May 25, 2022

StrategisChhr

Skillful Business Crafters

Why Indian startup founders are flocking to Chile

Behind the Andes in a secluded corner of South America, far from Silicon Valley or Asia’s business hubs, Chile’s startup revolution is drawing the eye of founders from far afield. Indian entrepreneurs are arriving on Chilean shores, attracted by its favorable business environment, technological expertise, and government support.

“Chile offers a variety of opportunities for Asian and other foreign startups at different stages of development,” said Gerardo Alonso Velasco Baratawidjaja, president of the Chile-ASEAN Chamber of Commerce. “Chile offers a stable, smaller market to pilot, test, and grow products and services, alongside a savvy and friendly business environment, and a competitive consumer landscape [where many have] disposable income.”

It has meant that all sorts of Indian startups, from data services firm Evalueserve to Toolyt, an AI-powered personal assistant, have established themselves in Chile in recent years. According to four Indian entrepreneurs who moved to Chile and spoke to Rest of World, the country is an ideal model market to test out products and ideas to bridge over into the more desirable U.S. market or to expand across Latin America. 

Founders from India who sought their fortune in Chile include Priyanka Srinivas and Sasikanth Chemalamudi, who created the Live Green Company (LGC) in 2018. The foodtech startup aims to create healthy, plant-based foods using artificial intelligence, biotechnology, and machine learning.

A number of factors made Chile an ideal place to set up LGC, Srinivas, who moved to Santiago in 2018, told Rest of World. “The country’s many free trade agreements, a retail market that behaves very similarly to the U.S..” 

By August 2020, LGC had raised a seed round worth $1 million. The company subsequently expanded to Peru and the U.S. Since then, the founders have raised a second $8 million round and relocated to Boston.

LGC also benefited from being part of the Start-Up Chile incubator, which was set up in 2010 and is today managed by the governmental organization Production Development Corporation (CORFO). Since then, it has supported over 2,000 fledgling companies, helping more than 4,500 entrepreneurs from 85 countries. It provides equity-free investment and mentorship for startups with the aim of making the country a hub for innovation, while attracting foreign investment and increasing competition in local markets.

Start-Up Chile currently has 12 Indian-led companies looking to make inroads in sectors like software, biotech, and gaming. The program has had many Indian founders in the past, but hasseen a significant uptick in recent years, according to Start-Up Chile and the other industry leaders Rest of World spoke to.

Integration into international markets is important for those looking for a launchpad from which to scale. “In large part, Chile’s economic development is based on the internationalization of the country,” said Álvaro Echeverria, director of the Asia-Pacific Chamber of Commerce in Chile. “In this context, Asia’s role has been an important one, and trade between Chile and the region has grown significantly in recent years.”

The India-Chile pipeline has also been supported by a preferential trade agreement that has been in place between the two countries since 2006, and which was significantly expanded in 2016.

Several major Indian companies already have a presence in Chile, including Tata Consultancy Services, Infosys, and Polaris Group. Others are now moving in: ManageEngine, the business IT branch of Indian giant Zoho Corporation, has established a presence in Chile, and Indian agrochemical giant UPL acquired Chilean company IngeAgro in September 2020.

“Chile is also an ideal platform to scale and expand into the rest of the region and the Americas, through its diverse trade networks, solid financial and legal institutions, and navigable bureaucracy,” said Velasco Baratawidjaja of the Chile-ASEAN Chamber of Commerce.

Robin Kanattu Thomas, a 24-year-old from the Indian state of Kerala who is part of StartUp Chile, arrived in South America in 2019 when he brought his prosthetics and injury rehabilitation firm, Astrek Innovations, to Santiago. But rather than using the country as a launchpad into the U.S. market, he sees Chile as a gateway to Latin American customers.

Although Kanattu Thomas received around $40,000 from Start-Up Chile, he said that the business support he and his co-founders collected has been even more valuable. “I was very young when I started out in Chile — I was just 22,” he told Rest of World. “So having mentors and advice from people who knew the lay of the land was invaluable.”

Although Kanattu Thomas had to return to India during the pandemic, he is still in constant contact with his Start-Up Chile mentors and plans to continue working in Latin America once he has secured the appropriate licenses for his products.

“I see similar structures and inefficiencies in Latin America as we have in India, so the solutions that have worked in India will work there, too.”

Asha Joshi came to Santiago as part of Start-Up Chile’s 2020 cohort with her language-learning platform Thinkin. Although 80% of the company’s revenue now comes from Central and Western Europe, it’s still headquartered in Chile. She said she appreciates the country’s strong startup ecosystem and the time difference with Europe, which allows bug fixes to be sent overnight.

“It’s not just the incubators, but also the general public,” she said. “Startups are highly respected in Chile and we see that in the large number of students who beta-tested our technology and still help us improve the backend.”

Bengaluru-based engineer Roushan Dehury is currently considering whether to move his startup Pronto to either Chile or Peru, once he’s secured the Indian market. “India is a very competitive startup market,” he said. “You might think your idea is original, but you start to see the same things everywhere when you look around.”

He said Latin America’s underserved markets — and Chile in particular — are more attractive than options in Africa and Southeast Asia because of stable regulatory environments and government support.

“I see similar structures and inefficiencies in Latin America as we have in India, so the solutions that have worked in India will work there, too,” he said.

Dehury said his startup, which focuses on micromanagement skills, has a good chance of succeeding in Latin America given similar technical challenges in the regions. Though he is conscious that for all their similarities, the Indian and the Latin American markets can often diverge in significant and upsetting ways.

Velasco Baratawidjaja said that even if founders leave Chile, the country benefits in the long term. For instance, though LGC’s founders, funding, and focus now lie primarily in the U.S., the startup still keeps a team of 18 people in Chile.

“Presence of their product in the local market, positive returns for local investors or funds which invested in them, jobs created, encouraging others to follow in their footsteps, and if any of their supply chain uses Chilean products or services — these will all benefit Chile in the long-run,” he explained.

Joshi, the language-learning entrepreneur, said that Indian entrepreneurs coming to Chile could be a net positive: “We’re adding a company to the Chilean map.”

“I believe that because of India’s mature IT sector, Indian entrepreneurs can bring ideas and tech expertise that will further strengthen Chile’s position as South America’s Silicon Valley.”

https://restofworld.org/2022/india-startup-founders-chile/