Bangalore: Indian entrepreneurs planning start-up ventures have a new and welcoming destination—Chile. The South American nation is attempting to attract fledgeling businesses from across the world by offering initial funding and other incentives, joining a growing list of countries seeking to create alternatives to Silicon Valley.
This year, the programme called Start-Up Chile has attracted 3,000 applicants, of which at least 100 are from India, making them the fourth largest group in terms of the country of origin, after those from Chile, the US and Argentina.
On offer is the equivalent of $40,000 (around Rs.22 lakh) in seed funding from the Chilean government, which isn’t asking for any equity in return, plus a one-year work permit. Chile aims to host 1,000 entrepreneurs by next year at a cost of $40 million under the programme, which it has launched at a time when immigrants have come up against stricter work permit rules in the US that have made setting up start-ups difficult.
“Start-Up Chile seeks early-stage, globally minded entrepreneurs, and India has a lot of talent with worldwide recognition,” said Horacio Melo, executive director of Start-Up Chile.
Melo, who quit his job as a marketing manager with Latam Airlines last year to join Start-Up Chile, said the idea is not exactly to emulate Silicon Valley.
“Many countries around the world try to emulate Silicon Valley instead of focusing on adding value to the key elements that make their countries and cultures different. We don’t want to replicate Silicon Valley, we want to build an entrepreneurial ecosystem that is unique,” Melo said in an email.
As countries across the world attempt to cope with slowing economic growth, they are realizing that unemployment and the lack of new opportunities to create wealth can be tackled at least partly by attracting more entrepreneurs. They are competing to attract entrepreneurs who are willing to move wherever their ideas receive the best funding and market support.
One such entrepreneur is Sushaantu, who goes by only one name. He relocated to Chile earlier this year to work on a software application that analyses the online behaviour of Internet users and offers incentives for them to purchase products and services on a website; a potential customer may be greeted with a message reading “free shipping” or “5% discount coupon”, for instance, while he is trawling a website.
The son of an Indian government official working with Central Warehousing Corporation, Sushaantu is among 30 Indian entrepreneurs living in Chile.
“I have always wanted to be an entrepreneur, and after having worked at three start-ups, I thought it was time, I start my own. Start-Up Chile seemed like the best option once we got selected because they do not take any equity in the company,” said Sushaantu, who did his Bachelors in business studies from Jamia Millia Islamia University in New Delhi.
Sushaantu’s start-up, Targeter App, has already received funding and is currently part of the six-month programme. But Sushaantu wants to make Chile his home beyond this duration.
“The fact it is run by the government of Chile makes the bureaucratic tasks a tad bit easier. I intend to stay here for quite a while even after the end of the programme because a genuine start-up ecosystem is evolving here, fuelled by other start-ups that plan to stay in Chile,” he said.
Roorkee-born Manu Sharma is developing a low-cost wind turbine to address the renewable energy market in Chile. For Sharma, starting his firm Nuovo Wind in Chile was more about the market access it offered than the seed money.
“Increasing energy prices, one of the best sites for solar and wind energy seemed to be the right mix to move to Chile,” said Sharma, who is a rocket scientist and an engineering graduate from Embry-Riddle Aeronautical University, Florida.
Along with partner David Urmann, Jayesh Bagde from Nagpur has founded Touristlink, an online social networking platform that offers travel planning services.
“In the Start-Up Chile office, you’re working alongside founders from over 100 start-ups at any given time. What better place to bounce ideas off people and get feedback on what you are doing,” said Urmann, who did his PhD from Ohio State University in the US and worked in Nagpur before relocating to Chile earlier this year.
The biggest benefit for Indian entrepreneurs is a chance to work with entrepreneurs from across the world, experts said.
“For Indian entrepreneurs to participate in Start-Up Chile is a great thing because it exposes them to start-ups from across the world and helps them develop contacts,” said Vivek Wadhwa, a senior research associate with the Labor and Worklife Program at Harvard Law School. He is also one of the advisers for the Start-Up Chile programme.
Entrepreneurs in India said more of their tribe will look elsewhere if the Indian government does not offer focused incentives.
“Getting a visa for India is painful, getting a company registered here is a long road, winding up operations is a multi-year effort, and there aren’t any tax breaks,” said Siddharth Mangharam, founder of online networking site for singles called Floh.
“In fact, the honourable President of India, in his avatar as the finance minister, decided to tax all angel investments as taxable income in the books of start-ups,” said Mangharam, referring to Pranab Mukherjee.
What makes the Chilean programme different from other start-up accelerators is that it does not take any equity in return for the initial funding. Globally, accelerators such as Y Combinator, Morpheus and Kyron in India take as much as 10% in companies they invest in.
The Chilean government, on its part, also invests $15 million of taxpayers’ money every year in the programme, hoping that it will help create more jobs locally.
Chile’s approach to developing an entrepreneurial ecosystem offers lessons to governments across the world, experts said.
“Start-Up Chile may not be replicating Silicon Valley, but it is certainly offering a new model for governments to think about using entrepreneurship to transform culture, build the economy, and enhance human and investment capital flow transnationally,” Ted Gonder, an entrepreneur-in-residence at the US department of homeland security, wrote in the quarterly journal published by the Massachusetts Institute of Technology earlier this year. Gonder interned at the Kauffman Foundation last year to study Start-Up Chile’s scalability and influence.
Clearly, the governments of relatively small countries such as Chile, Israel and even Singapore have taken the lead in attracting the next generation of entrepreneurs by rolling out focused programmes. So far, India has not put in place a focused start-up policy at the national level that can compete globally.
“These three countries have successfully made innovation a matter of strategic priority for their development and probably as a consequence, these countries rank in the top quartile of the doingbusiness.org survey,” said Larry Glaeser, a French-American venture capitalist and co-founder of start-up accelerator Kyron. The Doing Business report is a World Bank project that measures business regulations and enforcement across 185 economies and ranks them.
To compete with smaller, aggressive countries wooing Indian entrepreneurs, India will need to move fast.
“The hope for India lies in the political impetus and leadership that one (or more) of its states could muster to pass legislation that would bring about a truly conducive innovative entrepreneurial ecosystem,” Glaeser said.
While small countries are looking to import entrepreneurs from other nations, India has the advantage of being able to tap its own existing pool of start-up founders already based in Silicon Valley and elsewhere.
“It’s time for ‘Startup India’. The good news is that to begin with, we do not need to import entrepreneurs from Chile to accomplish our mission,” said Lalit Ahuja, an Indian technology industry veteran, who co-founded Kyron.