If a country’s interest in innovation can be gauged by the ease of findingout its programmes and venturing ecosystem then Chile would be near the top of the world.
The country certainly has high hopes. As Juan Fontaine, Chile’s Minister of Economy, put it: "Instead of changing the world through revolution, we can change the world through innovation."
Chile has provided $350m of subsidies to the estimated 10 venture capital funds, five angel networks and more than 20 incubators and established a Start-Up Chile organisation to provide subsidies for entrepreneurs to set up in the country. Last year’s Start-Up pilot brought 25 teams from outside Chile and provided them each with a $40,000 subsidy (no equity) to participate for six months, and a temporary, one-year visa to develop their projects.
This year, it is aiming for about 300 participants, with 1,000 entrepreneurs participating by the end of 2014, which is the deadline President Sebastian Piñera Echeñique has set to create 100,000 new businesses and 800,000 jobs. Vivek Wadhwa, director of research at the Center for Entrepreneurship and Research Commercialization at Duke University, writing about the pilot for news provider TechCrunch, said: "All of the teams that I met raved about the opportunities they had gained by being in Chile.
"They told me they have gained valuable time to perfect their technologies before having to raise capital from angels or VCs, that they had found Santiago to be a really cheap place to live, and that they benefitby being able to network with each other, are appreciative of the support the Chilean government is providing by connecting them to local businesses and investors, and enjoy the high quality of life and wonderful scenery and climate."
However, rather than build Chile into a peer to the US’s venture capital centre in California, Start-Up Chile said: "Many people think we want to replicate Silicon Valley – we don’t. What we want is to connect Chile to all the major hubs of innovation, and leverage [these] networks to create value. We strongly believe that human capital is the best highway to build upon.
"At the same time, infrastructure is the sandbox where human capital can play, and Chile is by far the best equipped country in Latin America. Think of Chile not as the final market but as a bootstrap platform before going global."
To this end, Chile has more mobile phone users than its population, although only about half its population of 17 million people has access to the internet. Non-profit organisation World Economic Forum ranked Chile at number 30, the most competitive country in Latin America and the Caribbean, according to its Global Competitiveness Report for 2010 to 2011.
The forum’s report said: "The country [Chile] has been at the forefront of market liberalisation and opening, resulting in very efficient goods and labour markets (28th and 44th, respectively), one of the most sophisticated financial markets (41st), and the largest pension industry in the region. These attributes have not only spurred growth over the past 20 years, but also have provided the country with the resources needed to stimulate the economy in recent times of crisis."
However, the forum said Chile’s education systems needed improving and so the country ranked 43rd for this pillar of its score card. Steve Blank, author of the Four Steps to the Epiphany, writing for news provider Xconomy, said while he was impressed with how far Chile had progressed in making the country an innovation hub, "what seems to be missing is a stated goal for Chile to become a magnet for talent in specific domains".
He also told Xconomy that entrepreneurship in Chile seemed to be disconnected from the country’s largest industries and core resources, such as copper mining, which contributes 20% of gross domestic product. But Chile is attracting attention from service providers. In January US-based incubator Founder Institute set up three centres in Latin America, including Chile.
Tim Delhaes, head of US-based Founder Institute’s Chilean incubator, said the country and its capital, Santiago, "is a great innovation region because in less the two hours you are surfing, sailing, kiting, horse-back riding, ice climbing, paragliding, you name it; the hard crime rate is low; it has a Duracell economy, it keeps going and going and going; and Chileans treat foreigners better then they treat each other."
Key indicators 2009
Population: 17 million
Gross domestic product: $161.8bn
GDP per capita: $9,525
Source: World Economic Forum