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Chile Venture Capital & Startup Overview 2020

Chile’s diverse landscapes, excellent wines, and Andean skiing make the country a compelling tourist destination. But, for VCs looking for a destination for their capital, the country also has a burgeoning startup scene. A strong economy, top talent pool, and active startup ecosystem ensures investors will not overlook this Latin American country. Below I have highlighted some of the trends impacting Chile’s startup and VC industry by using data from independent research, interviews with the individuals shaping the community, and detailed analysis found through various venture capital resources. My goal is to educate you on the current state of startup funding, the economy and legislation affecting the ecosystem, and the roadblocks and opportunities the country currently has as it continues its upward trend to becoming a major hub for startups and investing.



Compared to other Latin American markets, Chile is a leader in economic opportunity. The country ranks high in several categories, such as competitiveness and globalization. This strength is primarily due to the country’s history of natural resource mining, which has created a stable foundation for economic growth and has allowed them to open borders with other nations. “Chile has an abundance of trade agreements with other countries, so you probably find more brands here than you would in other locations,” says Pablo Traub, General Partner at Manutara Ventures. “With more brands and technology coming here from elsewhere, it helps with the adoption mindset.”

This adoption of new brands and technologies was on display when companies like LinkedIn and Facebook first came to the region. After entering Latin America, they had seen higher adoption rates in Chile than in other countries, which is significant because Chile’s overall market is small. The country is home to 19 million people, with roughly 25% located in the capital and business hub of Santiago. In comparison to other Latin American countries, Chile has less than half of the population and potential market of Colombia and Argentina, and only 9% of Brazil.

“Scaling in the Chilean market alone creates obstacles,” Pablo Traub continues, “The market is small here and is typically used to validate ideas for new technologies to early adopters in the region. Many companies realize that and use Chile as a testing ground, but to be candidates for venture capital, they need to decide early on to expand their market outside here.”

Size is not the only limiting factor in Chile’s market, as income inequality has become more prevalent across the nation. This issue affects the marketplace as a whole but also plays a significant role for entrepreneurship in the country. “Wealthy people here have more access to the knowledge and tools needed to start something new,” says Angie Besoain, who leads marketing for ChileGlobal Ventures. “People in need, who represent almost 60-70% of the population here, don’t even have the means to transport themselves inside the capital. For people in this situation, it’s challenging to create innovative solutions for society.” 

In 2019, these issues hit a breaking point, leading to protests across the country. These protests have continued into 2020, with little change so far in the government.


Startups & Funding

Despite the small size of the market, Chile’s venture capital and startup scene continues to see successes. This trend is similar to other parts of Latin America, which have seen increased funding over the last two years both internally and from firms based outside the region. In 2019, Chilean startups raised $64.5M compared to $40M in 2018, a +61% increase. 

Chile is still very early to the startup and entrepreneurial scene, so much of the funding is concentrated on early-stage companies. With that said, there have been some breakout successes recently, most notable being Uber’s pending acquisition of grocery delivery company Cornershop. The deal was announced in October of last year but is yet to pass due to antitrust regulation. In the meantime, the company has recently expanded to the U.S. market and has plans to enter Brazil.

Exits such as this are crucial to drawing VC dollars into Chile and developing the ecosystem. “I think we are all learning because no one in Chile has a proven track record,” says Felipe Matta, Managing Director of Chile Ventures. “I believe this is even more valid for funds because there isn’t a history of recurring exits and returning cash to LPs. Capital isn’t much of an issue here for early-stage companies, but we still need to see some later-stage successes.” Many of Chile’s early-stage startups are trending in the right direction and seeing traction, and below I have highlighted some of the top startups in the country:

  • ComparaOnline: A price comparison platform helping clients make informed decisions when purchasing complex financial products, has raised $33M.

  • The Not Company: A Food Tech company that uses AI to create sustainable food from plants, has raised $30M to date.

  • Simpliroute: An IT company specializing in optimization, logistics, innovation, and big data raised a $3M Series A in April 2020.

  • Jooycar: A ConnectedCar and Insuretech platform has raised a $3.2M Series A.

  • Fintual: A Fintech company that manages financial portfolios has raised $1M to date.

Data provided by Crunchbase

Two main factors are impacting the funding environment in Chile, with the first revolving around funding sources. Today, much of Chile’s capital dollars are contributions from high net worth individuals, family offices, and government-sponsored programs such as CORFO and Start-Up Chile. Some of the most active VC firms include Magma Partners, Mountain Nazca, Aurus, Scale Capital, and Genesis Ventures. 

Where funding is lacking is from government-sponsored pension programs; as Angie Besoain explains, “We can compare Chile’s venture capital industry to Mexico. They have a big market, and their government also controls their pension funds. They invested 1% of their pensions in venture capital to diversify their portfolios. Here in Chile, those institutions don’t have the legal ability to get into this asset class, as many people perceive it too risky. It’s a mindset that needs to be changed to increase our pool of capital.”

That mindset may be in the beginning phases of change, as Pablo Traub tells us, “This topic is something that we’re discussing with both the government and the Chile Venture Capital Association. The pension programs here are extensive but also have stringent investment parameters. To help solve that kind of challenge, we are proposing a “fund of funds,” which can help pool together resources and decrease risk across the board. A solution like this could generate a new pool of Series A financing and help Chile jump to the next stage.”

The second funding roadblock in the country is around mid-stage financing. With many VCs involved in the early-stage, companies can find support networks and funding to kick off their ideas and find product-market fit. Beyond that, there are chasms in the ecosystem to help scale businesses. “The capital is sufficient for funding the early-stages of startups, but Chile and many other countries in the region have a funding gap from Series A and beyond,” continues Pablo, “Even for a large firm like Softbank, it is challenging to fund companies in Latin America. We need to fill the gap from the Series A rounds to later-stage investments, and no one is currently serving that market.” 

Due to this situation, as companies scale in Chile, a chicken or egg situation develops around Series B and C funding rounds. To hit growth milestones and penetrate new markets, companies require upfront financing to scale their operations. However, to secure that funding, companies need to demonstrate that they have a scalable product and can reach broader markets outside of Chile in the first place. Due to the lack of funding in Chile’s growth stage, companies tend to look for financing beyond borders. “It’s a question of traction, which is needed to attract investors,” continues Angie Besoain, “We have nineteen million people living in Chile today, so it’s a very niche market. If you want to grow, scale, and expand, then you need to go to another market.” 

If the venture is successful, future returns benefit other countries’ ecosystems instead of Chile’s; as JT Li of Magma Partners explains, “In Silicon Valley, you see founders give back to the community. So they raise funds there, and when they succeed, they become angel investors. Here, you can’t complete that loop because the founders have to leave the market to go to other places, and the capital doesn’t come back into our ecosystem.” 

“There are initiatives to tackle this issue, with some VC firms raising new and larger funds,” continues Pablo, “These firms plan to use their new funds to increase follow-on investments in companies and move further along in funding stages. Another thing that will change soon is corporations’ participation by setting up programs like a venture capital arm. In the last few years, many corporations have gotten into open innovation programs, but there’s a point where that isn’t enough. If they want to be forward-looking as companies and be efficient in acquiring innovation, corporate venture capital will be a better way to do it. I think they’re very close to that tipping point.”


Ecosystem & Talent

Chile’s government has been critical in jump-starting the country’s entrepreneurship and investing ecosystem. Most notable is CORFO (Corporación de Fomento de la Producción de Chile). Although CORFO’s involvement in Chile’s economic development has lasted for decades, the program has expanded significantly since the turn of the century. One change was the launch of Start-Up Chile in 2010, which developed as a vehicle to change the culture around entrepreneurship in the country. The Santiago-based initiative operates as an accelerator and provides investment, co-working spaces, and knowledge workshops for the local community. This program has inspired similar government-sponsored accelerators all across Latin America, and its global reach has allowed it to maintain a portfolio valued at $1.4B.

“We have an excellent startup ecosystem here thanks to these organizations,” says Jose Yañez, who leads growth for Fintech startup Global66, “CORFO helps by providing entrepreneurs with resources such as helping create a clear roadmap and developing strategies for product-market fit.” Beyond the inception of Start-Up Chile, CORFO has contributed a significant amount of value to the country’s venture capital funds. The organization launched an early-stage tech fund, which provides a 3:1 line of credit to VC firms investing in private startups. This low-interest debt has a forgiveness program if the portfolio fails but must be paid back in full if it succeeds. This subsidizing of the ecosystem has helped cater the early-stage but does come with strings attached, as VC funds tied to CORFO are solely allowed to invest in Chilean startups and not in the broader region.

Chile also has a strong talent pool for both entrepreneurship and startup operators. Santiago is host to some of the best-known universities in the entire region. In 2016, Chile introduced gratuidad, which is a program that provides a version of “free college” and expands access to upper education to citizens. Furthermore, many Chilean students continue their upper education through American universities. Despite the high quality of talent, the country’s wealth inequality limits opportunities to a percentage of the population. “Top talent certainly shows in technical skills here, from software development to engineering,” says Pablo Traub, “Wealth inequality is a problem here as well, so that creates challenges for starting businesses.”

Another roadblock to entrepreneurship in the country is a “fear of failure” culture that echoes throughout the Latin American region. To this day, individuals still prefer the safety of a stable career path with an established company. “Young people here are still not as enthusiastic about startups as people in Silicon Valley. From my personal experience getting to know many young people here in Chile, they still prefer to work for big banks and large traditional companies, a safe career with a good reputation and salary,” explains JT Li.



Like much of Latin America, Chile has emerged as a contender for VC investment over the last couple of years. Despite its many advantages as a historically stable economy, there are some roadblocks Chile needs to overcome to create scalable businesses that generate returns for investors. Legislation needs to take place to close income inequality gaps. Beyond ending the country’s civil unrest, providing equal opportunity to education and tools for entrepreneurship will increase the number of founders and ideas to fund. Chile also needs to push capital that drives later-stage investments and bring companies to an exit. These exits will return capital to LPs, bring new money into the ecosystem, and have previous founders give back by removing the “fear of failure” mentality found in the culture. Lastly, flexibility needs to occur to allow broader sources of capital into the venture capital asset class. This initiative would include public programs like pensions and corporate venture capital arms. With these moves, Chile can continue to be a startup powerhouse.


For comments and feedback on my work, please e-mail me directly.


Thank you to Chile VenturesManutara VenturesMagma PartnersChileGlobal Ventures, and Global66 for the in-depth interviews.


Investment data provided by Crunchbase.

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