Many local Startups had access to a first round seed money with no strings – means no equity or no liability. Startup captains however need to learn, that money does not come for free. Investors (local and international) not only expect a discount on the valuation because of the natural risk of a Startup venture but also because of the regional risks. Data show, that comparable Startups in the US are valued min. 30% higher than in Chile. In addition scalability is limited given many Startups are not thinking big but limit themselves to the local market or to LatinAmerica – even though their solution has global potential.
We have seen many great startups in Chile which are equipped with the right attributes for success: a great founders team, a competitive solution/product addressing a current need, a solid addressable market and even first “proof of concept” and customer acceptance. The positive News is: In The Latin America Startup Scene, Chile and Colombia Stand Out
So why are we then hearing that there is not enough follow-on investment happening and available in Chile? What is holding investors back? Today we could read a critical article in El Mercurio which addresses some of the challenges. On the other hand we have not only interesting new initiatives to encourage new investments like…
- CORFO releasing the new Early Stage Technology Fund attracting new investors into the ecosystem
- The Chilean Ministry of Economy and the Multilateral Investment Fund (MIF), seeking the assistance of Crowdfund Capital Advisors (CCA) to releaseCreating a Crowdfunding Ecosystem in Chile
… but also an increasing number of individual investors and entrepreneurs who are impacting the ecosystem positively by willing to step-up and taking a risk. Examples are the established angel investor networks like Chile Global Angels, Santiago Angels, and DaDNeos as well as the first crowdfunding platform Broota with increasingly positive results and participation.
About the author:
Markus Schreyer, is CEO of MGMS and Business Associate Chile of Go South! Consulting Inc. in Chile — MGMS has set out to support the Chile startup ecosystem by providing expertise and services to close the gaps which are limiting scalability and global expansion of local Startups. With this we are preparing the Startup for investment readiness and global growth.
With our business model focused on value-creation and success, we respect the financial limitations of our customers. In addition we enable our customers to focus 100% on the growth and execution of the business while we work with our network of investors to develop and identify the best investment solution. Please also read: 8 Keys To Providing Consulting Services To Startup.