Founder Institute Expands to South America, Should Your Country Be Next?

Adeo Ressi’s incubator the Founder Institute is expanding to its fourth continent, South America, with new local chapters opening in Bogata, Colombia in April and Santiago, Chile in September. Closer to home, the Founder Institute is also opening a new chapter in San Francisco, due to increasing Bay Area demand. This will allow the incubator to run four semesters a year in Silicon Valley, graduating more than 100 local companies.

The three new offices bring the total number of chapters to 16– and Ressi says he wants to add at least four more this year. In the US, the incubator is in Boston, San Diego, Los Angeles, New York, Washington DC, Seattle and of course Silicon Valley. In Europe, it has chapters in Berlin, Paris and Brussels and in Asia, it has a thriving chapter in Singapore.

The Founder Institute is different in a few ways. It operates several four-month long semesters per year where mentors help develop pre-seed entrepreneurs for the wild world of running a startup. Unlike TechStars and YCombinator, they don’t invest, but they do take 3.5% of the graduating companies and put it into a pool for the founders, mentors and people who operate local chapters. It’s basically a large startup exchange fund and a clever way of systematizing how the money naturally flows in Silicon Valley, as founders have exits, invest in and mentor other friends’ companies, take investments from their friends for their next companies and everyone in the scene generally helps each other become successful and, in the process,  shares in the wealth.

But a bigger difference is the geographic scope. There just aren’t many incubators that take such a global approach, and the few that do, like Seed Camp, typically don’t have as wide of a footprint in Silicon Valley and the United States. If you believe that all the best entrepreneurs can’t be in Silicon Valley, and that the biggest growth opportunities are in emerging markets, Ressi is rapidly becoming one of the better positioned bridges and mentors between the experience and money of the Valley and the raw opportunity of the emerging world.

Of course, not everyone does believe that. “I have had this argument with so many people,” Ressi says. “They’re like, ‘Dude? What are you doing?’ In the scheme of other countries America is only big when it comes to GDP.” (I feel you, Adeo. Michael Arrington still tells me I was an idiot to leave the Valley and spend the last two years on the road.)

Another plus in opening these international chapters? The governments are way more supportive, Ressi says. In Singapore, the government backs 100% of Founder Institute grads with investment grants, market access and other service, and Chile and Colombia are aggressively trying to follow the model of what’s worked well for attracting investment in places like Israel and Singapore. In Colombia, incoming President Juan Manuel Santos has a plan to invest more than $2 billion in communications and information technology sectors, including a $30 million fund to stimulate the development of a local venture capital industry. In Chile, there are so many aggressive programs to support founders and venture capitalists that there is actually more money than there are local entrepreneurs. Founder Institute is going to help change that. Compare that to the US where we have some new capital gains tax benefits for angel investors, but little movement on solving real startup problems, like allowing startup visas to help alleviate the brutal talent war for engineers.

It’s a curious strategy to focus on smaller countries, over giants like China, India and Brazil. Ressi says he’s been put off by the corruption and unfriendly regulations towards setting up new businesses in some of those larger countries. Given how crowded they are already with investment, he prefers a more fledgling ecosystem where the government frankly needs Founder Institute more and will work to eradicate red tape and help support these companies.

So, where should Founder Institute go next? I challenged him to look into two cities I’m fascinated with: Jakarta and Nairobi. But Ressi also wants to know what you think. He asked me to ask our readers to make the case for their city in the comments, and he’ll not only read them, but strongly consider what you say. For those of you who complain you don’t have local angels and mentors, now is your chance to get some.

If you’re an entrepreneur in one of the 16 existing cities the schedule for 2011 semesters is here.