SANTIAGO (Reuters) - With a sprinkling of seed capital, Chile is courting a flock of young technology entrepreneurs to spur local innovation and turn the South American country into a satellite for Silicon Valley.
By October, Chile hopes to attract 25 budding tech companies through Start-Up Chile, a pilot program promising to slash red tape, help with $40,000 of overhead and connect innovators with top local talent and venture capital.
New President Sebastian Pinera, who made a fortune as a credit card entrepreneur in the 1980s, has pledged to turn around declining productivity and increase the Chilean economy an average of 6 percent annually during his term.
The president is confronting what he calls the country’s “lack of a true culture of innovation and entrepreneurship,” with the help of young innovators passing up U.S. opportunities in a reversal of the traditional brain drain.
Pinera’s advisors hope the foreign entrepreneurs can jump-start their Chilean peers through local hiring, shared know-how and sheer example - all in exchange for six months of start-up capital.
“I was there and I know what $40,000 can mean to a guy that’s fully leveraged,” said Nicolas Shea Carey, a Chilean entrepreneur who left Silicon Valley to head up Pinera’s inter-ministry panel on innovation.
“Basically, you’re coding in an attic with your friend, eating pizza ... So why don’t you just go to Chile, move to a more comfortable place and buy the same Domino’s Pizza for half the price?” said Shea Carey.
One of the first hungry entrepreneurs to accept the offer is Amit Aharoni, an Israeli looking to start a travel website with fellow Stanford graduate Nicolas Meunier, from France.
“For first-time entrepreneurs, you have a chicken-and-egg problem,” said Aharoni, explaining the need for capital in order to generate a prototype to attract capital.
Aharoni expects to be back in California next year scaling up the venture, but if he and Meunier find the right expertise they may keep their development operations in low-cost Santiago.
More than the help with basic expenses, he said affordable access to the region’s best talent was the greatest appeal of Start-Up Chile, which starts the local networking with a buddy from the tech sector waiting at the airport.
Add to that Chile’s convenient time zone, temperate climate and inviting coastline, and Duke professor Vivek Wadhwa sees the potential to draw a cadre of high-impact innovators with just $2 million.
Wadhwa, an unpaid adviser to the program who researches the movement of highly-skilled immigrants, said Chile can capitalize on a turning point in the American tech sector, as visa difficulties and a sluggish recovery are pushing talent toward more vibrant emerging economies.
“For the first time in U.S. history, skilled people are leaving America to make other countries their home. So far it’s been a one-way ticket to America... Now they’re finding more economic opportunities in other countries,” Wadhwa said.
Oskar Hjertonsson, a Swedish entrepreneur who steered Santiago Web start-up Needish to a $10 million investment from daily-deal Web company Groupon in June, says Chile has a lot of ground to cover before it’s churning out new tech gems.
Web culture locally is still playing catch-up, he says, but a successful example does wonders for confidence.
“I now have 35 employees convinced they could run a start-up better if they didn’t have me in the way,” he said.
Editing by Simon Gardner and Tim Dobbyn
Our Standards: The Thomson Reuters Trust Principles.