More public backing for innovation, more idea exchanges to nurture global trade and more stability. That’s what two transnational entrepreneurs hope will result from U.S. Vice President Mike Pence’s travels this week to Latin America, where he has promoted prosperity, security and democracy for the Americas.
Liliana “Lili” Gil Valletta, a Colombia native and naturalized U.S. citizen, described Pence’s trip to her homeland, Argentina, Chile and Panama as “a good thing” that highlights bilateral trade.
Valletta co-founded and runs CIEN+, a marketing and analytics firm based in New York and Medellin, Colombia. “We’re doing our mini-version of trade, giving jobs on both sides,” she joked.
Nathan Lustig, an American entrepreneur, said he hopes Pence’s visit reinforces the benefits of trade and competition — for the entire hemisphere.
“Many Latin Americans limit themselves” because they lack confidence that they can compete in global markets, says the 31-year-old managing partner of Magma Partners, a wide-ranging seed-stage investment fund with offices in Los Angeles, California and Santiago, Chile. “What we see on the ground is that they actually can.”
Pence, speaking at a business dinner in Santiago on Wednesday, said that U.S.-Latin America trade “totaled a stunning $1.6 trillion” last year and that the United States wants to see it increase: “We want to bring even more of our business culture of entrepreneurship and innovation across Latin America.”
Lustig and Valletta suggested Latin America also can export some valuable approaches to entrepreneurship.
Lustig is a beneficiary of Start-Up Chile, an international model for public investment in entrepreneurship.
In 2010, the Chilean government launched the so-called startup program for business startups to encourage entrepreneurs and define the country as a global hub of tech innovation. Selected applicants from around the world get at least $10,000 in funding, a one-year work visa, office space, plus months of training, mentoring and networking with potential investors. In exchange, they stage workshops or provide mentoring for local residents, creating a ripple effect.
As of last year, the accelerator program had helped at least 4,000 entrepreneurs from 79 countries boost 1,400 fledgling businesses, according to Start-Up Chile’s website.
Lustig, who started two businesses as a University of Wisconsin student, got $40,000 and a foothold in Latin America via Start-Up Chile’s pilot round of training.
He said that beyond the accelerator, Chile has introduced other ideas worth emulating to boost innovation. For instance, a 2013 law streamlined the startup process, enabling entrepreneurs to incorporate businesses online, in a single day, for free.
“When I first got here [to Santiago], it would take 60 to 70 days to open a company and take several thousand dollars” for incorporation fees, Lustig said.
Ruta N in Medellín
As Valletta sees it, “there’s a lot for us to learn in the U.S. about the agility and ability” of public-private partnerships to meet entrepreneurs’ needs for guidance and capital.
She pointed to Medellín’s Ruta N as another model.
The city’s government and civic leaders set up the business accelerator for technology, science and innovation in 2009. Set in a special innovation district, Ruta N has created “nearly 3,000 jobs with an average monthly income of $1,300,” executive director Franco Restrepo wrote in Americas Quarterly earlier this year. Colombia’s labor ministry said minimum-wage workers earn about $250 a month.
Both Start-up Chile and Ruta N face challenges.
Many of the Chilean program’s startup companies tank without additional government aid or they relocate “as soon as they’ve finished taking advantage of Chile’s generosity, low costs and relatively light tax burden,” the website TechCrunch found in an analysis.
Colombia, too, has had setbacks that could hamper its program. The country risks a cut to its BBB credit rating after “overly optimistic forecasts by the government,” Reuters news agency reported in July, citing factors such as low oil prices and weak economic growth. It said the finance minister planned to cut the next year’s budget by 5 trillion pesos ($1.65 billion).
A good entrepreneurial ecosystem requires talent, experienced mentors and willing investors, Valletta and Lustig agree.
Immigration is one source of talent, said Valletta, who came from Colombia at age 17 “with a suitcase and a student visa and without speaking a word of English.” She graduated from Southwestern Adventist University in Texas, earned a master of business administration degree from the University of Colorado and rose to become global marketing services director at consumer products behemoth Johnson & Johnson before starting CIEN+.
Asked about the White House’s delay of the so-called International Entrepreneur Rule, which would let qualified foreigners come to the U.S. to develop businesses, Valletta suggested the United States should make room for innovators.
“Unfortunately, everything is so politicized,” she added.
Now in her early 40s, Valletta serves as a mentor for the Stanford Latino Entrepreneurs Initiative, based at the university in Palo Alto, California.
She noted that despite the burgeoning U.S. Hispanic population, Latino entrepreneurs — especially women — have limited access to investors. So, she started Dreamers Ventures, an alliance of investors and mentors to bolster minority businesses.
“We’re playing a role as a matchmaker to fill these gaps quicker,” she said of the collaboration with lifestyle-entertainment retailer HSN.
Lustig does mentoring through Magma Partners and shares ideas through his blog and a related podcast.
He has a bit of advice for the U.S. government: Sign a tax-relief treaty with Chile to reduce pressure on small, cross-border businesses like his.
“The U.S. taxes you on your worldwide income and they don’t give you credit for taxes you’ve paid in Chile,” he said, complaining that a treaty to ease double taxation has stalled in the U.S. Senate. The Foreign Relations Committee approved it twice, in 2014 and 2015, but it never reached the full Senate for ratification. He said small and midsize businesses lack the means to find tax advantages that large ones can.
But Lustig pointed out that the United States long has had a major asset: “a stable legal system where you know what’s going to happen.”
Chile, too, is stable; the World Bank says its strong regulatory framework makes it a top performer in Latin America and the Caribbean.
Lustig compared Chile with Argentina, where President Mauricio Macri has been implementing market reforms since taking office in late 2015. Before that, the entrepreneur said, “the business laws could change daily. …
“You can’t build a business foundation on top of sand,” Lustig said. “… As long as you have a set of laws, whether they’re pro-business or not, entrepreneurs are going to find a way to build on it.”