Venture Capital in Chile and the ACVC

By the term Venture Capital we understand, in a broad sense, the capital that is intended to the funding of startups, which may be in different development stages of it, generally in its growing phase, in such a way that investors become owners of a part of the Company’s assets. The purpose of such investment, is that the investor expects the company’s value to grow in time, and given that time the investor withdraws his equity receiving profit.

There is no doubt that during these last years entrepreneurship has experimented an steady rise in Chile, this mainly has to do with the public investment that has been destined to the area. Nevertheless, the venture capital that is invested within the country is still comparatively very low when confronted with others such as the United Kingdom, USA or Israel.

In the previously cited countries the effect in the economy by the means of venture capital investment has got an output up to 7,5 times the amount of the original capital input, which in turn means thousands of jobs and salaries.

With the intend of narrowing that gap, in Chile there are some measures been taken already, that is how the AVCV arises (Chilean Association of Venture Capital) which is comprised of investment fund manager representatives, as well as other private companies: Genesis Ventures, NXTP Labs, Magma Partners, Alaya Capital, Mountain Nazca, Nexo Capital Partners, Raicap, Carey, Telefónica and Engie.

The focus of ACVC is to support those industries that promote and contribute to the development of entrepreneurship in Chile and the region, cooperating to that end in the generation and implementation of public policies that support the expansion of the industry, the establishment of links between foreign investment funds, seeking at the same time, the promotion of international standards of good practices among its members.

Currently the Chilean industry manages 15 investment funds for US$350 million approximately, however, ACVC expects the triplication of this figure for the year 2020 as a consequence of the advancement of entrepreneurship and innovation funding.

The ACVC will also sponsor and carry out good practices training activities for investors and entrepreneurs, in addition to the keeping of relationships and information exchange and experiences with other associations as well, within Chile and abroad.

Besides the joint effort that the members of the ACVC carry out for the boost of entrepreneurship and Venture Capital industry, it is worth mentioning some measures to be taken for the achievement of the figures of those countries that are ahead of us in these matters, for instance, legal openness for the institutional market to be able to invest, a great amount of regulation and good practices control for the industry, a large quantity of information with the purpose of making the investors aware of this asset and, a strong support from the state in an early stage.

This being said, for the distribution of the funds intended for Venture Capital that are at CORFO’s disposal, it makes use of several financing facilities, operating throughout fund managers that focus in ventures of the most diverse nature. As an example, “A5 Capital” manager focuses on the innovation of technological procedures of the food industry; “Alaya II” for the development of software, e-commerce, social media, etc; “Auros Bios” invests on Companies that develop their business in the areas of biotech, biogenetics, pharmacology, etc. These intermediary managers sum a total of 30, guaranteeing a vast array of industries for the investment, thus, promoting innovation and development.

 

Francisco Mulatti, Lawyer.

Photo: Joey Kyber (CC0)

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