Company Formation: Investment Opportunities in Chile’s Startup Sector

Chile is known for its stable economy and big mining industry. However, due to its dependence on the mining industry, Chile saw a slowdown in its economic growth as commodity prices were falling. Therefore, the Chilean government started many initiatives to stimulate and diversify its economy. One of them, for example, was by investing in the Chilean startup industry. This has already had a positive effect on the industry. So much so that Chile is even ranked as the 7th best country for startups in the world by a Gust study. In this article, we take a closer look at the developments in the Chilean startup industry. In addition, we will also look at what are the influences on these recent developments and what opportunities might arise in this sector.

Company Formation – What Are the Benefits for Startups in Chile?

As mentioned before, the Chilean economy has been quite stable in the past years. In addition, Chile’s economy is considered to be open and therefore Chile is known as an easy country for doing business. According to the World Bank, it ranks 55th worldwide in ease of doing business and this is reflected in the laws that are related to new businesses. For example, Chile has a corporate law that enables to start a business within one day. This saves a lot of time and money when creating a new company. Moreover, Chile also has a favorable immigration law regarding foreign entrepreneurs. The “Visa Tech” offers entrepreneurs, tech talent and investors the possibility to obtain a visa within just 14 days. By sampling the visa process for these individuals, the Chilean government hopes to attract talent that cannot be found in Chile itself. Furthermore, as Chile has a high-risk averse culture, its population is traditionally not entrepreneurial minded. The foreign newcomers that are attracted also have a positive influence on the local talents to be more entrepreneurial.

Chile furthermore offers a modern infrastructure for startups. It had an increase in broadband accessibility and in cloud services. These factors facilitate the process of starting a business massively. In addition, there is also a decrease in the information gap as more and more people gain access to internet. There is also a lot of investment coming into Chilean startup industry. According to a study by Gust, in 2016, the Chilean startup industry received the most investment worldwide after the United States and the UK. Furthermore, Chile also has a very favorable corporate tax system for foreign businesses. It has double tax avoidance agreements with many countries worldwide. Companies falling under this agreement can deduct taxes to be paid in Chile that are already effectively paid abroad. A recent tax reform is also offering tax benefits for small and medium-sized enterprises. These developments are intended to attract foreign entrepreneurs to do business in Chile.

How Does Chile Invest in Its Startups?

One of the main contributors to the positive development in the Chilean startup industry is Start-up Chile. Start-up Chile is a government-funded accelerator with the goal of promoting entrepreneurship in Chile. Start-up Chile offers equity free grants and one-year visas to its participants. It also offers mentoring workshops, co-working spaces, and help accessing investors. From 2010 to 2016, a total of 1,309 startups from 72 countries participated in Start-Up Chile’s accelerator programs. As of 2016, these companies accounted for 1.4 billion USD of portfolio valuation combined. Moreover, these companies have raised 30.5 million USD in capital, 100 million USD in outside funding and have created 5,162 jobs worldwide. In addition, more than 200,000 Chileans have benefited directly or indirectly from the program. Start-up Chile is the leading Latin American accelerator and a top-10 accelerator worldwide.

Start-up Chile offers 3 different programs: Seed, a 7-month program for companies with a functional product and early validation receiving 40,000 USD; SCALE, for companies incorporated in Chile, looking to scale in LATAM or globally receive 60,000 USD; and S Factor, a 4-month program for female entrepreneurs that will receive 15,000 USD. The S Factor program is the only accelerator program in Latin America specifically for female entrepreneurs.

Want to Find out More About Starting Business in Chile?

To learn more about the Chilean economy, the business opportunities to form a company in Chile, and how you might take advantage of these political shifts, please contact us today.

Watch this video below to find how to form a company in Chile: