Chile: An Entrepreneur’s Paradise

Chile: An Entrepreneur’s Paradise

08/27/2014 - 1:23 PM
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Chile

Chile is now one of the best countries in South and Central America for tech startups.  As you will see in this article, it is blowing past my 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 these government programs, it’s attracting many tech professionals from the U.S. 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 U.S. turns away many of the best and brightest by denying them residency and visas, Chile is welcoming them with open arms.  Tech geniuses come to Stanford, Harvard and MIT, only to find that the U.S. won’t allow them to stay when their schooling is over.  Chile is cashing in on our 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 startup to Chile?  Talk to Start-Up Chile first.  They offer a government sponsored program that may award a grant of $40,000… and all the visas you need… if you come to 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 these businesses.

This program, which began in 2012, has funded over 1,000 companies and entrepreneurs from 37 countries.  Of these, around 1/5th are local businesses and about 1/4th are American.  The rest are from anywhere and everywhere on the globe.  This has created a very “Californian” vibe along the Pacific coast of South America and a vibrant expat entrepreneurial community.  Like Paris in the 1920s and 1030s 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:  1) Chile is focused on tech start-ups while Panama has targeted call centers;  2)  Panama wants you to hire local, where Chile will allow you to bring in as many of your own people as you like… from your home country or elsewhere (i.e., India).

  • Panama’s visa programs are for executives, while Chile’s are for 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 which 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, I suggest that Chile will remain a strong option for tech start-ups.  For me, the focused community and a government that looks to make my life easier, rather than one that’s constantly looking over my shoulder (Uncle Sam), is all I need to know to say that Chile is a great place to set up an offshore tech business.

Brazil might become the China of Latin America, but Chile will be the Singapore… which is where I would rather be.  Brazil has the local market base, but Chile has the privacy and community I want, plus a more educated workforce.

As the U.S. pushes out foreign-born talent, some might say in favor of the huddled masses coming through the Mexican border, you can expect the likes of Chile and Brazil to become even more important players on the world tech stage.

In fact, the U.S. has cut its skilled worker visas to 65,000 per year, down from 100,000 in 1999, and made the process nearly impossible to navigate.  Back in the days of Reagan (the good ole days to some), these visas took 18 months to procure.  Now, one can wait as long as 10 years!

The U.S. should be focused on winning the global war for talent, but obviously has decided to focus on other matters.  Tech firms hoping to compete with lower cost and more efficient programs in South America might find themselves losing to Chilecon Valley and the like.

I hope you’ve found this post interesting.  If you’re considering moving your business out of the United States, we can help structure it in a manner that is tax efficient and compliant.  Feel free to call or email us at info@premieroffshore.com with any questions.  All consultations are confidential and free.

Next up will be a review of Chile’s economy tax system, which was designed to go hand in hand with the U.S. Foreign Earned Income Exclusion.

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