Why Chile does not have a unicorn yet
- The country has a robust startup ecosystem that is widely lauded across the region
- However, the lack of a global mindset is the stumbling block
- In Chile, processes are inflexible and slow to regulate disruptive technologies. This is a challenge that must be overcome
- But there are prospective unicorns waiting in the wings, such as Notco and Shippify
Chile is widely lauded in South America to have a robust startup ecosystem. The Global Innovation Index 2020 edition ranks Chile first among the economies of Latin America and the Caribbean in regard to its capacity for innovation and its Start-Up Chile program has been a global success, so much so that it has been replicated by its neighbors in Peru and Brazil.
But to date, the country does not have a startup that has attained unicorn status while on the other hand, countries such as Brazil has nine, Argentina five, and both Colombia and Uruguay have one startup unicorn under its belt.
So why does Chile not have a unicorn yet?
The answer lies in the mentality of the Chilean startups. Ignacio Detmer, co-founder of Frontier Car Group (which is now part of OLX), emphasizes thinking big: ‘If you talk to an Argentine, they are ready to go to other markets before they have been operating for six months. Here most of them starts out in Santiago, before venturing into Concepción, then Peru and just after that they start thinking about Mexico’.
Startups need to think global, a point emphasized by José Antonio Berríos, founder of the crowdfunding platform, Broota: ‘all Chilean entrepreneurs that wants to make an impact has to leave Chile and operate in other countries, with other regulations, with other realities’.
Aside to the point about mentality, another issue is on the confidentiality of the investments. According to Stefanie Sherman, Manager for Digevo Ventures, ‘It’s super difficult to know what valuations the startups are in. In other countries, investments are usually made known, some investment funds sing loudly when they close good deals but not here’.
Nonetheless the pandemic has benefited the Chilean startup ecosystem because it acts as an accelerator. Today companies can operate from Chile anywhere in the world and capital is more global.
Specifically, Chile currently has two contenders to the throne – Foodtech NotCo and last-mile logistics firm Shippify are, for experts, serious candidates to enter the major leagues and both are thinking big.
Matías Muchnick, co-founder and CEO of NotCo, says that after arriving in the US and the injection of US$ 85 million in 2020, they are looking to land in Colombia, Mexico and Peru. And he promises that the company will grow further in the near future.
Miguel Torres, CEO of Shippify, says that in 2020 their turnover grew 260%, that they have 350 clients, including Amazon whom they signed a contract for US $ 130 million.
So till when would we see a Chilean unicorn?
According to João Melhado, research and policy director of Endeavor Chile, ‘It is certain that in two years we will have a Chilean unicorn.’