By Cheryl Yeoh
Many countries aspire to create the ‘next Silicon Valley,’ and for someone who comes from that ecosystem, I’m well aware that it’s almost impossible to replicate, nor are we attempting to. In fact, there are other ecosystems more similar to Malaysia that are worth emulating. A good example would be to look at Santiago, Chile, a country dependent on natural resources of 17 million people, in the Latin America’s region of 406M population, akin to Malaysia’s 30M within Southeast Asia’s 600M population.
In fact, as I went on a week-long visit to study the entrepreneurial ecosystem in Chile in 2014, it was evident from speaking to entrepreneurs, investors and other ecosystem players that Start-Up Chile had sparked an entrepreneurial revolution.
Introduced by the Chilean Government in 2010, Start-Up Chile’s mission was simple: to attract early stage, high-potential entrepreneurs from around the world to work on their startups in Santiago, Chile’s capital. The pilot batch brought in 22 startups from 14 countries, providing each with US$40,000 of equity-free seed capital and a 1-year visa to develop their projects over six months. This bold move came at a time when the US was making it difficult for foreign entrepreneurs to remain stateside.
The big draw was the promise of free cash to cover costs such as product development, hiring, patents and living expenses – most of which will ultimately flow back into the Chilean economy. This is unlike the typical accelerators that require founders to give up 5-10% of equity in exchange for the funding, services and mentorship received during the program.
In return, entrepreneurs are required to carry out social impact activities to inspire and sow the seeds of entrepreneurship to the nation. These awareness and knowledge sharing activities range from talks, workshops and training sessions with bonus points awarded for regional activities.
Start-Up Chile now welcome startups three times a year, accelerating 100 startups per cohort. In three short years, it has successfully put Chile on the map with 15,000 applications coming in from over 65 countries. They’ve also emerged as #20 in the 2012 Compass Global Startup Ecosystem Report. Quoted in the report, “Santiago has benefitted hugely from government initiatives like Startup-Chile to attract and foster startups.”
Interest in the program is at an all-time high and the most recent application round saw a record 2,448 applications vying for the 100 available spots. This is almost on par with the 3% acceptance rate at Silicon Valley’s YCombinator, often ranked the top accelerator in the world.
A Washington Post article reads “The top-down industry cluster is a modern-day snake oil. Chile proved that it is people, not industry, who power innovation. The Start-Up Chile experiment’s purpose was to learn whether a technology hub would follow from importing entrepreneurs and providing them with the right networking support and mentorship.”
I’m a firm believer in the power of cohorts. Think about your close friends – most of them are likely from your high school or college days. There’s something about a group of people coming together in a space and going through the same experiences that forges a strong support network. When this environment is replicated for entrepreneurs, the sense of community and accountability makes it less likely for individuals to give up when the going gets tough.
Being exposed to a confluence of ideas and cultures within a cohort has rapidly enhanced Chileans’ perception and excitement about entrepreneurship. This is backed by a Stanford research paper that found that Start-Up Chile improved the entrepreneurial behaviors of Chilean entrepreneurs by leveraging on social interactions with foreign entrepreneurs.
In the coming months, MaGIC has a major role to play in launching the Malaysian Accelerator Program (MAP), where we plan to accelerate a cohort of 75 startups, 20 from the ASEAN region. We firmly believe that local entrepreneurs can benefit from the diverse cohort and be inspired to capitalize on the large ASEAN market, which is emerging and taking flight right now.
In the same way Chile has invigorated its entrepreneurial spirit and the Latin American startup ecosystem, I believe Malaysia has an integral role to play for Southeast Asia. In the past year alone, we have seen a formidable startup ecosystem emerging out of Malaysia, with many successful stories paving the way – Jobstreet was acquired by Seek.com for USD523.5M, GrabTaxi raised a total of USD340M, a handful of 2 year-old startup raised USD2-4M, and a regional startup was featured on Techcrunch. Arguably, we have all the right foundations and talent to build a platform which will encourage the growth of more regional and global companies.
There’s no magic formula (no pun intended) to build a vibrant startup ecosystem that leverages the strengths of our country. With an MOU signed with Startup-Chile, we are leveraging off the learnings from another successful ecosystem. However, we will still need multiple ecosystem players to come together and embrace differences to collectively grow the ecosystem together and create a critical mass of startups to succeed – for our nation’s current and future generation of entrepreneurs, and for Malaysia.
After all, the focus needs to be on people.
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You can also check the official post from MAGIC here