Aiming to become the Singapore of Latin America through IT entrepreneurship

Tuesday, May 24, 2011

Chile is aiming to become the "Singapore" of Latin America with a series of projects designed to boost entrepreneurship both inside and outside the country.

Government business development organization Corfo recently set up Start-up Chile, an organization that provides funding to foreign investors to come and establish start-ups in the country. Some 23 such entrepreneurs have arrived in recent months, an additional 100 are on the way and Corfo expects a total of 300 by year-end and 1,000 over the next four years, Hernán Cheyre, executive VP of Corfo, told BNamericas.

"We want people to use Chile as a platform to do business and to also act as inspiration to the Chilean youth and instill them with their entrepreneurial and innovative culture," Cheyre said.

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But the organization is also seeking to send its youth to learn abroad. Corfo, in conjunction with IT association Acti, entrepreneur organization Endeavor and start-up incubator Plug & Play, selected nine Chilean entrepreneurs to go and spend three months at the Plug & Play lab in Silicon Valley.

The initiative, called Global Connection, preselected 31 budding entrepreneurs to make a 15-minute presentation in English of their business project, of which nine were selected.

Fernando Gouveia, Plug & Play's international relations manager for emerging markets, said the selection of candidates had less to do with how good their ideas were, and more to do with how mature their businesses already were, whether they already had clients and revenues, as well as the impression their team gave.

Present at the awards ceremony was Chilean entrepreneur, Nicolás Orellana, founder of online corporate event administrator Welcu, which this year became the first Latin American company to receive investments from Tomorrow Ventures, an investment company owned by Google executive chairman Eric Schmidt.

"Sending Chileans abroad enables them to reach levels they could not have imagined before. Abroad they can access different networks of people, promote their products better to international markets and, at the same time, access financing and risk capital," Cheyre said.

Corfo will provide some co-financing for the trip, but the candidates will be expected to largely finance the trip themselves.

One of the winners, Cristián Sepúlveda, founder of Ubiqq, a company which provides an interactive web platform, has already been to Silicon Valley once on a Corfo grant, which gave him the idea of coming back to Chile to set up his own business. He received US$100,000 in seed capital from Corfo, and his company now generates some US$150,000 in revenues.

At the same time, the benefit of Global Connection is not about the grant received from Corfo, but rather the opportunity to be in the "mecca" of IT entrepreneurship, as Silicon Valley was frequently referred to during the presentation.

"The financing is small; it's more about the alliance with Plug & Play. We have to finance a lot of activities. It's not about the airfare; we have that. It's the support, the industry contacts," Sepúlveda told BNamericas.

Vladimir Tirado, another of the winners and founder of Smart Soluciones Tecnológicas, had to dredge up every scrap of what he called "street English" to do the presentation.

His ClicMart project is a mobile commerce platform that allows customers to view additional information about a particular product by scanning its barcode with their smartphone - a notion known as "extended packaging." This then allows supermarkets and brand names to pitch offers and similar products to those customers.

"We all know what Silicon Valley is - the mecca of entrepreneurship - so this is a great opportunity to share the experience of all the big entrepreneurs to improve our business model," Tirado told BNamericas.

Francisco Rojas, founder of Mazorca Studios, which develops a platform that integrates social networks with video games, was one of the unfortunate ones that didn't make the grade this time round. However, Corfo will hold a second round for Global Connection in September, which gives Rojas and others time to refine their projects more and get some customers.

According to Cheyre, Corfo's goal with Global Connection and Start-up Chile is not to try and create a Silicon Valley in Latin America - something that in his opinion is impossible to replicate.

Rather it's more about moving Chile's economy away from its traditional dependence on natural resources to one with more value-added services and products. And the synergies between foreign investors looking to Chile and local entrepreneurs learning from abroad can help the country reach that goal.

He imagines that much innovation will actually take place around Chile's traditional industries of mining, fishing, forestry and agriculture.

"We can add value and strengthen these value chains that are generating world-class clusters in each of those industries. And in the area of global services, Chile has advantages in offshoring," he said, underscoring the frequently mentioned advantages that the country has over some of its neighbors as a foreign investment hub: political stability, institutions that work, low levels of corruption.

"We want to be the Singapore of Latin America, an entrance point to the region. Chile is a reference, but we have to strengthen that," he said.