Today is demo day for the top 20 start-ups from the 12th generation of one of the world's most talked about business programmes - Start-Up Chile.
Tonight at 7pm Santiago time the 20 will present their ideas to national and international investors to raise funds to grow their businesses while they are in Chile. The batch were selected from among 70 other companies from the programme's 12 generation.
Demo Day (pictured above is one held during the 10th generation) is guaranteed to prove nerve wracking as the chosen few will have just five minutes to convince investors that their idea is worth funding. Judges will chose the winner, who will get a free flight to go to Silicon Valley to meet more potential investors.
Launched in 2010, Start-Up Chile provides $40,000 of equity-free funding to early-stage, globally-scalable start-ups from around the world. The funding is accompanied by a one-year temporary visa that allows foreign entrepreneurs to execute business activities in the country.
In exchange, programme participants – who must stay in Chile during the six months of the programme – must take part in activities that promote entrepreneurship to Chileans. Over 200,000 Chileans have benefited. The idea is to get Chileans to think more globally and to collaborate with one another.
Over $100m raised
Over 1,200 start-ups from 72 countries have taken part in the programme so far. Participants coming out of the programme have raised over $100 million (this Techcrunch map shows where follow-on funding has been raised) and have created more than 1,500 jobs.
In May Start-Up Chile announced that the programme would begin offering $100,000 in follow-on funding, in return they must stay in the South American country for a year and mentor others.
The change follows criticism from some in Chile that the programme, run by the Chilean government, had not done enough to keep attractive participants in the country.
Following in Chile's footsteps a number of countries have begun creating their own start-up programmes, including Brazil, South Africa and Malaysia (see this earlier post).
Most Chilean entrepreneurship experts agree that the real success of Start-Up Chile has been in the social or cultural impact it has had on the country rather than its economic impact.
Drop the red tape and share
If anything the example of Start-Up Chile perhaps shows the power of global networks.
Entrepreneurship expert Vivek Wadhwa points out that none of the participants mention money as the biggest benefit from attending the programme. "They talk about the fact that they are with great entrepreneurs from all over the world who want to exchange information, and help,” he says.
The 2015 Global Startup Ecosystem ranking released last week (see this post) says to nurture more technology start-ups countries should work on reducing red tape and lowering barriers (such as relaxing visa requirements or exchange control rules.
This is because start-up ecosystems have become increasingly interconnected (over a quarter of funding rounds have at least one overseas investor and over a quarter of team members are foreign employees).
In all three of emerging cities ranked among the top 20 start-up ecosystems in the world (São Paulo, Moscow and Bangalore) it takes almost two months to finalise immigration papers, compared to 21 days in Silicon Valley.
Added to this start-ups in emerging cities employ few foreigners (two percent in Bangalore, five percent in Moscow and seven percent in Sao Paulo). In Silicon Valley a quarter of employees are foreigners.
Lowering barriers may also help to grow the number of international customers for start-ups – which ranges between nine percent in Bangalore and 31% in Moscow, compared to 36% in Silicon Valley.
Listen to Shea
While the report’s authors said Santiago, Chile (placed 20th in the 2012 rankings) had ended up peaking fairly quickly, they note that the city's start-up population is seeing slightly above the average growth when compared to other ecosystems.
In an interview last month the brains behind Start-Up Chile Nicolas Shea (pictured right) shared with the Standford Business journal how countries can attract more entrepreneurs. In essence he says the programme has been a success because it of its simplicity.
“You just come to Chile, you get a one-year working visa, you get $40,000 and this amazing office. So just start inviting entrepreneurs. Make it straightforward and do it. I promise you they will come.”
More people should listen to Shea.
Download the Start-Up Chile book from: www.startupchile.org/supbook-results/. Click here to sign up to Small Business Insight's monthly newsletter for insights on entrepreneurship in emerging economies.
Stephen Timm is a