Chile to give 300 startups $40,000
start-upchile.com
start-upchile.com
Then non-technology entrepreneurs got upset and the definition of "technology" was enlarged to include anything that had a web site.
Then the money dried up and we still don't have more world-class technology companies than before.
The morale of the story: Silicon Valley is what it is because there is a critical mass of venture capital and world class universities within a small region. That's not something that's easy to replicate in 40K increments.
You don't need to have a specific area in which technology/innovation/money flourishes. Why not try to promote the "startup spirit" countrywide?
The idea is that if you have a lot of businesses near to each other in the same business sector, you can get synergy between them. the whole is greatrer than the sum of the parts.
Chile wins if this program generates positive ROI on the investment, even if it generates only 1% of success of Silicon Valley.
Economic stimulation, if done properly, works. I find it amazing that a government initiative makes so much sense and is executed, as far as I can tell, so well, so big props to Chilean government for doing that.
As someone who has been living and working in Chile for more than 10 years now, I'm not at all surprised to see them throw money at the issue yet again, instead of working on changing the way things work. But I've already talked about that stuff before: http://news.ycombinator.com/item?id=2068429
March 15th is the last day to submit applications for this round, so don't put off applying if you're at all interested. Stay up late and get your proposal finished.
Imagine a national contest, YC-ish if you will. 500 businesses walk away with $100K each. That costs just $50M.
What would you get in return? You'd get tens of thousands of people racking their brains and being brave and innovating. Even if they weren't chosen, many of them would have a solid plan and go for it.
If we really believe that creating new jobs is our top national priority, then we need to find new ways to create new jobs. After all, that's where 80% of jobs come from: new companies.
I can already imagine some of my friends screaming: "You Socialist bastard!". No.
It could be done to reward merit, and it would provide critical support to promising startups right when they need it most. This is not about handouts- its about rewarding and encouraging innovation and supporting job growth.
Angel investors might be pissed though.
If anything the cost of doing significant startups in the intervening years has declined, certainly for software, but also for hardware too. Apple had to build their own factories, even after they got venture funding. Now nobodies can hire factories on demand for your hardware.
$100k in the right hands would do a hell of a lot. However, the government isn't usually the best at determining the right hands.
What I would support is tax credit: if you feel like doing a startup, under some rules, the government could give you a $100k tax credit.
Giving away $100k for people to put businesses into the ground doesn't seem smart to me. Otoh, each business is supposed to make money and if you don't become profitable, might as well shut down.
In any case, attacking this as a "socialist" idea is an ad hominem attack. Not that its the best idea ever, but calling it "socialist" doesn't detract from the merits of it one way or the other.
I don't see it as an ad hominem, nor was it intended. Just two disagreeing opinions.
Actually, this is just a recent annoyance of mine. In my country (Romania) the government just released something like this: they are giving away 10.000 eur to new companies started by young people, based on some form of contest (they read a business plan, etc).
This annoys me for multiple reasons, but one if very personal: I am disqualified from that contest because I already have a company. So I am literally paying taxes that are wasted so another guy gets free money from the government based on how good he is at writing business plans (or bribing).
What they could have done instead is say: all companies with young owners get a 10.000 eur tax deduction (maybe, for example, if they create one extra workplace). This way, you have to actually prove that your company is profitable, not that you are good at writing business plans.
I see how you're upset that "your" tax money is being given to someone else to start a business, but its probably worth noting that only some excrutiatingly small % of your taxes are going to this.
I think that other governments can and should learn from experiments like the one in Romania. But from a policy perspective, it seems like a somewhat reasonable way to spur new company creation.
The government doesn't create jobs, it just directs resources from one place to another.
Yes, it's socialist. The government doesn't have that money anyway, it's running at a deficit.
This doesn't prove it's a good idea, but it does help to realize that there are enough of these programs going that they can at least learn from each other's mistakes.
Curious what those actually living in or from the region perceive as to the racial climate there in Chile and Sourh America in general.
disclaimer: I've never been to Chile, so I'm not sure if any of this applies there...
A friend of mine recently posted (FB) the following story on the police blitzing a black foreigner for jaycycling: http://www.emol.com/noticias/nacional/detalle/detallenoticia...
I'm inclined to say the same about Argentina and Uruguay, where I've traveled a few times, but not lived. I've also been to Brazil, and can tell you people of darker skin are quite the norm, as in the caribbean like Venezuela, though I wouldn't recommend going there for other reasons.
The much larger problems are class and sex discrimination. There is definitely a "nanny" class that the middle/upper income people view differently and vice versa. You would be largely exempt from this as a foreigner and would have no problems interacting with both groups. For women, the sexism is an obstacle although not a huge one. Offhand I can think of five female entrepreneurs I know personally in the tourism industry. They are from Chile, Cuba, Austria, US, and Argentina.
Chileans are overall very respectful of foreigners. They are self conscious due to Chile's small population and are open with foreigners and appreciate what they bring to the table.
There are very few black people. I have talked to a few that are US basketball players on contract to local teams for a year or two. They generally seem to enjoy the experience. Brazil has more blacks but it also has more corruption, more crime, and a higher cost of living.
Whatever you decide, I highly recommend living abroad as there are few better learning experiences.
They also respond very quickly.
The cash isn't the important part, in my mind; it's the experience of living in a very different culture and part of the world for a year, with more or less a full safety net. The amount of entrepreneurial good that could be done for the world if Americans--with their can-do spirit and work ethic--were more aware of the people outside their borders would be staggering. And I'm not saying that in a derogatory way, just that with a country as big as the States, it's often hard for Silicon Valley to give some thought to the business-solvable problems people have in New York, let alone Tierra del Fuego.
I think they got scared by what my product was about to do (self-healing computer networks, which would undermine their nascent IT industry). It's sitting on the backburner for now while I am working on something a bit less threatening to properly fund the main product.
Might try again this year. :)
So 2,344 Chilean workers will waste 40% of their working lives this year to pay the taxes to fund these 300 startups.
This is command economics with a Web 2.0 veneer.
If that were true, Paul Graham would be giving out handred dollar bills to random people instead of investing in startups that he personally vetted.
If the politicians and bureaucrats are so good at investing, why don't they do it privately instead of working for the government?
You are assuming that government is better at allocating resources than the market. If the government is better at investing than private capital, why even have a market economy? Why not have a command economy like in the Soviet Union?
If you believe in markets you should realize the Chilean government is doing something innovative and pro-entrepreneur at very low initial cost and likely negative cost in aggregate. I'd put it in the same boat as the matching funds programs run by Hong Kong and Singapore, with the major difference that the individual sums invested are much smaller and there is less bureaucracy involved.
First because some companies are already generating revenues and spending that cash locally. Add those inflows to the matching funds participants are expected to provide (most end up spending more) and it's clear Chile's exposure per startup is lot less than $40,000. And that's without considering the multiplier effect all this spending has on the local economy.
How the exact numbers run will depend on how they pick the teams, but I'm guessing that if two to three percent of the participants take investment or stay on permanently the program will be a net plus. Which makes it an income transfer if it works - but one from other parts of the world to Chile. And it's a good deal for entrepreneurs too so what is not to love?
He said that due to the cost of living, he was able to employ some very smart individuals who he wouldn't be able to afford to pay if he lived, say, here in Ireland. And mentioned that other startups were doing the same.
So even if it's not a requirement it happily happens anyway due to economics/cost-of-living/etc which sounds great.
We pay taxes and that's not going to change.
This money goes to government which then allocates in various ways to provide services to people of the country.
Part of this money can be thought of as an investment i.e. government spends money (e.g. on infrastructure like building roads) in hopes that this will generate more economic activity which will enrich the country as a whole.
The only important question is: is this program a better investment that others?
That is hard to tell, but at least to me it appears to be a great one. The cost (on the scale that governments operate) is puny and potential upside (companies that keep operating in Chile, hire Chilean people, pay Chilean taxes) huge.
If even one of these startups is really successful, it will pay for the programme on its own.