The MIT Enterprise Forum Pan Arab recently celebrated the announcement of the winners of the 11th edition of its flagship Arab Startup Competition. The 2 day event took place on April 18 and 19 in Muscat, the Sultanate of Oman.
We had the pleasure of inviting David Fernandez, Business Intelligence Executive at Startup Chile to take part in the judging as well as a panel discussion on “Building Emerging Entrepreneurial Ecosystems”.
Startup Chile is a government initiated business accelerator launched in 2016 to drive entrepreneurship in the country. In no time, Startup Chile became one of the leading business accelerators in Latin America and globally setting an example for emerging markets on building entrepreneurial ecosystems from scratch.
We sat down with Fernandez and discussed one on one some of the main challenges Startup Chile faced and what are his thoughts on overcoming them while creating a similar success story in our Region.
MIT EF: Can you tell us more about Startup Chile and what makes it the project a success when it comes to building emerging ecosystems?
Fernandez: Startup Chile is an acceleration program founded by the government to support the local ecosystem of innovation in Chile. We have been working on this for almost 8 years and the results are good, attracting global entrepreneurs from all over the world to come to Chile and develop new ideas and startups. They are helping in making Chile’s innovation economy stronger.
MIT EF: What were the main challenges you faced while building an entrepreneurial ecosystem in Chile?
Fernandez: The first main challenge that all economies normally have is “examples”. Back in 2010, we needed good examples to drive entrepreneurs to invest and start new ventures. In the beginning we did not have any success stories so we needed to create them. That was the main challenge. If you compare all economies, for examples take Silicon Valley and Chile, you see that Silicon Valley is building ventures and we did not have this in Chile. So the main challenge was that: How can we start creating local or maybe global success stories and to get entrepreneurs based out of Chile to start their own ventures so that all Chileans or Latin Americans can believe that they can also do it?
MIT EF: How did you overcome this challenge?
Fernandez: The first idea was to attract global entrepreneurs to come to Chile, not just foreigners but also Chilean entrepreneurs who were living outside the country, and we fund their ventures. In the beginning it was 30,000 USD for 6 months. As the program grew, we attracted entrepreneurs through 2 batches per year. We have now completed around 19 batches and around 1,400 startups have run through our acceleration program.
MIT EF: Any other notable challenges?
Fernandez: We can not do these alone. We need to involve the whole ecosystem. We need the universities, banks, investors, funds. The other main challenge is to get everyone involved in the entire movement. The absence of different stakeholders and involving other key players in the process.
MIT EF: What were the main challenges particularly related to the market infrastructure of emerging economies such as that in Chile?
Fernandez: We needed to fund coworking spaces with good internet access and accelerators and incubators owned by universities. We needed to fill out these gaps while going through Startup Chile. Regarding the social economic side, Chile is a very stable country and secure. And it was a key factor to attract global talents.
MIT EF: Who are the main stakeholders that should constitute a strong entrepreneurship ecosystem?
Fernandez: The support of the government, we need a whole ecosystem, we need investors and we need money. Money can come from private funds, the government, or corporate funds. But we also, in my point of view, need universities and the talents they nurture. In Chile, we have good universities and we have partnerships with global universities who are coming to Chile to support.
MIT EF: What kind of policies or implementations can the government execute that can support the facilitating growth and development of entrepreneurial ecosystems?
Fernandez: Startup chile was founded as a lean experiment by the government to develop the innovation ecosystem. The whole policy should be established. For example, you need to create new enterprises where it is lengthy and bureaucratic so you should make it easier. You need to attract foreign investors to Chile then make it easier through new visa policies. Is it enough to have just one line of funding to help startups? You need the full support of the government. You need to attract new talent to Chile so we need to make the Visa process easier and faster. Now it is possible to create an enterprise free of charge in one day. And this is not just due to the efforts of Startup Chile but it is because the entire ecosystem is heading in the same direction and is involved in making the process better.
MIT EF:How do you build on your network of partners to support startups at different levels?
Fernandez: We have really good relationships with universities because we need their support. They are creating new talent and we need them to focus on not motivating students to be employees but also to become entrepreneurs. Through the incubators they have, they are helping students build new ideas and experience being part of a real startup. But what happens after Startup Chile? We need partners to support startups and here comes the role of the venture capital, angel investors and few other accelerators. Depending on the challenge a startup is facing we channel them through the right partnership. For example, if they need new clients, we link them to our corporate networks. It will assist them sell to corporate clients and close first deals.
MIT EF:What model Startup Chile follows when it comes to building on corporate partnerships to support innovation?
Fernandez: We had good examples of startups growing really fast and competing with corporate and so corporates realized that they need to implement innovation in their process.The traditional way was to hire an innovation team and have them work on new processes and features and deliver the same value they were delivering. But instead of hiring the team, partner with startups. They share the challenges they are facing and they look into our profile to identify startups that may deliver value to them. And we help them connect and work together.
MIT EF:What is your opinion on the entrepreneurship ecosystem of the Arab world?
Fernandez: Being here in Oman is incredible, and this competition (MITEF Arab Startup Competition) by itself which has been running for 11 edition means that a lot is being done in this area. We need to stop following big examples like Europe and the US and look thoroughly into our needs. We need to understand what our problems are and find innovative solutions for them through our local startups. A good advice to the Arab world is to identify your problems and find the talent to solve it and deliver locally tailored solutions.