After a record year, where local startups managed to attract US6 million in investment, in addition to the purchase of the first Chilean "unicorn" - Cornershop by Uber-, the outlook is promising. Entrepreneurs and experts from the university pole analyze the phenomenon and provide the keys to creating a success story.
he world of Chilean startups is on fire. Start-ups aiming to build a scalable, repeatable business with the ability to grow very fast - relying on technology and innovation - are in their prime. Not only because in 2020 local startups, mainly through NotCo, managed to attract a record figure of US6 million in investment, according to figures from the Association for Private Capital Investment in Latin America, but also because the Global Competitiveness Report, published in June , positioned Chilean entrepreneurial activity in its initial stage in second place worldwide.
The evidence of this great moment adds up and continues: the national startup Cornershop sealed a few days ago the sale of the 47% that Uber did not control for US,400 million and the platform was valued at US,000 million, a figure that is striking if one remembers that when Facebook bought the whole of Instagram did it for "only" a billion dollars. Contrary to what happens with an SME or a normal enterprise, where its path is slower and it can take several years to become a medium-sized company, startups are designed to have explosive growth. An all or nothing luck. Cornershop debuted in 2015 and literally, in a couple of months, raised foreign capital and was valued at US million.
The impact of this boom is also social: experts estimate that in Chile 1% of the companies that are created are startups and they are currently providing 40% of new jobs. How is a startup created? What steps are necessary to take? Along this route, Chilean universities have played a leading role in promoting innovation among their students. Most of the houses of study have diplomas, postgraduate degrees or incubators that support relevant projects and that can change the lives of their creators and their environment. Here, 7 keys to keep in mind.
- Fall in love with an idea that has a social impact.
“Doing something that has an impact on other people is a super powerful force that allows one to grow, innovate and connect in another way,” says Eduardo Della Maggiora, founder and CEO of Betterfly, a national company that just raised . million in an investment round -a record for a local company in its initial stage- and that works on insurance with high technological innovation so that companies grant it to their workers under the concept of labor welfare.
For Della Maggiora, it is important that you are passionate about your idea. “When people break up a company, you connect deep down. Because passion is connecting with something in a professional and personal way, and it makes you stand up a thousand times," says the businessman, to which he adds: "If you leave a company for wanting to be a unicorn (innovation companies that are valued at US$ 1,000 million) or due to popularity or any other more external reason, you will be able to stop sometimes, but not those that are necessary to be able to undertake and grow”. For him, it is an endurance race, where resilience is key. And in order to do that, he says, you have to be involved in something you really believe in.
"An innovation with social impact will be a catalyst to achieve financing and positioning, thanks to the wide spectrum of benefits generated by different actors in society," says Francisco Chiang, director of Innovation, Technology Transfer and Entrepreneurship at the Andrés Bello University, home of Higher Education that teaches a Startup Creation Diploma and another in Business Creation. Daniela Soto, who does mentoring (support for entrepreneurs) at UNAB, adds that a cultural change is taking place: “Startups are seeking to generate an impact on society, help the community evolve around the economy, the empathy more than to generate a certain product”.
Learn to listen to the needs of people. That is what Ángel Morales, executive director of UDD Ventures, the business accelerator of the Universidad del Desarrollo, which has been transforming an idea or project into a high-impact business for 10 years, starts by proposing. “They are those conversations that allow us to create new futures with other people. Ideas are not going to be born with us locked in an office”, defines Morales. In this sense, the quality of the conversation and interaction networks allow these future scenarios to be configured. “My advice to an entrepreneur who wants to innovate is to do a deep quality scan of who you are talking to, who you are listening to, what you are regularly reading about the field and industry you want to enter,” he says. .
It is important to always fall in love with the problem rather than the solution, says Angeles Romo, manager of Start-Up Chile, a public business accelerator that, under the auspices of Corfo and the Government, promotes technological ventures to scale globally with lines of financing and support. “It is important to understand that it is the problems that somehow inspire a solution. The solution, by itself, if it doesn't solve a problem, probably isn't going to turn into a big business”, says the executive.
“Always define the objective of the enterprise and not lose the vision that one had from the beginning, although you can change it, but never lose the foundations, never lose the origins. To understand all the progress that has been made,” says Werner Kristjanpoller, director of the International Institute for Business Innovation (3IE), the business incubator of the Federico Santa María University, which encourages technology-based ventures aimed at the global market.
- Quick and cheap equivocate.
"Do not waste resources and time on the undertaking to the extent that the need is not validated," advises Francisco Chiang, director of Innovation, Technology Transfer and Entrepreneurship at UNAB. “It is necessary to validate at an early stage to prevent spending on initiatives that in the end do not target a specific need and therefore are unlikely to be successful. It is better to validate quickly and if there is no important need, reformulate or look for another entrepreneurial idea”, he adds. Chiang says that this concept is used a lot in the United States. "There are startups that spend two years stuck spending money and only recently realized that there was no important need and they could have done it after six months and used the resources on another idea or adjust what they were thinking," he points out.
Cristóbal Cassanello, founder of the startup Ecopass -a national ecological event ticket holder- argues that if you have a business idea, the most valuable thing is to launch it on the market, with little money and for the market itself to tell you if it works or not. "Unlike the thought that existed before that you had to invest a lot of hours and money, the startup formula is that they launch many things at a fast speed and at a low cost." Under this premise, Cassanello assures that this formula allows “iteration, which is listening to the market with these launches and after a while, the product they achieve is superior. The idea is to develop MVP, a minimum viable product”, he explains.
“Going testing, piloting and making mistakes is part of the way. Look at mistakes as learning opportunities and with that build the entrepreneurship or the solution that each one is doing”, says Della Maggiora, CEO of Betterfly.
Daniela Soto, from UNAB, says that one always starts from a hypothesis, a problem is identified and there is a thesis about how to solve it. “The validation stage in early-stage ventures is very important to be able, in the field, to define whether that hypothesis is correct. This allows you to transform your solution and lower it to what the market and your segment needs. You have to specify your idea as soon as possible to be able to validate it in the market and your target segment. If this is not done, the company spends a lot of time building on clouds, in pure theory and the idea must be put into practice as soon as possible, validate it with the target customer and the market”, she points out.
- Resort to mentoring and rely on incubators.
Francisco Chiang, from UNAB, says that we must remember how today's mega-companies started: startups that were developed by university students, often when they were studying, such as Mark Zuckerberg, Bill Gates and Steve Jobs, among others. “In the university knowledge is generated and also a community to develop, validate and test it. The university is relevant in this ecosystem, because it connects knowledge with expertise on issues of entrepreneurship, access to financing and is a factor that catalyzes entrepreneurship”, he argues.
At the Universidad Andrés Bello, Chiang leads the Diploma in Business Creation, which is going to start its fourth version, delivering, in three months, hard skills to entrepreneurial teams, where his focus is. “Within the diploma course, the idea is to teach how to prototype and validate your idea at an early stage, how to see the issue of defining the price and the sales plan, correct definitions of company constitutions, tax regime and intellectual property, how to structure well the business model and how to value the startup”, he explains.
Mentor Daniela Soto says that there are many innovative projects that have overcome fears and that come from laboratories. "In the case of the UNAB, there is a project of some guys who want to generate electricity based on plants (BiopaV)". Another startup that is scaling is Phage Technologies. The company produces a virus that has the ability to attack a bacterium and they started working on it as a vegetable disinfectant for the home, however, they realized that there was no relevant need in that market. After hanging around fairs in the south, Chiang says,
Regarding mentoring, Daniela Soto, who fulfills this role at UNAB and also at UDD, maintains that the work can be done at different stages of the project: “In my case, I have been linked to early-stage ventures, where the idea is to be a counselor and see what is happening in that team. What we do is make a diagnosis and set the goals they want to achieve. It is an accompaniment for their processes”.
For Werner Kristjanpoller, director of 3iE, an important issue is that the entrepreneur has to be open, humble and get closer to those who know to promote their business. “Understand that an incubator, Corfo, mentors and investors have exactly the same objectives as yours. If Corfo gives them financing, if an incubator gives them sponsorship, if there are investors who put money into it, everyone is looking for the success of the project”, he explains.
Cristóbal Cassanello started with Ecopass in 2014, when he was studying Industrial Civil Engineering at university. He had to work in a massive event and saw that the payment systems were very slow and worked with thermal paper. He realized that these hard tickets cannot be recycled and their components cause cancer. From then on, he got together with two programming friends, they developed the idea and won a couple of CORFO funds that allowed them to develop the platform. They were incubated in 3iE, until after the outbreak and the pandemic they had to reinvent themselves and began to bet on virtual events.
- Be clear about the problem and your work team.
Daniela Soto, a mentor at Andrés Bello, maintains that it is important to understand “what I am solving and for whom it is a pain or a problem and if it really is a pain for the segment that I have identified. In other words, the subsequent step is to validate with the affected segments”. In this way, she says, a robust proposal is built and a solution that really applies to the problem and the segment itself.
Regarding the work team, the experts state that the idea is to have a group that has the necessary tools to develop the project. For example, continues Daniela Soto, if the solution is to create an application to help people with disabilities, "it is necessary to have people on the team who are competent to understand the problem from up close, such as someone related to health who understands pain from up close, a person with experience in digitization and computer science”.
Along with this, it is ideal to have a work team that gets along well, since they will spend a lot of time together developing the idea, so they must create a pleasant and conducive environment to be successful. Francisco Chiang, director of Innovation and Technology Transfer at UNAB, points out that “if the organization is not aligned, it is likely that a break will be generated and the most important piece of the enterprise is the team and if it breaks, there is a risk to continue with the initiative.
- Use of technology.
María de los Ángeles Romo, manager of Startup-Chile, believes that entrepreneurship is a tool that is available to everyone. "Technological entrepreneurship is a tool that at the same time allows us to generate mobility, and to the extent that you can access that mobility, you can change the quality of life and ecosystems in a very resounding way," he says regarding companies that grow fast, they generate a lot of employment, contribute to the economic, social and cultural development of the countries.
The inclusion of more entrepreneurs with complex, digital, technological or scientifically advanced solutions is vital to achieve a higher level of productivity, GDP and quality of life for citizens. Ángel Morales, from UDD Ventures, assures that digital-based ventures are the ones that investors seek to bet on, since they allow them to have a global vision, operate in different cities around the world, seek volume and, therefore, in the long run time to transform into businesses with positive profitability. “In that sense, the digital age is the amphitheater for the emergence of these new players, such as Cornershop, and thus lead the digital economy of the future,” he says.
- Be financed with non-dilutive funds.
Francisco Chiang, from the Universidad Andrés Bello, states that at the beginning it is important to start financing with competitive funds from Corfo, entrepreneurship tournaments or the like, rather than with investment. “Non-dilutive funds don't ask you for property. When an investor arrives, he tells you that he is giving you 200 million pesos, but you have to give him 20% of the property. If you win a fund in Corfo or another, they don't ask you to participate in the equity, then you can take the first steps without being diluted," says the director of Innovation and technology transfer at UNAB.
- Propose a good exit.
Startup creators talk about “exit” as if it were the Holy Grail. In formal terms, it is a business exit strategy, referring to the strategic plan of an entrepreneur to sell his property in a start-up company to investors or another company, as Cornershop did with Uber weeks ago. In this way, the owner of a business reduces or liquidates the participation of it and can get to obtain a profit if it has been profitable.
According to the director of Innovation and technology transfer at UNAB, Francisco Chiang, to have a good exit you have to plan it, and for that you have to have good agreements with the investors that come in and seek to dilute as little as possible. “If you had partners who are going to be the majority in the startup, when they enter, a shareholders' agreement is put together between the owners of the company, which indicates that everyone must leave under the same conditions. In other words, they cannot come and sell their share very well and leave them without the option of selling at the same price, which is a drag along. Those exit conditions have to be pre-agreed to allow a good exit”.