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Jul 21

Could Chile--or other countries--steal the US's entrepreneurial thunder?

Posted by annearf in venture capitalstartupsmall businessentrepreneurshipChile


An often-repeated solution to the economy's woes is to boost high-growth  entrepreneurship. That's one reason some politicians have been pushing a new startup-visa bill making it  easier for foreign entrepreneurial wannabes to set up shop in the US.

Now, however, it looks like other countries might be trying to steal the US's thunder. Chile, for example is launching a first-of-its-kind program aimed at encouraging entrepreneurs with ideas for high-growth businesses to base their operations in that country. Called Start-Up Chile , the program will award up to $40,000 and a one-year resident visa to 25 entrepreneurs "with innovative and high-growth business plans that have the potential of bringing disruptive technology into its industry or the global market."

The program seems to have been inspired by the growing number of "venture accelerators" in the US--small seed funds that host groups of 20-something web-savvy entrepreneurs for three months or so, providing a few thousand dollars and access to advisers and potential investors.

What does it mean for the US? As one isolated fund, Chile's program hardly poses a threat to the US as the global Mecca for entrepreneurship. But is this the tip of the iceberg? If so, it could be more of a problem if other countries  start creating similar programs of their own. After all, $40,000 could be a lot more attractive than the $5,000 or so most venture accelerators provide.

What's more, it's all coming at a bad time, amid reports of plummeting start-up activity for the first half of 2010. Results of a recent survey of job seekers by the outplacement firm Challenger, Gray & Christmas show that an average of 3.7 percent started their own businesses in the first half of 2010, down from 7.6 percent in the first six months of2009 and 9.6 percent in the last half of the year. Surely the measly job growth we've seen during that period cannot explain the full extent of the decline. 

 Chances are, if the US government tried to get into the venture accelerator business, you'd hear howls of protest from Republicans and venture capitalists, alike. And there's something to be said for the idea that it's not a productive role for government. But the companies funded by venture accelerators are technology firms with the potential to grow big.  It wouldn't be a bad idea to explore more ways to support such efforts.




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