Because it's the World Cup, you've probably seen a lot about the various technology Brazil is introducing or using during the event — everything from drones to surveillance centers to a mind-controlled exoskeleton that enabled a paraplegic Brazilian teen to make the first kick at the opening ceremonies. But Brazil isn't the only place in Latin America where the technology sector is heating up. In Chile, startups are sprouting up all over the place, but the country has a problem, too.

By first-blush accounts, Chile's tech startup accelerator Start-Up Chile is a great success. In June, according to a recent in depth analysis by TechCrunch's startup research team CrunchBase, Chile saw a batch of almost 100 startups graduate from the accelerator's 10th iteration and prepare to start their businesses.

Start-Up Chile is an initiative created and completely funded by the Chilean government to help Chilean entrepreneurs take their tech ideas from conception to launch. The program was one of the earliest in Latin America and its success has led other Latin American countries, like Argentina, Colombia, and Peru, to create their own incubators based on Chile's government-led startup engine.


Chile's Startup Drain

There's only one problem: Chile has been having a very difficult time keeping all of these startups in the country. The way Start-Up Chile works is by offering grant money with hardly any attached stipulations, and, according to CrunchBase's analysis, that model has led to an attrition rate for newly launched startups of almost 80 percent.

That's right, four out of five startups successfully launched in Chile will leave the country after finishing the six month program. A third of them move to the U.S., where the startup field is certainly more crowded, but also where a successful transition to an established company or an acquisition by a Silicon Valley giant can easily be measured in the millions. And Chile's problem is not unique in Latin America.

It should be noted that the figures showing how startups leave Chile in droves are not indications of national brain drain. In fact, Chile's startup accelerator has mostly provided a launch pad for non-Chilean entrepreneurs; June's graduating class is the first group made up mostly of Chileans.

"Everyone uses incubators as ATMs," said Chilean entrepreneur Tadashi Takaoka to TechCrunch. "It's the place you get money, but the process isn't that strong and the results aren't that good." Part of the problem is that there's little follow-through and an incomplete technology and business ecosystem in Chile for entrepreneurs to take their newly minted startup to the next level.

Business culture in Chile and other Latin American countries is another problem, according to investors and entrepreneurs who spoke to TechCrunch. After decades of uncertainty in the economy, moneyed Chileans are simply unwilling to invest in a field like tech startups, where such a high percentage of projects eventually fold. "There is a cultural thing with failure here," said Chilean investor Cristobal Silva to TechCrunch. Certainty is valued over the high-risk, high-return style of tech startups. "My reality is completely different from the older generations who have been working for 40 years at the same company."

Despite Obstacles, Hope For the Future of Latin American Tech

Which brings us back to Brazil. Out of all the hotspots for tech startups in Latin America, Brazil is the tent-pole economy where startups can not only launch but begin to scale their businesses into real technology enterprises.

Another Latin American former entrepreneur, Nicolas Szekasy, noted to TechCrunch, "Even if founding teams are based elsewhere, very early on they go to Brazil and continue expanding from there with the objective becoming a regional leader," because, he said, "you can build a billion dollar business in Brazil... in any other country in Latin America that is not really possible."

Szekasy's view won't stop those other Latin American countries from continuing to chase the goal of creating a high-tech economy, and with the rapid rise of the mobile Internet continuing among Latin American consumers, along with a wealth of other indicators of an emerging Latin American tech boom, the possibilities still abound.

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