The Chilean government led an initiative to turn the country into an innovative benchmark more than a decade ago. That impulse and the work of many entrepreneurs with an international outlook have been key to achieving it. Although there are challenges ahead, in Santiago de Chile startups from all fields are already emerging, from mining to fintech.
“The appeal of Chilecon Valley”. A decade ago, ‘The Economist’ entitled an article with a phrase that described the potential of the Latin American country to become an innovation ecosystem comparable to Silicon Valley. Other media and institutions also popularised that nickname. They praised a main feature: the ability to attract international talent in Santiago de Chile and its surroundings.
Opening up to the outside began from the public Administration itself. In 2010, the Production Development Corporation (Corfo) created the Start-Up Chile accelerator, based in the capital. It mainly selected foreign entrepreneurs and provided them with financial support, without becoming a shareholder, and facilities to stay. In return, participants had to take part in support activities for the growth of the ‘hub’. Since it began, 2,200 ‘start-ups’ of 88 nationalities have received the support of Start-Up Chile.
“Public policy has had a great influence, attracting international talent first and expanding to Chileans later. The ecosystem has been maturing for ten years and unicorns help create a multiplier effect,” says Mariana Poblete, Selection and Growth Manager at Endeavor Chile, a global organisation that offers market access, talent and capital to entrepreneurs. With the help of her and other experts, we analyse how the innovation hub of the country has evolved in the last decade, with a focus on its capital.
With almost seven million inhabitants, more than a third of the national total, Santiago de Chile is the main innovation ecosystem in the country and the fourth by importance in Latin America, according to StartupBlink: Mexico City, São Paulo and Buenos Aires are ahead. In this city flanked by the Andes, successful technology companies have been born, such as Cornershop, a home delivery app acquired by Uber.
Two unicorns (companies valued at more than 1,000 million dollars before going public) have also galloped through it recently. They are the ‘insurtech’ Betterfly, which provides welfare benefits to companies, and the ‘foodtech’ NotCo, which produces plant-based foods thanks to artificial intelligence as an alternative to meat.
Cornershop, Betterfly and NotCo have one thing in common: they have expanded their business to other countries in the region, an essential ingredient for start-ups from Santiago to grow. “It is a small market compared to other Latin American countries and entrepreneurs have to think outside of Chile to grow,” Poblete underlines.
In addition, the two unicorns have received the support of Start-Up Chile, the aforementioned public initiative, which is still in force and now empowers the women of the ecosystem. There are also institutional advantages for entrepreneurs, such as the possibility of creating companies in one day, and several private accelerators in the capital to promote projects.
“The combination of public policies, the reduction of bureaucracy, the training of entrepreneurs and the increase in investor interest means that we are reaping the fruits of what we have sown,” summarises Martin Cook, Business Development Manager at Forum, a company specialising in automotive financing owned by BBVA, and professor of innovation at the University of Chile.
Investment in venture capital funds corroborates his statement: it went from 160 million dollars in 2020 to almost 3,000 in 2021, according to data from the Chilean Association of Venture Capital. The average value of the investments exceeded 12 million dollars, a sample of the growth of the ‘start-ups’, and 57% of the transactions involved foreign funds. “Chilean entrepreneurs are highly valued for their commitment, they are very professional and strive to do things well beyond their borders,” says Poblete, from Endeavor.
The network of support for entrepreneurs that Chile has woven does not benefit a single sector: the recent selection of 100 outstanding Chilean start-ups by ‘Forbes’ includes projects from all areas, most of them in the capital and almost half supported by Corfo. In the primary sector, there are numerous ‘agrotech startups’, one of the technological trends for BBVA Open Innovation. Among them there are: Done Properly, which develops ingredients through bio fermentation, F4F, which produces sustainable food, and Kran, which applies nanobubble technology to agriculture.
In the secondary sector, mining innovation stands out, a very relevant sector in the north of the country: it is the world’s leading producer of copper and the second largest producer of lithium, a key mineral for the manufacture of electronic devices. In this area, projects from Santiago have been born, such as Indimin, which applies artificial intelligence, and Ceibo, which seeks sustainability.
For its part, in the tertiary sector there is a presence of ‘edtech start-ups’, logistics or ‘retail’. Also ‘fintech’ projects, with almost 180 according to Finnovista. One of them is Buda.com, a cryptocurrency platform created in the capital in 2015, a participant in a recent BBVA Open Talks on the future of money and included in the ‘Forbes’ list. “When I discovered bitcoin, it became clear to me that there was the possibility of offering a faster and more efficient form of money and that a decentralized currency could achieve social equilibrium,” says Guillermo Torrealba, CEO of Buda.com.
After receiving financing from Corfo, Buda.com grew with private investment. Now, it is present in Colombia, Mexico and Peru, employs a team of 100 people and attracts more than 500,000 users. Torrealba assures: “In Chile it is very easy to start a business and Chilean entrepreneurs are brave, they know they need to get out quickly.”
Another ‘start-up’ linked to the financial sector is Autocred, dedicated to facilitating the sale of used vehicles and in which Forum, a BBVA company, has invested. “Autocred offers people who buy and sell cars the transfer of ownership of the vehicle, the financing alternative supported by Forum, car insurance and the TAG, a device that allows you to travel on toll motorways,” details Cook, from Forum.
Despite the good state of innovation in Santiago de Chile, the ecosystem still has challenges ahead, as stated by Endeavor and the experts consulted:
Chilean entrepreneurs will face these and other challenges, but the future is promising. “At this stage the virtuous cycle begins, many young entrepreneurs look to the Chilean unicorns and the next ten years will be very fruitful in innovation and entrepreneurship,” predicts Cook. A decade after Chilecon Valley received its name, Santiago de Chile takes a breath to continue climbing steps in innovation.