Note: It might seem funny, but I’ve never written a standalone post about doing business in Chile. If you’re interested in going deeper, please check out the Chile category on the blog, as there’s 8 years of content about what it’s like, delving deep on banking, real estate, startups, investing and more.
Chile is a long, thin country at the tip of Latin America that is widely considered one of the best countries in the region to do business. Across several indicators in the World Bank’s Doing Business Report, Chile beats out the regional competition. In 2018, Chile ranked 55th in the world on the World Bank’s Doing Business report, coming in just after Mexico, which ranked 49th. However, in recent years, Chile’s business-friendly reputation has slid from 34th to 55th which has been subject to some controversy.
Still, Chile is undoubtedly one of the most influential economies in the region, despite its small size. Chile’s population reaches just 17 million people, but the country is extremely centralized. The capital, Santiago, is home to 7 million people, or one-third of the total population. By comparison, São Paulo, the biggest city in Brazil, has over 21 million inhabitants – more than the entire country of Chile.
Chile’s overall GDP was US$247B in 2016, 28% of which is made up of exports. Chile is the world’s largest exporter of copper, and it also exports lithium, fish, and wine. While Chile’s overall GDP appears small beside giants like Brazil (US$1.8T) and Mexico (US$1.1T), its population is more than ten times smaller. When measured per capita, Chile’s GDP is the second-highest in the region after Uruguay.
I recently wrote a column in TechCrunch called A new era in Latin American startup investing where I talked about how things have changed since I first moved to Chile in 2010 as part of the pilot round of Startup Chile.
Some of the pioneering investors and entrepreneurs have started to be successful, paving the way for the next generation of startups. Other founders who tried and failed in the early 2010s have learned their lessons and are starting second rounds of companies. The ecosystem is much more developed, including startup specific attorneys and more experienced venture investors. From the link:
Startups in Latin America are using creative solutions to address not just local but also global problems. For investors outside the region, the prospect of working with these startups can appear attractive, yet complicated. Investing in early-stage startups in Latin America can present challenges; however, despite the challenges, time and time again I’ve found it can be well worth the effort.
When I first came to Santiago, Chile in 2010 as part of the pilot round of Start-Up Chile, there was hardly any talk of startups. Most people didn’t even know what startups were. Within nine months of returning to the U.S., the company I co-founded was acquired. So I decided to go back to Chile to look for more opportunities in this emerging market.
Over the next couple of years, I taught entrepreneurship in Chile, mentored local entrepreneurs and eventually started investing in Latin American companies myself. I’ve now invested in more than 30 early-stage companies in Latin America, and I firmly believe the time to help early-stage startups in Latin America has never been better. Here’s why.
Continue reading A New Era for Startup Investing In Latin America on TechCrunch.
Photo credit: Alessandro Pautasso
Lots of entrepreneurs ask me about Chilean investors and venture capital firms. Here’s my list that I usually send them. Hopefully it’s helpful.
Magma Partners – We’re the only fully private investment fund in Chile. We invest early stage and like to be first investors into companies. We’ll do initial investments of $25-$75k and can follow on with up to $250,000 per company. We like two niches: B2B businesses in Latin America and companies that have their back office in Latin America, but whose primary market is in the US or Europe. 26 investments in 2.5 years. $5m fund. Presence in Colombia, Mexico, USA.
The Chilean government, via CORFO, offers venture capital funds incentives to invest in Chile. For every $1 funds invest, CORFO can match an additional $2 or $3 with low interest debt that they forgive if you fail, but you must repay if you’re successful. Here’s the full fund list across all industries. These are the more startup focused funds.
– In 2015, Nazca was acquired
by Mountain Partners
, a successful German/Swiss VC and company builder. They generally invest $200k-$500k in companies that can scale regionally and potentially expand to other mountain offices in Europe, Asia and Africa. Nazca has offices in Argentina, Chile, Brazil, Colombia and Mexico. Mountain has offices in multiple countries across Asia, Africa and Europe.