How to Start a Business in Chile
No matter the size of your company, Chile provides the strong market demand and resources necessary for business to thrive. If you’re looking to move and/or expand your business, Chile could be the place for you. Starting a business in Chile makes sense for nearly every type of entrepreneur.
In recent years, investors and owners of small, medium, and large businesses have become drawn to Chile because of its low tax rate, its economic and political stability, its level of technological modernization, and, above all, the abundance of opportunities available in the service sector.
Due to Chile’s high levels of economic growth, low unemployment rate, and the increased presence of foreign investors and companies, the strength and spending power of Chile’s middle class are at all-time highs.
This newfound middle-class spending power has created an increased demand for more foreign businesses and services that have been, until now, unavailable to Chileans. Pew Research found that Chileans now have the highest access to Internet, digital media technology, and smartphones in Latin America. This recently created demand has caused quite a stir for investors—even as little as five years ago this market was not just nonexistent but completely unforeseeable.
Over just the past few years, many investors have come to Chile to set up businesses in Santiago, both Chile’s financial capital and most economically developed city-the logical starting place. Development and opportunity abound in Santiago… just look at a year-to-year comparison of its everexpanding skyline.
We point out the increasing number of skyscrapers under construction in Santiago for two reasons… While, on the one hand, they represent the current level of growth, investment, and upward potential in Santiago, they also represent the opportunities that are no longer available. While there’s still time to take advantage—especially for small- and mediumsized businesses—Santiago has become somewhat saturated with investors. This is where you’ll find that having an insider’s perspective of Chile is handy…
Those of us on the ground here in Chile can tell you firsthand that, thanks to all of the foreign investment in Santiago, the wealth generated in Santiago has started to spread and is now trickling into smaller cities throughout Chile. These are where the best opportunities now lie for business development in the country.
The sheer expanse of Chile (the world’s longest country north to south) means that it uniquely offers the widest array of regions in the world—each with its own climates, terrains, economies, and needs. Each of these highly contrasting regions offers a diverse set of economic industries, ranging from agriculture to finance to fishing to wine—all of which have grown immensely over the past decade.
All things considered, Chile possesses all of the demand and willingness to pay necessary for a foreign business to become successful… it only lacks the foreign businesses. Add to that the fact that Chile is highly monopolized and that Chileans have been eager to support any competition—foreign or local. The country is exceptionally industrialized and modernized, and offers such a range of climates and industries that, with enough insight and the proper guidance, the committed investor or entrepreneur will find it hard not to succeed here…
Chile: An Entrepreneur’s Paradise
Chile is now one of the best countries in South and Central America for tech start-ups. It is blowing past its nearest competitor in the Americas, Panama, at least in attracting tech start-ups.
Termed “The Chilecon Valley,” Santiago, Chile, has become the entrepreneurial hub of Latin America by focusing on talent and backing up its policies with cash. As a result of government programs providing incentives, it’s attracting many tech professionals from the United States and elsewhere.
In tech, the world’s most valuable resource is talent. Chile doesn’t have the talent, but they’ve found a way to import it. While the United States turns away many of the best and brightest by denying them residency and visas, Chile is welcoming them with open arms. Tech geniuses attend Stanford, Harvard, and MIT only to find that the United States won’t allow them to stay when their schooling is complete. Chile is cashing in on the United States’ loss by giving out residency permits to anyone who will add to the country’s emerging tech industry and then giving out grants to get these businesses up and running.
Want to move your start-up to Chile? Talk to Start-Up Chile first. They offer a government sponsored program that may award a grant of US$40,000 and all the visas you need, if you set up a business in their fine country. As your business becomes more mature, they have additional government funded seed-capital programs and investment rounds. For those moving on to the big leagues, Chile has convinced many of the best venture-capital firms to visit Chile to hear pitches from businesses.
The program, which began in 2012, has funded more than 1,000 companies and entrepreneurs from 37 countries. Of these, around one-fifth are local businesses and about onequarter are American. The rest are from anywhere and everywhere on the globe. This has created a Californian vibe along the Pacific coast of South America and a vibrant entrepreneurial expat community. Like Paris in the 1920s and 1930s was the home of a great expat writing revolution led by the likes of F. Scott Fitzgerald and Earnest Hemingway, Chile is leading the way for the best and brightest in tech that don’t feel welcome in Silicon Valley.
The differences between Chile and Panama are that Chile is focused on tech start-ups while Panama has targeted call centers that want you to hire locals. Chile will allow you to bring in as many of your own people as you like, from your home country or elsewhere (e.g. India).
Panama requires 90% of your work force to be Panamanian unless you set up in Panama Pacifico or are hiring someone who qualifies for residency under their Specific Countries residency program, which covers 48 countries, but not India, for example. Chile’s programs allow you to hire pretty much anyone.
What does Chile get out of the program? Other than the obvious short-term financial benefits of bringing in successful people, they require recipients of the grants to coach local businesses. They expect you to give back some of your time. Since 2012, Start-Up Chile has held 500 meetings and 1,200 workshops and conferences focused on improving local talent.
Also, these programs have led to a number of joint ventures between Chilean and international businesses that would’ve been unattainable just a few years ago. This, and the influx of international talent that is often hired by Chilean companies, has had a positive and lasting impact on local businesses.
But Chile has some tough competition coming on. Brazil has been working towards becoming a tech mecca for the last few years, and, now that the World Cup with its billions in investment is completed, this nation is pushing hard. With aspirations of being the China of Latin America, Brazil offers better infrastructure and local resources and an economy 10 times larger than Chile’s but also a much more dense bureaucracy—one that can be impenetrable for foreign investors.
Whether or not Brazil is successful in its efforts, Chile will remain a strong option for tech start-ups. Brazil might become the China of Latin America, but Chile will be the Singapore, which is where most entrepreneurs would rather be. Brazil has the local market base, but Chile has the privacy and community, plus a more educated workforce.
If you aren’t sure about starting a business, you can always try working in Chile.