Get $40k grant for your startup. Live in Chile for 6 months. | Hacker News Reader

Get $40k grant for your startup. Live in Chile for 6 months.

startupchile.org

158 pointsiamelgringo74 comments

I met one of the associate directors of Startup Chile last night at a Hackers & Founders event. These people are amazing. They are trying to revamp their economy by changing the culture, and to do that, they want to import startup culture. So, their government has set aside $100M over the next four years to get 1,000 startups to come to Chile for six months and work.

But even more than that, their vision is much larger. They want the program to become a success, so that other, less developed countries start similar programs. Their goal is to try and convince 10 other governments of developing countries to embark on similar projects.

They are trying to hack their economy. And... it's working.

I was shocked to heard that their applicant pool wasn't that large.

Also, they are willing to take people at the idea stage.

So, if you want to build your startup, and take part in one of the best economic hacks I've heard of in years... apply.

Free lunch ? Or do they want equity ? Can't leave Chile for X years ? Must have headquarters there ?

there's more discussion at http://www.quora.com/Startups-in-Chile/Would-you-develop-you... but in short there aren't that many catches - certainly no equity (i would guess that people here in chile realise 40k really isn't that much in american terms; the payoff is in the numbers and the culture, not taking a stake in your particular business)

[edit: also, getting a visa here is not hard. you don't need to win that grant to come here. i arrived on a tourist visa (3 months, renewable to 6), got a job offer, and within a week of the offer had permission to work. and none of that was illegal. do bring some kind of certificate indicating your level of education, though(!)]

Could you share some of your experiences working in Chile? Where did you move there from? Did you already know Spanish? Have you enjoyed living & working there?

[having problems with hn slow response]

see http://www.quora.com/Hows-life-in-Santiago-Chile for more background.

i am here because my partner is a chilean academic with tenure here. in general, it's a good place to live. personally, i am not the most outgoing or relaxed person on the planet, and sometimes living in a different culture - and it could be any other culture - gets to me. but the only negative thing i can think of about living here is that the work culture in large companies (my first job) emphasizes hours over productivity. if i were coming here to run a startup i would use a more results-oriented working environment (i don't care if you work at home, but you fucking get stuff done) as an incentive. a lot of people really hate the enforced long hours.

you need to speak spanish. but people will be friendly and tolerant when you screw up. you can learn while you are here. a chilean lover is as good a way to learn as any ;)

PS - just thought of a negative (as i went outside). the winter air quality in santiago is terrible. if you have asthma you don't want to be coming here. another negative would be the differences in wealth, although i imagine that's more shocking to a european than an american (i have no idea why i am paying such low taxes compared to europe - why isn't more of what i earn being used to help the poorest people here?).

PPS - some positives: good food (you have no idea how good a hot-dog can be); good beer (really - it's exploded the last few years with a bunch of micro-breweries); a more entrepreneurial attitude than europe; a more sane social attitude than the usa; low crime rate (despite what people here seem to think...)

Should be noted, the taxes in Chile are not only lower than Europe, they are also lower than in the US unless you are a member of the ultra elite rich that has a team of tricky accountants who shuffle assets to remote islands to make sure you don't pay your share. How can they do it? Well they don't maintain a global imperialist war machine that costs trillions to maintain, nor do they give away trillions to criminal bankers.

heh. that happens here too. i had someone come round trying to sell me some off-shore banking services here in chile. the "salesman" was the son of an english diplomat. i am from "normal" english stock. it was a socially uncomfortable meeting.

I don't have an authoritative source, but I recently read that Chile assesses: - Up to %40 income taxes - A form of social security taxes - taxes capital gains as income - %17 corporate taxes - %19 VAT Taxes (might have that and corporate reversed) and, the piece de resistance: - a %35 excise tax on taking money out of the country!

tax on earnings are listed here - http://www.sii.cl/aprenda_sobre_impuestos/impuestos/imp_dire... - and the 40% rate applies to earnings over $12,500 a month (it's banded). there are also incentives for investment that count against that (so you invest the money in a pension fund, say, then that lowers your effective wage for tax purposes, i think (not completely sure)).

the 35% tax is described here - http://www.sii.cl/portales/inversionistas/imp_chile/impuesto... - and applies to earnings of people who don't live or have residence in chile. so it wouldn't apply to someone under this grant. also, it's not in addition to other taxes (so it's 18% over VAT, if that would have been charged - again, this is just from skimming the docs).

[edit: you need to translate the fourth paragraph to understand the "additional" nature. here's a link in english http://www.thisischile.cl/frmContenidos.aspx?SEC=187&ID=... that says This tax applies to those who are neither residents nor residing in Chile and ranges between zero and 35% on total revenue depending on the type of income (e.g., for services, royalties, interest, transportation payments, insurance, capital gains, and dividend distributions). In the case of utilities, the “First Category” tax can apply as a credit towards the additional tax.]

in general, chilean laws and taxes are all described online. you don't need to post uninformed speculation - you can search for the details. disclaimer: i just skimmed the links, and am no expert, so my summary may be incorrect.

"Additional tax applies to income derived from Chilean sources by individuals or entities not domiciled or resident in Chile, where the income is available from Chile to the person residing abroad. Dividends, withdrawals and / or repatriation of profits by corporations, partnerships or permanent establishments of foreign companies are taxed at the general rate of 35% additional tax."

Note the word "additional". So, this implies after regular corporate taxes are applied.

So, you form a corp in Chile under this program, then you leave after 6 months. You're no longer a resident of chile. You want to take your companies profits out of chile, then this tax would be applied. Depending on the industry, and the corporate tax rate, it looks like it could be as much as %52! (%35 plus corporate taxes.)

This is actually one of the key indicators of a regime that you should be wary of. Currency controls are what governments impose when they find their policies are driving businesses out of the country. I'm not saying that is the situation in chile, I'm just saying that this is the historical role these kinds of taxes have played.

This tax, and the others I mentioned are confirmed by the links you gave, so it is wrong to claim they are "uninformed speculation". Turns out I was quite well informed!

"this implies after regular corporate taxes are applied... looks like it could be as much as %52!...Turns out I was quite well informed!"

since you appear to be relying on auto-translate, and don't understand the garbled 4th paragraph, i have added an english language link to my reply above. it is not in addition to corporate tax - that is a "first category tax" that can be used as a credit.

and if you want to leave chile, why would you leave the company here? you think you can run a startup from abroad? why wouldn't you move the company too? this is software. heck, you could even take the programmers with you - many young chileans would jump at a green card...

$40k grant. Free as in beer. No equity.

They want you to move to Chile for 6 months, and go to some events and meet some people while you're down there.

Apparently there's a pretty horrible form to fill out, but that's about it. I know a couple of people out there at the moment and it sounds like a pretty sweet deal.

they get you 40k and u have to put in 4k from your own pocket (the 40k are in the form of reimbursements - u spend something, they give u back in the following month). U have to spend the 40k during the 6 months (can't spend it all in one month for instance) and of course, you have to spend it in business-related stuff, like salaries, software, marketing, etc (they won't reimburse coffee or if you buy a car!) The contract you sign is very clear: there are no strings attached apart from having to keep someone here for 6 months and presenting reports to get the reimbursements. So it's no "free lunch" - it's just a great example of what governments could (and should) be doing with their money. It fosters innovation, that alone is a huge return of investment for the country..

disclaimer: I'm in StartupChile's first class of 2011 (Novelo team from Brazil) and LOVE, LOVE, LOVE it. I'd be here even if they offered ZERO dollars!

What's to stop you from giving a salary of $40,000 to a member of your team?

the contract. You can only take 350k pesos as a salary...

and when u contract services, they ask you for some sort of proof if the value is suspiciously large. So you can TRY subcontracting a friend in US and paying him 40k USD, no problem. I wouldn't expect it to go through unnoticed, though...

Since it's a frequent topic of discussion here, it's worth pointing out that Chile is still not bound by the Patent Cooperation Treaty (http://www.uspto.gov/web/offices/pac/dapp/pctstate.html), although they are taking some steps in that direction (http://chile.usembassy.gov/press20090731_mou.html).

If you have a product that you think might be popular enough to run afoul of the U.S. patent mafia, it might be worth consulting with someone versed in Chilean patent law and trying out a launch there instead.

Chileans are interesting. I like the country, they seem to be culturally capitalist (though when we were there we did observe a communist party having a rally of some sort.) But on the street, you don't see kids bugging you for money, the poor kids go around selling coca-colas in the park. The older kids sell american cigarettes.

Chileans don't seem paranoid, or to have an inferiority, nor a superiority complex like many people. They're open, but not pushy. If you don't say anything to them, they'll leave you alone, but if you ask a question they'll try to answer it.

Santiago has a gay quarter which looked about comparable to the kind you'd find in an american cities. We were there during the day so I can't say anything about the scene, other than it isn't in the closet.

Oh, and they have the best food.

Highly recommend Chile as at least a place to visit. I could certainly live there.

the political spectrum is wider than the usa, and people are more politically involved (both of which you would expect, i think, given the country's history). some of the most decent people i know here are still active communists; many of my friends were in the party during the dictatorship because that was the main coordinating movement in the resistance.

there's an active debate about how society should work. i suspect some americans will see "communists" and think they are going to have their work stolen from them. that's not the case. in practice the debate is more about where to position the country between what you might call "european" and "american" ideals. sure, some people i know advocate permanent revolution. but on the other side some people advocate eugenics of the poor (seriously - speaking from experience). there really is a wider range (and i think that's a good thing).

i live in chile, although i work for us companies. when this was announced i was pretty sceptical, but it does seem to be making a significant difference to the local culture. there is a lot more "buzz" - many more meetings, job offers, companies appearing. there's even a conference being organised - http://www.startechconf.com

Nice, you might be able to answer the number one question I have about this program: how do native Chileans feel about this? Is there a perception that they're being skipped over, do they feel negatively towards outsiders being brought in through this program, or are they generally positive towards it?

i haven't heard anything negative (as i said, the general response is a positive "buzz"), but i agree you might expect it. it might be because the kind of people i talk to are more developers than founders, or because i am a "gringo" myself, but i think there's also a feeling that it is helping locals. also, there may be similar schemes for local businesses - it wouldn't surprise me. i know other chileans read here, so perhaps one will answer?

ps also, if your experience of latin america is mexico, i should add that chile does not have the anti-gringo sentiment you find there. not at all. it was a real shock for me, to go to mexico...

Not a direct answer to your question, but: the program accepts Chilean entrepreneurs/startups as well as applicants from other countries. Which doesn't meant there can't be negative sentiment, but locals aren't barred from taking part and getting funded.

oh, wow. so it is. has that changed? i thought back at the beginning it was external requests only (because i looked and understood i was barred). anyway, thanks for posting this and sorry for my misleading answer elsewhere.

They have indeed changed that rule. Probably to cope with teams moving to Chile before the deadline in the expectation of getting the grant.

Do you know if they are targeting a specific geographic area? I'm guessing most everything will be coming out of Santiago.

although everyone is initially coming to santiago, Valparaiso and Vina del Mar are doing all they can to grab a piece of the action (including offering free office space for SUP alumni) :)

I've never heard of Vina del Mar, but based on the name it sounds like exactly where I'd wanna go.

I agree, it sounds like they have vineyards that overlook the southern pacific ocean.

Now if that was in the US, something called "Vina del Mar" would be McMansion tract housing built on salt flats in Nevada next to a nuclear waste disposal site.

...and since searchyc is now dead (RIP), there is this : http://www.hnsearch.com/search#request/submissions&q=chi...

SearchYC is dead because there's now a search field at the bottom of every page.

What's the cost of living like down there? What's the equivalent of ($40k in Chile) in a typical US city? i.e. ($40k in Chile = $x in Atlanta).

Seems like a cool program, just trying to understand how far that $40k would go (or even the $5k that you can pay yourself).

there's a lot of info at http://www.quora.com/Hows-life-in-Santiago-Chile but basically: if it's imported, it's more expensive than the usa, but if it's local then it's less so. so the cost of living depends a lot on your standard of living. if you want all the luxuries you might expect in the usa or europe, you'll need to spend a similar amount. but if you're happy living in a cheap part of town, eating local fresh food, you could get by on much less.

you could rent a small apartment in a good area (providencia) for $300 a month; a ride on the metro or bus is $1 - $1.50; bread is around $2.50 a kilo... minimum wage here is about $500 a month (the quora page is a bit out of date - the dollar has lost some value...). i imagine you'd need to pay around $2,500 a month for a decent programmer - less for someone with less experience.

so bring a laptop with you!

What about non-Santiago parts of Chile? If I were going to spend six months in Chile I might be tempted to forego the metropolis and find a nice town by the seaside or the mountains (both of which seem to be pretty easy to find in Chile). But are there "nice" areas outside the big city, or is all the wealth concentrated in Santiago?

I studied in Valparaiso and Vina del Mar - both very nice places on the beach about 1.5 hours from Santiago. It's a pretty modern place with all the shopping of a city of 200K in the US.

I have the impression, from having had a look at the program, that they want you to be involved and available, which I suppose isn't that much to ask, given that the only other real string attached is to stay in Chile for 6 months. This would likely mean staying in Santiago.

BTW, for andrewcooke or anyone else there: how's transportation there? Can you get by with public transportation? Are cars cheap? Do they drive well or like maniacs?

i can't imagine the grant requires you to live in santiago - that would be something of a political faux-pas here. BUT the country is very much centred around santiago. there are no other places that i, as a european, would honestly call a city; the largest are are more like large provincial towns. the only exception really is valparaiso/vina del mar which is almost an extension of santiago on the coast - the government is there for half the year, and it's within easy distance of santiago.

not sure what you mean by "nice". i know of one european software engineer that lives in the middle of nowhere (well...) and loves it. but outside santiago you just don't get the "stuff" you probably expect (nice restaurant / top-end computer hardware / large selection of brand-name clothes / pre-prepared frozen food / decent coffee ...). but if you want a simple life, sure. doubt you'll find many good software engineers to hire, though.

as for transport - i think it's excellent. in santiago there is both a modern metro and a bus system. the entire country is connected by buses (some of excellent quality - something like airplane business class) and air. i lived here for many years without a car (i still don't have one, but my partner now does, and uses it about once a week).

oh, and driving - well, they consider themselves the "british of latin america" and really that's not a bad description. compared to uk driving, it's a bit more hectic, but compared to elsewhere in latin america, it's pretty sane. also, no corruption here (well, not that you should meet). don't try bribing a police officer. you can extend this to culture generally - "they" (disculpenme) are friendlier than the british, but less friendly (perhaps "more reserved" is a better term) than any other s. american culture i have met.

How about health care, in terms of cost and quality?

in santiago there are very good hospitals. i had a hernia op in a good-but-not-top place and it seemed similar to me to hospitals in the uk. doctors are a little more paternalistic here - you have to be firm in making clear that you want to be involved in any process. health insurance is way less than the usa. on the other hand, public (government-funded) hospitals are pretty basic.

This seems an exceptionally interesting & exciting idea. Is this the first time something like this has been run institutionally in an emerging economy or developing nation?

Nope. I'm coordinating political advocacy for the Startup Visa here in the US, and one of our volunteers came up with this list of research on international efforts: https://docs.google.com/document/d/1Rbs3flXfGSfkVH41L3-oiIJP...

StartupChile is almost certainly the savviest and most effective effort out there, both in results and their marketing of themselves, but there are many other international pushes to promote entrepreneurship.

this is a very silly question, but what are the odds they will accept founders from Asia? i'm Indonesian currently working in Malaysia. if the odds are good, i'm willing to try. i don't want to waste my and their time submitting application if i know they favor certain countries of origin (i just pessimistically think they're luring people from Valley and the like, not just some random countries).

"Any globally-minded entrepreneur is eligible to apply, regardless of his or her nationality and all applications will be judged under the same criteria."

if you watched This Week in Startup, there's an episode where Jason and Jose were pitched on the ideas worked at StartupChile. the first was from brazil. second from Italy. Third was boston. No silicon valley in sight!

Which Twist episode was this?

You can see the TWIST episode at ...

http://twistsantiago.com/2011/07/28/thisweekinstartups-comes...

Last I looked at this, I thought one of the requirements was that your startup had to directly affect Chile, like providing jobs or something of that sort. Am I completely incorrect or is there something on there with that provision?

There is a checklist of things they like to see. Hiring locally is one of the points in the list, but you only need to do a few items on the list so you can get by with scoring an article in your hometown paper, going to a Chile event, etc. Also, even if you don't need developers you can hire a Spanish speaking assistant to do all the admin work and contacts with the government. The list of things you can do is in the FAQ & Terms, see startupchile.org

I wonder what the internet penetration, internet speed and mobile penetration is in Chile. Do they see this as something that would directly benefit Chile through the products or something that would just create a pool of people and ideas that would indirectly improve the startup environment in Chile.

And then the broader question in my mind is: can you build a successful US focused startup from somewhere else? Aren't the first six months some of the most critical stages of your product development where you have to be close to your users and understand their needs well?

When I first heard about this a few months back I was somewhat skeptical, but it seemed like a great idea. It's nice to see a Gov't that doesn't have its head firmly lodged up its own ass and one that is trying different approaches to attracting business. From the other comments it seems as though it's working out pretty well- When I can no longer take anymore of the politics and RIDICULOUS politicians here in the States, Chile could be a good place for the next adventure...

40k for six months of my life in an area where I don't have a lot of familiarity or a network of business associates or friends isn't a great deal.

Six months of my life to win a contract with the Chilean government to use my software, and I'm sold. How much support or networking is done by the program? Is it pretty much you get the money and you're on your own in a foreign country?

The first class met with Dave McClure and the Chilean President as part of one of Dave's Geeks on a Plane visits to South America recently.

Looks like they do a fair bit of networking.

I was looking into living in Chile after I heard about this program and one thing that really jumped out is that the Chilean Peso is running at more than 450-1 against the dollar. Does anyone know why the currency is so devalued? Is the political situation unstable? Or is the sovereign debt situation out of control?

I'm a non-technical guy (in that I don't really code) with a decent looking prototype built out of a CMS and minor hacks.

Would applying for something like this with the intent of working with Chilean, or other, coders be a waste of the reviewers' time?

Any developers here interested in applying? I've been thinking about it but I'm primarily on the business side. If anybody would like to discuss possibilities please check my profile for further background and contact info.

I suggest you to sign up on http://www.startupdigest.com/chile to stay connected with chilean startup scene!

Disclaimer: I'm the curator of Chile Startup Digest

@cleiva

I'm a chilean entrepreneur looking for a cofounder to apply to Startup Chile: http://news.ycombinator.com/item?id=2824118

#2 is interesting. but my bet is there is already plenty of competition around. first step should be mapping them.

I looked at the application sheet, is it preferable to already have incorporated before applying? Or is that a no-no like YC?

You need to incorporate in Chile upon arrival (they help you with that), so I don't see how being incorporated in your own country would help because that company would just become a subsidiary to the Chile parent.

how many times can I apply?

Only one active application at a time: http://www.startupchile.org/faqs/is-it-possible-to-apply-for...

Once per round, as many rounds as you want.

any social/mobile game startups considering a move to Chile?

I got a survey from these guys a few weeks ago and it had cc'd over 400 applicant emails, including mine, for all to see.

looking at the web site some time ago also gave me the impression it's not thatwell planed prices. lots of missing info.

no wonder every thread about it raises the same basic questions.

it's also the first group (there was a beta last year), so it's not exactly a "long planned, flawless program". They call it an EXPERIMENT for a reason: come with an open mind and you'll definitely grow. Come full of "it doesn't work like that back home" and all you gonna find is frustration. Just my opinion, anyway. :P

Very few people know how to send group mailings correctly :-/

how much is 40k in chile?

can i and 2 other cofounders move there and have a good place to stay each? ...maybe one or two with the wifes?

you can only spend 350k pesos per founder, from those 40k. The rest should be used for other expenses, such as hiring, software (housing/rent is also refundable outside the 350k cap), etc.

350k pesos = 760 usd/month, which allows for some pretty ok living (a decent meal runs for 3-4k pesos, subway tickets are 500 pesos and so on).

I'm here with my wife, there's a guy here with SEVEN kids. :)

3-4k pesos per meal is already over 500k for one month, two people.

meal price * people * two meals day * 30 days

3k * 2 * 2 * 30 = 360k

other comments mention rent $300 (150~200k pesos?)

rent is not on that 350k limit (u can spend up to 600k a month in rent, which is enough for a pretty nice place - I currently pay 300k and live in the trendiest city in town)

if you're bringing family here, don't expect to be able to feed everyone on restaurants two times a day, every day of the week. That's impractical on basically ANY city, if you have a family. Alas, if you're planning that, you should not even be considering bootstrapping....

ah nice to know all that. thanks

so, updating my back of the envelope math for the monthly costs:

~US$700 rent ~US$700 for 'living' (food, transport, etc) ~US$4000 for paying two extra junior programers that will take you around 7 months to burn the 40k. maybe 6 if account for the trip and initial set-up.

interesting.

I'm doing my business plan right now and what you say is about right. Don't forget to have some budget for operating expenses - services like github, mailchimp, accounting program really add up...

Of course you can assume your revenue will cover those.

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