Hacker News Reader

Comment by markbao | Hacker News Reader

Huh. Chile is taking a $6 million ($40,000 × 154, assuming they all accept) bet that one of them becomes successful in some way.

I think the chances are pretty good.

View on HN

They've actually set aside $100M to fund 1,000 startups over the next 4 years. It's one of the best economic hacks I've ever heard a government doing.

They actually have one success already: Junar, from beta round, raised 1.5m and is keeping the office in Santiago! Jobs + taxes == win

Are they? They don't take equity. In fact I am not sure there is a direct benefit to Chile at all. I assume it is a bet that some companies will stay, locals will develop support infrastructure / services and ultimately create an ecosystem that is Silicon Valley like.

Of course it's not like Chilean citizens won't see any of that money. The startup founders need places to sleep, to eat, hang out while they're not working, etc. I'd wager a substantial amount of that money will go right back into the Chilean economy.

It's actually a fantastic kind of stimulus (though on a very small scale obviously).

Also, I believe one of the requirements is that founders must hire locals. And I imagine they have to pay the nations taxes as well?

Hiring locals is not a requirement. In fact, they hardly have any requirement apart from the fact that you need to spend 6 months in Chile.

That's a great move by the administrators of the scheme. Not because hiring locals is a problem (though it very well may be depending on what skillset you need and the language barrier) but because the bother of administrating such a scheme is a huge bother for the startups. They are right to put as few barriers in the way as possible.

Plus we go to universities, mentor locals, hire people with above-local salary, organize events... It definitely helps the local scene in many different ways!

The goal isn't to make money from equity. The goal is to jump-start a community there and maybe, if they're lucky, have a company be known as "that Chilean startup".

They're the government. They have something better than equity: they automatically take a seventeen percent share of every profit made by every company in Chile... not to mention personal income tax on every employee's salary.

Just one medium-successful company which decides to stay in Chile in the long term will easily wind up paying more than six million in taxes to the Chilean government.

Yeah, that too. I was thinking a ways out – if they can establish a community that occasionally springs up a sizable company, then they'll not only have the increased tax revenue, but will also be able to have multiple companies doing that.

In fact I am not sure there is a direct benefit to Chile at all. I assume it is a bet that some companies will stay, locals will develop support infrastructure / services and ultimately create an ecosystem that is Silicon Valley like.

They are trying to hack the economic culture of Chile. What better way to try to create a culture of startups, innovation and entrepreneurship than by creating a cultural exchange program, where they incent startups to come to Chile for 6 months. The startups bring with them ideas, initiative, an innovation oriented culture, and an understanding of things like customer service.

Not only that, but Latin America is a _huge untapped market for startups. Spanish is the 3rd most widely spoken language in the world (after Mandarin and English), and Latin American economies have been doing quite well in this global downturn. Chile has a stable government and a strong economy, and has a functional stock market.

Boot strapping a startup and technology culture in Chile is a _huge win.

Reply on news.ycombinator.com