Chile Business Blog

I had an amazing time studying abroad in Chile; it was an experience that allowed me to meet new people, see new places, and learn a lot about many aspects of both Chilean culture and business. One of my favorite parts was getting to meet with and learn from so many people, organizations, and companies that contribute to the entrepreneurial ecosystem in Chile. I am interested in entrepreneurship and have learned a lot about the programs in the United States that help support the strong startup ecosystem in many parts of the country, both from the classes I am taking for a certificate in entrepreneurship, and from the startup company that came from the laboratory where I do research. Because of my interest in this area, I would like to reflect on the roles that some of the places we visited play in supporting the Chilean startup ecosystem (Basso 2018).

Universities play an important role by connecting entrepreneurs with technical experts. They also facilitate tech transfer of the technology developed at universities to young startup companies to pursue further. In recent years, there has been a 17.4% (2015) increase in patent applications at universities in Chile, and the number of tech transfer offices has also increased significantly. In 2016, CORFO decided to support three technology transfer hubs, to connect the tech transfer offices from 26 universities (Koprowski 2016). We visited the Pontificia Universidad Catolica de Chile campus while we were in Chile, and we discussed some of the other universities (and the innovation centers associated with them) when we were going over information in class before we left.

Accelerators and incubators contribute to a healthy ecosystem by offering mentorship, space to work, and sometimes classes and workshops to train their entrepreneurs. There are two types of these innovation centers: university incubators, like the Innovation Center of Pontificia Universidad Catolica de Chile, which we toured, and privately-owned firms. There are also some incubators run by the government. Startup Chile, which we visited, is an incubator run by CORFO. Although businesses supported by university incubators and private firms have similar success at the beginning, businesses that are supported by university incubators are more likely to attain high growth than ones supported by private firms (Cancino et al 2018), perhaps due to the support of the technical experts located at universities. Co-work spaces, like HUB Providencia where we advised local entrepreneurs, contribute to the ecosystem in a similar manner to accelerators and incubators, by offering space to work and an opportunity to network and meet other local entrepreneurs.

Corporations and large companies support the local ecosystem by sponsoring local incubators and hubs. We visited Oracle Corporation while we were in Chile, and got to see all the innovative projects they are pursuing. Companies not only support the external entrepreneurial ecosystem, they also pursue innovation within their own organization.

A supportive government is essential for the development of a healthy startup ecosystem. The government can make policies that benefit entrepreneurs by offering incentives that help startup companies, and make founding a new company an easy process. They can also provide favorable policies towards small businesses, to help them to grow larger. Most governments, Chile’s included, also provide funding and grants both to companies and ecosystems (hubs and accelerators).

Funding for startup companies can come from multiple sources. Venture capital, angel investors, and grants and government support are some common places new ventures find funding. We had the pleasure of meeting with CORFO (Production Development Corporation), while we were in Chile, in addition to Startup Chile, which is funded by CORFO. CORFO has many programs aimed at helping startups, and has multiple grants and programs that offer funding. For example, CORFO started a Seed Capital Program in 2001, which offers monetary assistance to both entrepreneurs and startup companies themselves, and to incubators from universities and private firms (Cancino et al 2018).

Our trip was interesting because of the variety of places that we visited. We did not just focus on one aspect of the startup ecosystem in Chile, but visited organizations that each have a specific part to play in the overall landscape. While I thought meeting with the local entrepreneurs at HUB Providencia was emotionally rewarding and worthwhile, understanding the larger picture was also interesting to me. Each place that we visited was like a puzzle piece, and understanding the picture that is made when they are all put together brought the whole trip into better light.

 
References:
Basso A, Baltar E, Andonova E. Startup Innovation Ecosystems in Southern Europe, European Commission, Brussels, 2018, JRC113872.
Cancino CA, Nunez A, Merigo JM. Influence of a seed capital program for supporting high growth firms in Chile, Contaduría y Administración 64 (1) Especial Innovación, 2019, 1-14.
 Koprowski E. Chile to Support Technology Transfer Hubs with $19 Million. Masterstudies.com. 2016. Accessed April 14, 2019.

Before departing on this trip, I thought of entrepreneurship much like I would imagine many of my fellow millennials do.  I imagined technology startups in Silicon Valley, trendy logos on repurposed buildings in Austin, and Magnolia Farms-adjacent restaurants that charge far too much for avocado toast.  Of course in my mind, I know that entrepreneurship not only expands beyond the common millennial examples, but also entrepreneurship is not limited to the creation of an enterprise. It is a mindset that can be honed, perhaps like a science, but also it is an art, sometimes perplexing to the brightest of minds.  In Chile, I was able to witness a business environment that was at times just like comparable cities in the United States, while also in a different place all at the same time. Almost more European in nature in some barrios, Santiago and the surrounding areas offered beauty and economic vibrancy that surprised me, while the rural areas still presented a lifestyle that seemed to be yearning for an economic boom—but perhaps limited by the context it exists in.

One of the characteristics of Chile that we learned on the way in was that Chile, alongside Uruguay, has a reputation of low corruption, particularly in comparison to Latin American peers (The Santiago Times, 2018).  Additionally, despite Brazil’s economic strength in GDP gained by its sheer size, Chile has the highest per capita GDP in South America (World Atlas, 2018). Like many, if not most, countries around the world, mobile phone usage and network coverage was ubiquitous in Chile.  For many of the students on the trip, this meant a certain sense of comfort, although perhaps at slower speeds, as well as safety, stuck with them throughout the experience. For residents of Chile, this means access to essentially every online resource that we have here in the States.  I definitely discovered that the level of adoption in-country varied by product. Instagram, for example, was widely used, as was Yelp and Google Maps. Etsy, though, a strong tool for entrepreneurially (and craftily) minded Americans, was largely unknown to many of the entrepreneurs we consulted with in Santiago.  As is common worldwide, there was a regional alternative to Etsy, but it was nothing near the service that Etsy is, and it was not largely in use.   

Though the Chilean government and economic system is stable and fairly capitalistic, there are challenges with economic inequality.  I remember standing at the feet of the Virgin Mary statue in Santiago, and on one side of the large hill, I looked out at the tallest building in South America, the Gran Torre Santiago.  On the other side of the hill, in the shadow of the statue, I saw what we might call a slum. Our hosts warned us to avoid those neighborhoods. Even in rural areas, the economic and structural stability appeared greater than that of countries such as Nicaragua, Honduras, Mexico, and Guyana, which I’ve visited in recent years.  In some locations, both urban and rural, without the Spanish “hint,” you might suppose you are in the U.S. or Western Europe. It was hard to judge if the barrios peligrosos were nearer to the favelas in Brazil or a “bad neighborhood” in Houston. We did not explore such risks to find out. Nonetheless, there are many in Chile aspiring for a way into the middle class or upward.  Like the current situation in the U.S., where the middle class may be shrinking with capital absorption into the upper class, Chile struggles to overcome the “two Chiles” situation, where some prosper, while the rest live like the rest of Latin America, just perhaps in a more temperate climate (COHA, 2011). The question then is whether the presiding class care. One could argue that, like the capitalistic “Chicago Boys,” whose transferred knowledge from the States brought a certain sense of economic opportunity to Chile, Chile’s current leadership embraces the notion that fertile soil for business is fertile soil for the people.  In providing significant economic benefits to entrepreneurs abroad, through initiatives like Startup Chile, the government invites innovation and business opportunity to its shores, but whether the capital remains in Chile (or creates opportunity for those without), is of course up to the fundamental debates of capitalism and mixed economies. One of the challenging aspects of advising the local entrepreneurs was running up against laws that governed the entrepreneurial actions of many of the aspiring businesspersons we met. Even a man who sought to follow our advice and list some craft items on Etsy worried that he would essentially operating outside the law, as the Chilean government asks any business owner, however they so define it, to go through the appropriate processes.  What the U.S. might treat as a hobby or self-employment, the Chilean government seems to have interest in at least mildly regulating through certain barriers to entry. This created limitations for local entrepreneurs who were not postsecondary educated on the facets of enterprise. For younger, tech-savvy entrepreneurs at the startups, and for both domestic and international college students and graduates, I could imagine the system, particularly through various state-sponsored grants, competitions, and incentives, was favorable for business opportunity.    

Copper is Chile’s largest export, but recent volatility after a period of growth preceding the Great Recession has given Chile’s business and government leaders reason to find additional stability in other markets (InfoMine, 2019).  Even in early 2019, Chile has found a downturn in copper exports due to varying demand worldwide (Trading Economics, 2019). The government has invested largely in other markets, such as salmon production, to avoid challenges that other mineral-dependent countries, such as Zambia, also largely reliant on copper production, have found.  But like the UAE, looking forward towards an eventual future where oil reserves are not as plentiful, Chile looks towards tourism as another source of additional economic production. Chile, its beef-famous neighbor Argentina, and Uruguay have all seen recent boosts in tourism, as European and American travelers, along with wealthier Latin American sojourners, realize that the southern part of South America offers diverse landscapes, European architecture, fine cuisine, and a sort of safety and stability, particularly in Chile and Uruguay, that are not usually, in fairness or otherwise, associated with Latin America.  In Santiago, we witnessed signs of the booming tourism, with a clearly present dining infrastructure, from fast food to tapas and fine dining, as well as a modern public transportation system, conveniently synced up with Google Maps. In more rural areas, particularly south of Santiago, the beauty and boutique infrastructure exists for increased traffic, but the names and attractions are not household in the English-speaking world, so some sectors rely on wealthy Latin Americans, versus those from beyond the continent. With countless camping spots, breweries, distilleries, bakeries, and antique shops, the more rural parts of southern Chile would largely satisfy Romance-speaking tourists from Western Europe, though English availability varied outside Santiago.  Even still, with a growingly affluent Latino population in the U.S. and rising wealth in some areas of Mexico, Panama, and other places, Chile has an opportunity to set itself apart as the Spanish-speaking brother to Canada, New Zealand, and Norway, known worldwide for their mountainous scenery at the edges of the world.   

Back in Santiago, and in the nearby arid areas, Chilean wines offered a particular quality (that did not particularly continue with U.S.-bought products of Chilean origin) that adds to its both export and tourism prospects.  With unique varieties of wine grapes thought once to be lost, the climate and volcanic-rich soil offer growth opportunity for the Chilean wineries that have long played second-fiddle to their neighbors to the east in Argentina.  In visiting Concha y Toro, our group experienced a wine tour that was professional, beautiful, and entertaining. Though not distributed in the U.S. as a particularly prestige wine, their large-scale operation should be a pillar of any group trip to the Santiago area.    

Chile has the tall buildings, the historic architecture, the education infrastructure, the public transportation, the widely available internet access, relative safety and stability—what, then, separates Chile from its next step in growth?  One economic example can be found in the services of Uber in Santiago. Uber sits in a semi-legal state, somewhat akin to the U.S. legal battles over cannabis, often in some states decriminalized or tolerated but still not federally legal. Uber is widely used in Santiago, with thousands of reviews for some drivers, but still it is not technically legal.  Locals told of taxis luring Uber drivers to places and beating them. Some police officers allegedly lured Ubers to offer citations. Though New York City has seen some aggressive situations between taxi drivers and their opponents, the stories seemed more in line with other tales in less stable countries such as Brazil or Mexico. Does the government actually want to acknowledge Uber?  I took one taxi in Santiago, and I paid so much for such a short ride that it was no wonder that Uber maintains its grey-area-supremacy. I would argue that Uber can continue to exist in its liminal status, and, except perhaps for some tax revenue, the government avoids offending taxi drivers, who seem to fend for themselves, and the city’s modern populace and increasing tourists can still access one of the world’s growingly ubiquitous transportation services.  I believe anytime someone from the U.S. steps into a different context where people look and speak differently, particularly in the “post-Taken” world, there is a fear that the next Uber-ride or the next flight or the next (fill in the blank) is going to be the perilous one. But while in-country, I only witnessed highly vetted drivers with hundreds of reviews carrying out generally positive service. 

Chile is in a political and economic position to take leadership in the Spanish-speaking-West, both in terms of economic growth and visual presence.  The country is beautiful, diverse, and littered with natural resources. Many of the challenges that hold back larger players, such as Brazil, or even rival-Argentina, seem absent or less in degree in Chile.  Their economy once almost looked like modern China—controlled by militaristic rule, but in most senses capitalistic. Now the country has pivoted to something more American. Trickle-down economics are adopted in a certain sense.  Positive business environments and opportunities for direct government investment in enterprises and individuals makes Chile a promising starting point for new businesses. I believe the challenge for Chile is to its future advantage.  Chile, for all its cultural diversity and fluency, is largely Hispanic in its orientation. Spanish is the language of choice. For now, English is the dominating language of world business, and perhaps it will remain so, but Spanish is a growing player or world linguistics.  Mandarin Chinese and Hindi-Urdu represent huge population growths, but when looking at business-use feasibility and cross-national relationships, besides English, and ahead of French, Spanish is surely an important piece of the near-future of Western business growth. Chile has that certain consumer confidence, relative transparency, and free-market opportunity to lead now and in the near future.  With violence in Mexico and growing pains elsewhere in Latin America, Chile’s stability and its slow growth from quasi-capitalistic dictatorship to democracy positions it as a real economic and entrepreneurial player for the next decades. Whether agua con gas will spread as a trend to places like the U.S., that remains to be seen, but Topo Chico would assuredly love the opportunity.

References:
Chile drops two spots in corruption index. 2nd most transparent in Latin America. (2018). The Santiago Times. https://santiagotimes.cl/2018/02/22/chile-drops-two-spots-in-corruption-index-2nd-most-transparent-in-latin-america/
Historical copper prices and price chart. (2019). http://www.infomine.com/investment/metal-prices/copper/all/
The inequality behind Chile’s prosperity. (2011). COHA. http://www.coha.org/the-inequality-behind-chiles-prosperity/
The richest countries in South America. (2018). World Atlas. https://www.worldatlas.com/articles/the-richest-countries-in-south-america.html
Chile exports. (2019). https://tradingeconomics.com/chile/exports
 

“Encantarteeee” we all sang at the top of our lungs with whatever voice we had left after our music lessons. The Chilean couple leading us in their song started their business to use teaching singing as a way to bring people together. This was one of many fun, memorable, and educational experiences I was blessed to be a part of on my study abroad to Chile.

We spent the beginning of the trip learning about the Chilean people, culture, and economic landscape. This was very beneficial to our proper assessment of the startups and businesses that we visited. The Mapuche people inhabited Chile early on and had many land disputes with other people as they moved to Chile. They had unique culture and rich history. We learned about them through visiting a brewery and museum, our knowledgeable tour guides, and a dinner at a Mapuchan household. We learned that the economic landscape was one that encourages entrepreneurship; the government funds initiative and resources for people to start businesses.

We visited several businesses that were all very hospitable to us and informative. Two business visits that stood out to me were Green Glass and Startup Chile. Green Glass was started by a man named Oscar when he was 18 years old. Oscar explained to us that the company employs people living on the streets to collect bottles from the trash. Other employees farther down the manufacturing line turn the bottles into glasses at Oscar’s very own house. The company is a million dollar startup now after being open for several years. We got to see how the bottles were made as well as hear Oscar’s inspirational story of how he started Green Glass despite all odds. I was inspired by his drive and grit. His passion and dream drove him to persist through an unconventional story and many business challenges. Now that he has steady revenue, he gives back to the community with company profits. When I start a business I want to take after this model of incorporating philanthropy into my business model as I believe every part of my life, occupation included, should not be for selfish gain.

For many startup companies like Green Glass, Startup Chile was the reason for their success. Startup Chile is responsible for helping with the development and launching of startups in order to improve the Chilean economy. The government funded this program for people to have resources as well as incentives to start their own businesses. Walking into Startup Chile, I could see my future self in the shoes of the startups there… brainstorming and working with a team to see their entrepreneurial idea come to life in order to provide a revolutionary solution to a major problem. Getting to see the business development process from start to finish gave me more of a realistic perspective of what it takes from an internal (employee, managerial, etc.) perspective as well as external (resources, government approval, etc.) perspective. I was able to see how much government support and funding can make a difference when starting a business.

We learned about the funding for startups like ones that go through Startup Chile by visiting government funding organizations like Corfo. Getting to see the full picture of what it takes to run a startup was very impactful to my perspective of the process. I realized how much patience it takes to go through the process of getting everything approved as well as the multifaceted planning process it takes to start your own business. Coming back to the United States, I now want to support startups when I have the capital to do so because I can see how impactful it can be to individuals, society, and a country’s economy.

One of the most meaningful parts of the trip was getting to interact directly with startups and give personal advice. We partnered with Startup Chile to consult with people who have startups. I was able to relate to one of the startups in particular because it was students running the startup to solve a problem on their campus. All of the startups were in different phases; I loved being able to enter their business development process where they were and ask them questions to help them refine their business model. Since I have been back, I have truly enjoyed getting to offer advice to business owners based off of what I learned on my study abroad.

Lastly, we visited an innovation center associated with a catholic university. From this we were able to talk as a class about how we can implement what we learned and what they do back in College Station. I see this most actively implemented through the McFerrin Center of Entrepreneurship and Startup Aggieland. I now work for the McFerrin Center as a High School recruiter where I get to share with other people how my entrepreneurial mindset and future career mindsets have been shaped by resources provided by Texas A&M. I am honored to have received this opportunity to engage in experiential learning, go to the most beautiful place I’ve ever been, learn about myself as a leader and dreamer, make lifelong friendships, and be a part of a hands-on educational experience that is absolutely priceless.

My experience in Chile was twofold: being simultaneously exposed to the deep-rooted culture of entrepreneurship and innovation, as well as Chile’s more broadly encompassing culture of hospitality, revered landscapes, and the deeply felt history of the Mapuche peoples. This trip provided me with a new frame of thinking about business, while guiding me through a corner of the world I never thought I would be lucky enough to visit. From this experience I gained new friends, an eye for entrepreneurship and appreciation of the resources available at A&M, as well as the urge to travel and learn from other cultures around the world.

Chile grants its reputation as a breeding ground of innovative thinkers to Chile’s ideal blend of a small market size, government assistance, and economic and political stability. These factors allow for Chile to recruit entrepreneurs from across the globe. Perhaps the most unique aspect of the Chilean entrepreneurial ecosystem is the 2010 creation of CORFO, the government agency aimed at promoting innovation. We were allowed a closer understanding of CORFO when we attended a lecture at the Chilean Ministry of Economy. StartUp Chile, the major functioning arm of CORFO, was the first governmentally supported accelerator of its type, and it would later go on to inspire Brazil, South Korea, and Peru to create their own versions of StartUp Chile. Being able to visit their office, meet some of the participants from all over the world, and even try out a prototype sleep chamber created through the program, was eye opening. My understanding of the Chilean entrepreneurial ecosystem was expanded the day we met with locals who shared with us their ideas of their own businesses. Though struggling through a language barrier, our group was able to learn from everyone at the table, be it about their ideas for their handmade craft businesses to another wanting to expand their business of using drones to monitor solar panels located in the Atacama Desert. I left that meeting feeling inspired to pursue new opportunities with an entrepreneurial mind.

I was so overjoyed to be met with a friendly face everywhere we visited in Chile. I especially fell in love with Villarrica, from slow paced feel of the town, to gorgeous scenes of the lake, active volcano, and the flowers that bloomed everywhere you looked. There was such a strong sense of culture felt in Villarrica and furthermore as we traveled the countryside and learned of the Mapuche people. We often pulled over to learn of sacred religious grounds of the Mapuche, or spoke of how natural landmarks were valued by these people, and were even invited into the home of an indigenous family for a meal. It felt so invaluable to take part in these experiences and understand the deeper culture of Chile that stems from its native population. Learning of other outside impacts on Chilean history from our class meeting sessions served me in better understanding Chilean’s views of America, based on the US involvement in the 1973 military coup. Understanding the negative impact America exerted made me a more conscious and careful visitor.

I am so incredibly thankful to have been able to share this experience with my fellow Aggies and will always carry with me the knowledge that this trip imparted on me. I hope many after me are able to partake in this experience to the southernmost tip of the Americas to enjoy and learn from the people of Chile.