With the impending widespread distribution of vaccines for COVID-19, the world is beginning to look towards life after the coronavirus pandemic, even as some countries experience major upticks in infection rates. For Chile, one of the countries in Latin America and the Caribbean worst affected by the virus, the country’s growing technology, and startup scenes can be expected to play an important role in driving economic recovery. Here three startups in Chile that have fared well during the global health crisis and can be expected to grow in its aftermath are considered.
Chile is well-known for its business-friendly attitude and commitment to free trade, maintaining free-trade agreements with dozens of countries both through bilateral agreements and via regional associations.
The Pacific coastal nation is also a major hub for entrepreneurship, and was ranked first among Latin American nations and number 19 in the world in the 2020 edition of the Global Entrepreneurship Index.
Chile has long been a pioneer of promoting entrepreneurial culture, with the “Start-Up Chile” accelerator that was launched back in 2010 labeled “revolutionary” by Forbes in 2018. Since then, Chile has helped over 1,500 startups from more than 80 countries to build up an impressive $2.1 billion (all figures in USD) in net assets. In 2017, owing to its successes, Startup Chile was named the most innovative company in Latin America by tech and business outlet Fast Company.
During the pandemic, a number of startups in Chile have fared particularly well and can be expected to continue to grow in 2021, and below three of them are considered.
If you are considering doing business in Chile, or are already active in the market, understanding why these businesses did well during a period of severe economic difficulty could provide you valuable insight for your own commercial activities.
Industries and people badly affected by the pandemic
Like in many countries, industrial output, retail, and hospitality, and tourism were severely affected by the pandemic. In June, the country recorded its first drop in copper production since the beginning of the crisis — a notable development for the world’s largest producer of the red metal. That decline continued, so that by August production had dropped almost 7% compared to the same month in 2019.
The economic turmoil that engulfed many industries also led to a significant rise in unemployment, reaching a historic high of 13.1% in July. While efforts to reactivate the economy saw that figure drop to 12.3% by September, that still represented a five percentage point increase in unemployment compared to the same month the previous year. With a working-age population of approximately 13.4 million people, that means more than 1.6 million adults were left out of work — almost 700,000 more than in September 2019.
Industries and startups in Chile that fared well during the crisis
While many industries have suffered, in Chile the likes of supermarkets, natural product producers and distributors, and the financial sector have seen growth, thanks to the demand generated by people forced to acclimatize to a more restricted lifestyle, as well as increased awareness of health and welfare.
Doing particularly well have been e-commerce companies and logistics and delivery companies, which were well-positioned for the situation, as people began shopping online in increased numbers and delivery of food and other items was increasingly seen as a necessity rather than an avoidable expense. In the first week alone of the pandemic hitting Chile, e-commerce sales were up 41% on the previous year.
Some startups in Chile have been particularly well-positioned, owing to the nature of their business, or the strategies they have employed to both overcome difficulties themselves, and offer solutions to other struggling businesses.
3 startups in Chile to watch
Bio-Pedic Recycling: an environmental startup in Chile
This startup came to be as a result of new legislation that forbids single use plastic bags in supermarkets and other commercial environments. Following this, merchants started using polypropylene reusable plastic bags which are not necessarily much better for the environment given that they still generate plastic waste.
Bio-Pedic Recycling has developed a method for recycling polypropylene bags to transform them in low-cost prosthesis, using 3-D printing technology to build the products. Their target market is children living in poverty.
Recently, Bio-Pedic Recycling’s prostheses have made their way into the US, receiving positive feedback and pointing to very strong prospects for the future. The company has a new recycling and production plant opening soon that will expand productive capacity by 60%.
Given the company’s emphasis on circular economics and dealing with plastic waste, while also making a life-changing difference to some of the most needy people in society, the future prospects for the company look extremely positive.
Yapp: a health-focused startup in Chile
Yapp is a startup that operates in the health and pharmaceutical sphere, offering users quotes and price comparisons for many types of medications and other health-related products. In practical terms, that means it is capable of telling the user which nearby drugstore has the medicine they need at the most competitive price.
While the COVID-19 pandemic has undoubtedly helped the growth of this startup in Chile, its development has also come from the clever use of technology and innovation in an sector that has previously not tended to or needed to evolve significantly. Fast and efficient digitization procedures have been the key ingredient to its success in tapping into the e-commerce revolution to provide a useful and money-saving service to its users.
The company has grown rapidly and now lists more than 27,000 products across 3,000 pharmacies nationwide, and the financial results have been palpable, with the almost $493,000 in revenue seen in 2019 leaping to an expected $1.69 million in 2020.
Fintual: a FinTech startup in Chile
Fintual is a startup in Chile dedicated to democratizing finance by helping young professionals easily make long-term investments. The company helps users to put their money into secure investments, including mutual funds set up by Fintual and fixed national income funds. It’s exponential growth means it is expected to emerge as a unicorn (valued at over $1 billion) in the future.
Winner of the Best Fintech Startup award in 2017, given by Village Capital Venture Capital, Fintual is the only Chilean startup to have been taken on by the globally-famous incubator YCombinator, which has previously counted Airbnb, Dropbox, and Reddit among the companies it has helped.
In 2020, Fintual grew to employ 52 employees and a client base of 26,000 people, for whom it now administers over $190 million. The company also began international expansion efforts, opening an office in Mexico, and has set itself the goal of administrating $1 billion in the near future.
Biz Latin Hub can help your startup in Chile
At Biz Latin Hub, our team of experienced market entry specialists is equipped to help you enter the Chilean market and take advantage of the country’s growing startup scene. With our comprehensive portfolio of corporate legal, accounting, and back-office services, our multilingual team is equipped to provide excellence and guarantee the success of your business expansion into the country.
Get in touch with us today today to discuss the assistance that you need.
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