How to Create a Company in Chile: What You Need to Know to Expand Your Childtech Startup in This Country

Chile is one of the most attractive destinations for startup expansion in Latin America. Learn about the opportunities in the market and the general aspects you should consider to open your company in this country.

If your startup is ready to expand internationally, it is time to do some targeted research on the countries best suited to grow your business. To make your search easier, we prepared this article with the business opportunities and the basics of how to create a company in Chile, a market suited to childtech and edtech companies in general.

But why should you consider Chile as an expansion destination? The first thing you should know is that despite being a small country in geographic size, with a population of 19.49 million people, it has a strong economy. Chile is the fifth largest economy in Latin America, with a Gross Domestic Product (GDP) of 301,448 million dollars reached in 2022, according to data from the World Bank and the Central Bank of Chile.

It is a market suited to creating and growing startups in different sectors, especially educational technology companies, including childtech, since it is the third Latin American economy with the highest growth of the EdTech ecosystem in the region, after Brazil and Mexico. This is noted in the report ‘Educational Technology in Latin America’ prepared by the Inter-American Development Bank (IDB).

And that is not all. Chile is the country with the greatest ease of doing business in Latin America, according to the Doing Business report by the World Bank. Of all its cities, Santiago is the most important for doing business. In fact, it is considered the third best city in the region for creating companies, according to Statista’s “Global Business Cities 2022” study.

It also has the most developed entrepreneurship ecosystem in Latin America, according to the GovTech Index 2020 of the Development Bank of Latin America. It also ranks fifth among the main expansion destinations in the region, one of the most attractive countries for startup internationalization, after Mexico, Colombia, Brazil and Peru, according to the “Soft Landing in Latin America” study by Endeavor, Google, Mastercard and General Atlantic.

Best of all, foreign entrepreneurs who come to this nation to establish their company have the support the government provides through Start-Up Chile, the only public business accelerator in the country.

There is also other support from private incubators and accelerators, VC funds, angel investors and the business sector. As you can see, all of this makes your entry into the country and your positioning in the market much more feasible.

Market opportunities for childtech

Chile has great opportunities to start a business, especially if you have a childtech startup. Why? Although Chile has one of the strongest and most developed education systems in Latin America, there are still challenges you could address with innovation, technology and scalable models. This would help make teaching and learning processes more efficient and optimized, and provide greater access to education.

There are several areas where you could add value with your product. For example, teaching. The public-private initiative Elige Educar forecasts a deficit by 2025 of more than 26 thousand teachers in secondary education, in subjects such as History, Geography and Natural Sciences. This problem is part of the global teacher shortage crisis that UNESCO warned about, the same organization that says a workforce of 50 million teachers is needed to achieve universal basic education.

Other areas with opportunities are child protection and economy. There are social challenges here if we consider that more than 200 thousand girls, boys and teenagers are in child labor. 577 thousand people in this segment live in poverty for lack of income, and 71% of girls, boys and teenagers say they have been victims of some type of violence by their mother or father, according to UNICEF data.

Like these companies, you also have the chance to expand in this country. For this reason, we spoke with Javiera Araneda, Chief Growth Officer at Start-Up Chile, who shares some general aspects you should take into account when you decide to open your company in this nation.

1. Incorporating the company

Incorporating a company is essential for your startup to exist legally and be able to operate without complications with a public deed. This will define in writing who the owners of the company are and what percentage of ownership each one holds. There are several types of companies that can be formed in Chile as a foreigner, but the most common is:

• Sociedad por Acciones (SPA), a joint-stock company

2. Get the RUT from the Internal Revenue Service

Another procedure you need to complete to open and operate the company is the RUT (Rol Único Tributario). It is the Chilean tax identification number and has 8 or 9 digits. It proves your commercial activity and lets your partners or customers identify your company. It is required for those who want to create a company from scratch or invest in an existing one.

3. Get a work visa

Getting a visa is important so you can enter and stay in Chile legally and without complications during your business activity. You should know that there is a temporary residence visa for entrepreneur opportunities. It is granted to foreign people who want to invest in companies or create them from scratch. It lasts one year, and when it expires it can be renewed.

Another way to get a work visa is through InvestChile. This public agency has an initiative called Visa Tech, which helps technology services companies and startups taking part in the Start-Up Chile program get their work visa. It is designed for companies that need to hire highly qualified foreign staff who are not available in the national territory.

4. Look for strategic allies

Having the support of allies will give your company a smooth soft landing with a better chance of success. It is important to enter the country alongside a government agency, accelerator, company or even customers to minimize the risks of expansion. You can approach Start-Up Chile, InvestChile (the public agency that promotes foreign investment in the country), or ask for the support of private consultancies such as Softpower, which specializes in helping Latin American entrepreneurs reach the Chilean market.

Our recommendation is to look for help from Start-Up Chile. This accelerator has a program called Growth, exclusively for startups in the expansion stage that plan to establish themselves in Chile. Javiera explains that during the program they can help you with the company’s soft landing, getting the work visa, and a letter issued by Start-Up Chile as backing so you can enter the country more easily by taking part in a public program of the Chilean government.

In addition, this accelerator connects you with financial institutions to open bank accounts. It has a network of mentors and supporting partners such as lawyers and specialists who can help you open your company. As for market positioning, Start-Up Chile also helps you connect with potential customers, venture capital funds, angel investors, mentors and entrepreneurs from different industries to better understand the market and do business more easily.

5. Study the market

Javiera suggests analyzing the market very well before entering the country, even making connections and holding meetings beforehand so that when you arrive you know the industry, how the market moves and who the players are. It is important to prepare the ground before your startup lands. “A good way to enter Chile is alongside a customer, for example a company based in the country, and with partners such as Start-Up Chile,” adds Javiera.

It is true that expanding a company is a challenging growth stage, but even with the difficulties, there are great opportunities for your startup to join the Chilean market. A successful development is possible and we are sure you can achieve it. Don’t forget to consider these recommendations before opening your company in Chile; they will make your soft landing much more feasible.