The Global Race to Attract Promising Start-Ups

The global race to attract top entrepreneurial talent is on. While Silicon Valley, the greater Boston area, NYC’s Silicon Alley and other hubs of innovation in the United States continue to play the predominant role on the world stage of start-up incubation, other countries are looking to join the competition through government-led initiatives.

For example, Chile is doing something innovative with its Start-Up Chile program. The program, which is organized by the Chilean government and recently completed its pilot phase, is targeted at attracting entrepreneurs from the United States and elsewhere to relocate to Chile for one year by offering them $40K in grant money (no strings attached), a one-year work visa, and a vast array of local networking opportunities and introductions to high-level contacts.

The idea is to position Chile as a low-cost, offshore development platform for start-ups by offering access to talented engineers at 33 to 50% of the price of Silicon Valley counterparts, an Internet savvy local population, and an economically and politically stable gateway to a fast-growing region.  The pilot has been so successful that Chile plans to expand the program to several hundred or more entrepreneurs in 2011.

Russia is also garnering a lot of attention with its Skolkovo project, which is intended to create a high-tech center loosely modeled on Silicon Valley in a Moscow suburb. Earlier this year, a large U.S. private equity fund agreed to invest $250 million in Skolkovo and multiple high-level delegations of U.S. venture capitalists and other leaders have recently visited the project.

While the feasibility of Russia, Chile or any other country replicating Silicon Valley is not yet proven (one critic’s view and advice), it is almost certain that the globalization trend in start-up formation and funding will continue.  At Goodwin Procter, we have witnessed an increasing volume of cross-border start-up activity in the past 12-18 months as U.S. venture investors expand their investment horizons beyond Israel, China and India, and non-U.S. start-ups launch operations and hire talent in the United States.  It should be interesting to watch this trend continue and see what role government-led programs to promote centers of innovation and entrepreneurship can play.

This post on Start-up Issues was authored by Daniel Green.

 
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