Startups and Bitcoins in Chile.

The Chilean history goes back about 10,000 years when first Native Americans settled in its coastal areas. Country's past includes many heroic moments, such as Mapuche people resistance to Inca Empire and to Spanish Conquistadors (15th and 16th centuries), as well as most controversial historical events, such as human rights violations during the Pinochet-led military government, when more than 40,000 people vanished in a period between 1973 and 1990.

Today Chile is a representative democratic republic with 120-members, bicameral Chamber of Deputies, where a dozen political groups fight for dominance. The list of congressional parties presents a wide spectrum of political view ranging from pro-government Christian Democrats (20 seats) and moderate Independent Democratic Union (28 seats) to the extremist Communist Party (6 seats).

$250 billion Chilean economy is well diversified, with service sector contributing more than 60% to GDP, and ranks 7th in the international index of the economic freedom. In recent decade Chilean government has massively invested into the development of local high-tech ecosystem, increasing the number of local startups from 25 thousands to 100 thousands.

Chili has well-developed manufacturing industries as well as growing technological sector, which both create a base for high-tech businesses development. On the other side, Chilean consumers, specially those living outside of major metropolitan areas, are generally poor and income disparity in the country is high. On top of that, stagnating Chilean economy puts future growth perspectives of fledgling local high-tech companies under the question.

The enthusiastic support, which crypto-currencies received from Chilean government has been gradually wearing out. After the first local crypto-exchange was created with funding coming from authorities, it soon hit the wall when one of the major Chilean banks discontinued its participation in this project. That was followed by the Banco Central de Chile's head commenting negatively on the perspectives of digital currencies.

However, that may only partially explain why besides the astounding success of "chaucha" coin, cloned from Litecoin in December 2017, there has not been any other notable progress achieved in expanding crypto-currencies adaption in Chile.

The number of merchants accepting digital money still remains negligible and legal status of crypto-currencies - largely undefined. For the country, which, just a while ago, claimed one of its main state's developmental objectives to be gaining the technological upper hand on the South American continent, such sluggishness in following the most promising trend in "tecnologia financiera" looks abnormal.

Business Notes for Startups Founders:

political climate: friendly;
economic climate: marginally friendly;
regions to focus: locally;
industries to focus: FinTech, e-commerce, e-jobs, EduTech, entertainments, marketplaces, e-security;
major limitations: stagnant economy, GDP growth rate is under 1% (under 3% in 2015), low mid-income population;
stimulus: services account for almost 60% of GDP, developed telecommunication infrastructure (fixed Internet penetration rate nears 80%);
opportunities: to create an e-business aimed at young urban users of mobile Internet in FinTech, EduTech and e-job market niches.
Cryptocurrencies and ICOs (outlook): undefined (moderately positive).
The author: Svyatoslav (Svyat) Sedov
Angel investor and founder of The First International Incubator for Silicon Valley Companies (FirstInternational.In) in the Bay Area, CA, USA.

Twitter: https://twitter.com/SvjatoslavSedof