Regional Consultant LATAM, 4xi Global Consulting
Founded in 1541 by Spanish conquistador Pedro de Valdivia as Santiago del Nuevo Extremo (‘Santiago of the New Frontier’), the city is nestled under the serenity of the towering Andes Mountains and is today a bustling and vibrant city full of opportunity and home to a multitude of Chilean and global companies.
With a population of nearly 19 million and a GDP of $294 Billion, Chile is ranked by the World Bank as a high-income economy and is considered one of Latin America’s most prosperous nations leading the way in terms of competitiveness, income per capita, globalization, economic freedom and low perception of corruption.
That said, Santiago is a tale of two cities with high economic inequality as evidenced by recent social unrest and followed by the impact of the global pandemic hitting Chiles poor harder than those in more privileged areas. With an average net salary of just over $16,600 per annum, still, one percent of the Chilean population lives on less than US$1.90 a day. Nevertheless, that is still 180,000 people but comparative with neighboring countries including Uruguay, Argentine, and Brazil.
Chile ranks high in terms of global competitiveness and number one in Latin America well above the likes of Brazil, Mexico, and Argentina. It is also recognized as a country that is relatively easy to do business when compared with other countries in the region.
Dominated by the mining of mainly copper, and lithium, Chiles predominant industries include agriculture, fish processing, iron and steel, wood and wood products, transportation equipment, cement, textiles, and business services. Mining represents nearly 60% of all exports with the manufacturing sector accounting for 34% mainly in food products, chemicals, and paper products.
Nearly 14% of the workforce work in agriculture, Chile is the world's second-largest producer of salmon, forestry at over 13% is one of the major exports, wine continues to grow as consumers widen their appeal for quality at reasonable and competitive prices. The service industry continues to grow with many international companies located in Santiago.
Technology firms from Microsoft, SAP, IBM, and Nokia. Professional services from EY, Deloitte, and PwC. To the ubiquitous Amazon, and mining conglomerate BHP to name but a few. Chiles own Banco de Credito, LATAM Airlines, and Santiago’s Universities are also major employers in the city.
Over recent years, Chile has focused on developing homegrown tech talent and attracting global tech companies to what some have termed as Chilecon Valley. Here are some of the moves designed to stimulate and potentially simulate the foundation of global innovation in California.
Seed accelerator Start-Up Chile has been a huge success and has benefited more than 1,960 businesses to date. This publically funded program launched in 2010 to help promising young businesses grow, provides them with equity-free grants of not less than 10 million pesos and also provides working visas for foreign nationals. To date entrepreneurs for more than 79 countries have been involved with the Start-up initiative.
First initiated by Nicolas Shea, a Chilean businessman with the aim of speeding up the economic and social development of the country the program has been a huge success and has been replicated in more than 50 countries around the world. It is currently valued at $2.1 billion USD in Chile and has a retention rate of 47%.
As with Silicon Valley, Santiago has a robust connection with and availability of higher education and uptake. Nearly 90% of high school students successfully enroll in a university in Chile, in 2017, this ranked the 5th highest in the world. With some 32 universities, students have plenty of choices to meet their demands for higher education. Chile has some of the best universities in South America, ranked in the top 4 on the continent, with the likes of the Pontifical Catholic University of Chile, Universidad of Chile, and Universidad de Santiago Chile in the lead.
Chile’s more traditional conservatism has in recent years given way to a surge in budding entrepreneurs choosing a career as an entrepreneur above more traditionally risk-averse channels. The high level of education, travel, and work experience with global organizations both in-country and elsewhere has fueled the ambition of the latest generation of business leaders.
The start-up portfolio in Chile is now valued at over $1.5 Billion.
“About half of the total early-stage entrepreneurship activity in Latin America takes place in Chile. The country’s entrepreneurial ecosystem promotes risk acceptance and product innovation.”
Chile is making it easier for foreign entrepreneurs and investors to take part in Chile’s startup ecosystem. The government has introduced a tech visa that allows tech talent to acquire a visa in just 15 days. This visa is attracting foreign talent and helping to further position Chile as a leading global technology capital.
The government-backed Start-Up Chile program offers equity-free grants up to $40,000 has attracted technology entrepreneurs from all over the world. The government also gives one-year visas to those who want to continue developing their startups in Chile. The Start-Up Chile program offers mentoring workshops, co-working spaces, and access to investors. The government’s public investment laid the foundation for a growing culture of entrepreneurship.
Startups that have completed the program have also generated more than 8,500 jobs, with more than 50% of those staying in Chile.
According to the Global Innovation Index, Chile ranks first in LATAM for innovation investing more in research and development than its contemporaries in the region. This spending by the government is spurring innovation through investments in startups and loosening restrictions for larger companies looking to penetrate the Latin American market. Chile is also ranked 14th for the number of firms created each year.
FinTech Driving Change
The implementation of mandatory electronic invoicing in Chile has made doing business and dealing with taxes in the country much more efficient. There are many benefits of electronic invoicing, including the ability to optimize cash management, minimize risks, improve real-time traceability, improve data quality, access and accuracy, as well as reduce complexities with trading partners in other countries. This policy change has spurred Chile into a leader in electronic invoicing and in the FinTech space.
S-Factory for Women
The S-Factory is one of the only acceleration programs in Latin America that promotes technology startups led by female founders. S-Factory is a pre-acceleration program for startups led by female founders. There are two batches a year with 20-30 companies in each batch. Female founders receive training, mentoring, and approximately US$15,000 in equity-free funding to help get their projects off the ground and build their MVPs.
Then, unlike Silicon Valley, the cost of living is a fraction of its forefather in California making it much easier to live, survive, recruit, and retain talent, and thrive. There are many lessons to be learned from how Santiago and Chile is leading the way in LATAM and building a culture of success.
“For global organizations, LATAM represents a great opportunity to access a highly educated workforce but often need help navigating the nuances of politics and culture.”
Gary Mackay, 4xi Regional Consultant for LATAM has lived in Santiago for the past decade and can help your organization navigate your journey not just in Chile but across South America.
Gary has a wealth of experience globally in business and industry, mining, and remote sites, and helping organizations navigate the labyrinth of opportunity in LATAM, including:
Gathering insights and exploring opportunities
Regional and local support with existing operations
Making connections on the local level
Helping organizations enter new markets
Local leadership and presence
“4xi Global Consulting through its strength and power of collective experience can help you navigate the unknown and explore new horizons.”
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