Santiago to help run Start-Up Chile. The program will have a budget of $1 million this year and $5 million in 2011. More than 150 people, with ideas ranging from software to solar panels to gadgets that use radio-frequency identification technology, have applied to the program. Those who make the cut will receive a $40,000 grant, a one-year residency visa, and hand-holding from the program's seven-person team to ensure participants settle in quickly and make connections with potential hires and investors.
The program's five-person selection committee has approved 25 companies this year, most of them submitted by foreign-born residents of the U.S. The idea is to borrow talent, not steal it, Shea says. "It would be ridiculous to want to compete with Silicon Valley or Bangalore.…But we want to be in the game as an agile, friendly player—a good place to do a test market," he says. "I can't think of a cheaper public policy to gather all the talent that we will gather."
Detractors have questioned why Chilean citizens can't apply for the grants. In comments on blogs and via Twitter, they argue that subsidies should be awarded to Chileans to develop the country from the inside. Supporters of the program counter that foreigners will help create jobs and serve as an inspiration to locals. Chileans will see that "taking the entrepreneurial plunge is possible, because here comes this [foreign] guy with an idea…and it got funding," says Alex Seelenberger, managing director at Aurus Bios in Santiago, one of Chile's 20-plus venture capital firms.
For Aharoni, the program is paying off more quickly than he expected. He and Meunier have already met with several Chilean investors and plan to have a demo up and running by January, which they intend to use to raise money. Although Aharoni acknowledges salaries for software developers in Chile "are much closer to Silicon Valley than China or India," he says the Start-Up Chile staff has provided valuable help in setting up meetings with potential partners. "We started seeing that our schedule is more and more filled," Aharoni says. "It's at least as filled as it was in California, business-wise and social-wise."
The bottom line: Chile hopes to lure foreign entrepreneurs with $40,000 grants and a business incubation program for promising startups.