If you are an entrepreneur looking to dodge the conventional Silicon Valley/Seattle/Austin launch pad, think South America! In the past decade entrepreneurship and innovation have begun to flourish in South America. With the help of government-funded programs, these particular cities pose definitive advantages to startup founders. The Brazilian, Argentinian, and Chilean governments have all adopted strategies to encourage the development of an innovative, international, startup ecosystem within their major cities. The development of these ecosystems is certainly distinct from that of Silicon Valley, but has proved successful in establishing tech hubs and encouraging innovation from within.
Best Places to Start a Company in South America
Sao Paulo, Brazil
Sao Paulo, Brazil, the only Latin American city to make the list of best Global Startup Ecosystems by Compass, is home to roughly 2,700 startups. The Brazilian government provides several avenues for funding and mentorship, including its recent startup accelerator program, Startup Brasil, which began in 2013. The program consists of training for accelerators startup selection, and startup acceleration. During the acceleration phase, the government supports the companies for 2 months with up to R$200K in funding, and offers access to training, mentoring, and infrastructure. This program, plus accelerators such as Pipa and 21212, have aided in boosting the startup community in Brazil. Not to mention the increase in spending that comes from Brazil’s growing economy and middle class. Despite all of the pros there are a few cons of moving your business to Sao Paulo, including the high taxes you will likely encounter, especially in comparison to other Latin American cities.
Buenos Aires, Argentina
Buenos Aires, Argentina is another popular hub for expats, and a smart move for a startup founder. The edge that BA has over Sao Paulo is an even lower cost of labor. This is especially drastic in comparison to the high level of tech talent located in BA, which is amplified by the amount of skilled labor coming from universities in the area. The Argentinian government has been known to encourage innovation by welcoming foreign investment and providing funds to several accelerators. With such a low cost of doing business, high skill level, and government encouragement, starting a business in BA comes with significant advantages.
“Chilecon Valley,” as Chile (and more specifically Santiago) is sometimes referred to, is widely recognized as the spearhead for South American innovation and entrepreneurship primarily for its Startup Chile program, which was one of the very first of its kind. Through this program the government offers equity-free funding and a year-long visa, as well as mentoring and support from the local startup community. Aside from this program, Chile also has one of the highest rates of female entrepreneurs in the startup world (roughly 20%). Some of the frequently cited setbacks facing startups in Chile are the lack of venture capital/funding coming from Chile and the low retention rate of startups that go through the Startup Chile Program. Startup Chile recently added a new program to address these issues, which includes a follow-on fund for 3 companies per batch of 30. The companies receiving this fund must assume operations in Chile.
All three of these tech hubs offer relatively low costs of living and labor, strong government-backed entrepreneurial initiative, a growing startup community, and agreeable time zones for working with US companies. Many of the accelerators in these hubs also welcome foreign participation, and if pursued properly, can provide the perfect launchpad for new startup founders.