I am starting a company in Chile | Hacker News Reader

I am starting a company in Chile

amix.dk

111 pointswslh47 comments

"each startup receives $40.000 USD subsidy (no equity). This is a huge deal for me as you usually have to give a lot of equity in seed rounds for relative small amounts of capital. With this program you don't give away any equity, which should make most founders happy ;-)"

it's not a bad deal but you're completely missing the point of taking money from american or european 'bootstrap' companies: it's about the connections, the press, bonding with a group of entrepreneurs who will eventually become captains of industry, etc.

i would argue that companies that launch via YCombinator are also getting their money for free because, on launch day, their valuations go up more than the percentage paul et al. takes.

as for living in Chile for a while... i'm all for that!

"it's not a bad deal but you're completely missing the point of taking money from american or european 'bootstrap' companies"

Maybe. But they're not mutually exclusive and maybe the Chilean fund even helps with the startup incubators, because you can apply to something like YC or Techstars afterwards if you still have 100% equity to give away. Plus the good programs have gotten so competitive that it's harder to get in with just an idea, it's better to show traction and customer validation first.

As someone that interviewed for YC this week and didn't make it in, I can say that going to the Chilean program appeals to me for exactly those reasons, since I'd be able to reapply to YC after having worked on my project (stacyplease.com) full-time rather than continuing to burn nights and weekends.

The ineffable value of "connections" is always brought up in conjunction with selling your equity for a pittance, or with paying $250,000 for an MBA from a brand name school.

If you need connections with people that have nothing to do with your domain to succeed, revisit your business model.

We have plenty of connections that we have developed. Not phoney connections to business parasites that want a cut in return for magic beans.

That sounds really interesting. I've lived in Argentina for 6 Months, next to the Chilean border, and now I'm really wondering if I shouldn't move to Chile instead of boring myself to death here in France.

Many of my Argentine friends in the IT field moved to Chile too. But almost everything IT is connected copper mining there (at various degrees), and I'm not sure it that interesting.

Have you even come to Chile? You should either come or read more, because even though the mining industry is huge, by no means everything IT is related to mining. There's a very healthy and continuously growing startup/entrepreneurship community, with big organizations pushing to help them along, including the government, with programs like Startup Chile. BTW, GoaP is coming to Chile next week: http://geeksonaplane.com/destinations/santiago/ (I'll be participating in some of those activities).

I spent 2 week-end there (Valparaiso and Santiago), so I'm not really informed. But all my friends who emigrated from Argentina to Chile (that's 5 people) are now working at service companies related to the mining industry.

Start-Up Chile started 9 months ago and Junar is the only one of 23 companies that has attracted investment, and it is an Argentine company. No entrepreneur from the USA has been successful.

The Bill and Melinda Gates Foundation and other organizations try to solve problems by identifying a specific point of intervention and applying their efforts against a theory of change. Unfortunately, Start-Up Chile refuses to identify a specific point of intervention, as Steve Blank advised after his visit to Chile last December:

    My sense is that Chile has not yet “declared a major.” Saying that you support entrepreneurship and innovation is a start, but the sentence needs to be finished. Entrepreneurship and innovation in what field? …. alternative energy? materials science? food science? cellulose outputs? video games and film? South American web commerce hub? automated mining? UAV’s?

Start-Up Chile lacks focus and rejects Steve Blank:

    We accept projects from all business scopes ranging from biotech to energy to mobile and beyond. Throughout the 2010 pilot phase, there have been a number of Start-Up Chile participants who exemplify the diversity that the program strives to seek.

The second part of the Gates Foundation principle, applying efforts against a theory of change, implies that the government should justify intervention into a healthy free market by identifying the supposed “market failure”; in other words, telling a story that describes a process in which the intervention will be phased out and the free market revives. More: http://brophyworld.com/startup-companies-in-chile/

Curious as to what you mean by successful. Are you saying the 22 other startups declared failure/died? Are you talking about attracting investment in Latin America? I'm guessing a lot of those companies came back to the US to search here.

All the best. Wedoist looks useful. We too got selected. Hope to see you there :) I considered plurk to be one of the coolest things around the time when I started using it. For reasons unknown I stopped using it later. But lots of respect to you, would be a pleasure to meet you and work in the same work space as you!

That's great! I lived in Chile for six months in 2009 and loved it. Startup community there is thriving too.

Well I'm chilean and I don't want to be rude but if you've got those $40k USD for Wedoist I think the government is dilapidating our money.

Is your point from the fact that the author isn't Chilean or that your government is running this program in the first place?

I don't have any problem with the fact that the author isn't chilean but I'd prefer projects like the Show HN and weekend project links posted on HN.

And I'm not sure how these things (government giving money to private companies) are 'working' since we're recently having a huge problem dealing with corruption.

Part of the money already got it's worth for appearing on the front page of HN :) Everybody needs to manage their project, it's a big market and all this from someone who's been there and done that.

I'm not Chilean, but I live here and I've discussed this with Chileans and people abroad. First, the money is not that much (especially for people from richer countries). Second, the idea is not that they are buying a company, but that they are bootstrapping an attitude. And I think that is working. Look at startechconf, dynlangchile, huevapi, first tuesday, etc etc...

PS Are you guys here? Drop me an email when you arrive if you need anything (andrew@acooke.org) although I am not well-connected here it's always nice to chat in English (I'm a programmer - work from home for an American company...).

I'm chilean, and I very much agree with you. I'm not sure about the strength or real impact in the long run, since this depends on the government and government changes every 4 years. In any case, I think it's a great initiative and would never say they are wasting our money.

PS: I'm the founder of a chilean startup, I have a few contacts here and there, and would love to keep connecting with other hackers and startup enthusiasts. My contact info is in my profile.

Huh? This guy is already reporting profits he will almost certainly be spending in Chile. So his participation will probably end up being a net positive for Chile even if you don't include the value of his knowledge and experience in creating a top-1000 site.

I don't know much about the product, it seemed a bit sparse after looking quickly. However, I think the point is not what it looks like now, but what will it look like next year after the investment. A project management app is probably general enough to be beneficial to the country.

I agree, this is program is a fraud on Chile's taxpayers. Chile's economy is relatively successful because it is one of the most free-market in Latin America, and this program of directed government investment is a turn away from that tradition.

no it's not. the government has many investment programs. it's a mixed economy like any other.

what a weird comment. are you american?

If you think that's wasteful - bad news, that's how governments work in general. A good example of the 4 ways to spend money: http://www.youtube.com/watch?v=5RDMdc5r5z8

The way to get a good economy is to get rid of obstacles, not for the government to try to pick winners. Less red tape and lower taxes would be better.

I'm chilean, working from home for american clients, I have never been really interested in the local startup scene because, well, there was nothing of that a few years ago really, but things are changing and I'm glad we now have this initiatives and we're slowly starting to attract talent! we got the infrastructure but what we really need is to attract foreign talent / entrepreneurs, and to _keep_ good local talent. I wish you the best!

btw, Santiago ranked #1 in the list of Latin American cities of 2011/2012 by The British Financial Times Magazine: http://www.thisischile.cl/News.aspx?ID=6426&SEC=190&... there is a lot going on down here no pun intended

does HN do meetups? there seem to be a few people here from santiago - we could meet for a meal or drink some time? posting to here because you don't have any contact info in your profile :o)

hey Andrew, I'm not aware of specific HN meetups in the area but I'll be glad to join you for a meal or drink, I have updated my contact info and going to reach you over email, I'm not in Santiago because I love Viña del Mar ;) but we are just a bus ride away and I do have go hit Santiago in 2 weeks anyway :)

Why the US hasn't done this on a 1000x bankroll (1.2 Bill) is absolutely beyond me....

The US doesn't need to monetarily attract new startups, it just needs to get the visa/immigration nightmare the hell out of the way.

I completely agree on your point regarding the visa/immigration BS. Some of the best talent I work with is from south america or eastern Europe. They are ALL in this boat, and it's heartbreaking to see (and makes me feel like I have something I shouldn't, when a lot of these people are just more talented than I).

The US does need to monetarily attract new start-ups.

Our brightest minds are still going to the IB/PE firms of NYC and sucking money out of a zero-sum system instead of creating something worthwhile. Give them incentive to create (in terms of personal cash reward) in the same way the banks do, and you have something.

Spending a few billions on startups (who would spend it?) would not alter the long term balance between startups and wall street.

They have, even with equity participation. GM.com and AIG.com are all working on some cool stuff, supposedly.

I think the "supposedly" piece here is key.

Yes, plenty of companies do it -- but few have the means and liquidity to make an actual impact. If apple took half of their cash and moved it, that'd make an actual difference... but Apple's not going to do it and no one else (besides the gov't) has the power to do so.

Because it is corporatist and corrupt and not the American tradition to have politicians usurp the role of banks and venture capitalists. Fundamentally, do we believe that government should allocate capital, or should private citizens and companies do it in the marketplace?

These government startup funds are a Potemkin Village where the corrupt state mimics the healthy activity that occurs naturally in free societies.

Hey Amir! Congrats :D I too was selected (heading in June like you) -> search for ez4u (portugal) in the pdf file :D we should keep in touch: twitter: @zemariamm, email zemariamm at gmail dot com

Congratulations and good luck

Just one point of feedback - can you add an about page to the site with company info, bios etc? I looked for it and couldn't find it

Like noted in the blog post Wedoist has been something I have worked on in my spare time... Hence the lack of company info, bios etc. :)

I looked into Chile, but it's a surprisingly high tax place. It seems higher than even Canada in all measures.

Sales tax for everything is 19%, corporate profit tax is 17%. There's a tax ladder for personal profit which goes from 0% to 40% on the highest tier, although very few people pay that.

Average pay for a software engineer is around USD 2.000-4.000 net monthly, with living expenses at around USD 1.500 monthly (including 1 bdrm apt in a nice neighborhood for USD 400 monthly rent).

A BigMac meal costs around USD 6, but you may also have a nice homemade-like lunch (a lot healthier) for around the same price.

Is not a bad place to live, nor really that expensive. Although Santiago is one of the most expensive cities in the region, but with the added bonus of security, stability, and low corruption[1], something rare for these latitudes.

[1] In 2010, Chile had almost the same Corruption Perception Index than the US: http://www.transparency.org/policy_research/surveys_indices/...

for real? i pay 10% of what i receive (income) each month and get a chunk back at the end of the year. there's also a sales tax. and that's it.

So if you made $200k annually you would still pay the same %10? (I'm trying to find out the practical upper limits.). I based the higher taxation on the %20 payroll tax, but if the limit are low then it doesn't do much it seems. Also when I read the somewhat confusing tax document, there are pretty nasty taxes for foreign income and such, which would seem to apply for expats.

http://en.wikipedia.org/wiki/Tax_rates_around_the_world http://www.sii.cl/aprenda_sobre_impuestos/estudios/sistemren...

as far as i can tell the numbers in wikipedia are completely off: the "10% pension" is (1) still your money (it's a personal fund, not a social security system); (2) capped at $300 a month; and (3) completely optional if you're self-employed; i pay less than $100 for optional health insurance monthly (no idea where 7% comes from).

also, your link to sii doesn't work, but my understanding is that if you are paid from abroad and it's wired to you each month, and you convert it to pesos locally, it's just income and charged at the same rate as any other income.

in general the tax system is very transparent and open - it's easy to be self employed and you just pay 10% monthly as i described. at the end of the year chilean banks declare your interest etc etc, you get a web page that lists everything that you click "ok" on, and then you get a refund.

i have no idea about $200,000 a year salaries. i am just describing normal life working for an american company as a contractor (ie self employed from the chilean pov). frankly, if you earn that much, or you're looking for some kind of tax haven, pay someone for some advice instead of reciting stuff from wikipedia that you don't have the context to understand.

[both pension and health fund are private, in case that wasn't clear]

There are different ways of paying taxes, mainly:

1) if you are "self employed" and just do "boletas" (a sort of personal invoice), you pay 10% of that each month as a provision of your total income tax, usually this is paid directly by the receiver of the invoice to the SII (chilean equivalent of the IRS)

2) if you have an employment contract from a company, the company pays whatever the corresponding tax is for what they are paying you each month directly to the SII

But, each year you have to file a tax declaration form with the SII. And depending on the total amount that you earned during the year, there's a corresponding tax rate that you have to pay. Then if the total amount of the provision you paid during the previous year is higher than what you had to pay, you get a return on the difference (adjusted for inflation), but if the corresponding rate is higher (10% in your case), you'll have to pay the SII the difference.

If you only have one employment contract, from one company, then your total tax (global complementario) has already been paid, and you are excused from having to file your tax declaration.

Here's the table for the tax (global complementario) you have to pay corresponding to your total income:

http://www.sii.cl/pagina/valores/global/igc2011.htm

The way the table works is kind of complicated, the tax rate you have to pay depends on the total amount, but you have to pay a different rate for each of the tax brackets/tiers that your total earnings fall in. There's also a maximum total discount that you can subtract from the total as "expenses". The total is easy to calculate from the table using the "cantidad a rebajar" (discount) column though.

For example, if you make Ch$ 15 M (around USD 30k) a year, then you have to pay (according to the table above), 10% of: Ch$ 15 M, minus the discount on the same row = Ch$ 1.5M - 900k = Ch$ 600k. Hence, if you paid Ch$ 1.5M in provisions during the previous year, you'll get a Ch$ 900k (about USD 1.8k) return.

There's also another discount for expenses, I don't fully understand how it works though, but it would mean paying even less in the example above, and getting a higher return.

I'm not an accountant though, so don't take my word for it and get well informed before filing a tax return form.

Edit: changed some wording for clarity, added some info and changed the link to a more current table

What are living costs like in Chile?

Not much. The government pays a stipend to start ups that come to Chile as well.

There's a post on Quora by someone who shall remain anonymous that goes into this in some detail: https://www.quora.com/Hows-life-in-Santiago-Chile/answers/80...

I'm chilean but I'm also an anglo-celt so I can say that's a very accurate description of how is life in Santiago of Chile. I encourage you to read it.

How does Brazil compare to Chile for startup environment?

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