On (Startup) Chile

I was in same group as Herval and he is a good guy. This said, I have a huge problem with this general mentality and I think a lot of today's entrepreneurs are spoiled brats that don't have their perspectives right.

I have had an awesome experience in Chile and it has been one of my best decisions I have made. I have met my girlfriend here, I have scaled my business a lot, I have learned to surf, I have met amazing people from all around the world etc. On top of this, my company got $40.000 free money. The reimbursement process could be improved, but generally I did not have that much problems with it.

The problem I see is that people expect everything on a silver plate. They expect everything to be perfect. And of course, if you expect this you will be disappointed by Chile and Start-Up Chile - - because it isn't perfect and they have a long way to go, but they are trying hard to create a good platform for entrepreneurs and so far I think they are doing a great job (and a better job than most other countries in the world).

Maybe this lack of perspectives is culturally/experience bound. For me, my dad's story as an entrepreneur gives me perspective that I have it good and that I have much better opportunities than he ever had. My dad was an entrepreneur that quit his factory job to start his own business in his early 20's. He worked 12 hours pr. day at least. He worked and scaled his business for over 20 years - - to provide education for my siblings and good life for my family. Then the Bosnian war came and we lost it _all_. We had to relocate to Denmark, a country where we did not speak the language (and I can tell you that Danish isn't an easy language to learn). What did my dad do? He learned Danish and started another successful business in his late 40's.

So when I see people complain about the process of getting free money or that the chairs in the offices are bad then I laugh, because I think they have no perspective of what it takes to build a business, how hard building a business is for majority of people or what struggles other people have.

I thought I'd put in a note about my experience with a comparable program in Singapore called iJam. A very similar thing, though at the time it didn't include office space or travel expenses - basically a government managed micro-grant of $30,000, repayable only if you make $2MM in revenue.

I was also very frustrated by the amount of bureaucracy and the difficulty in getting payments - much of the time whether or not payments made it through was based on personal relationships. In fact at one point our payments were suspended simply because one of the advisors on the review committee didn't like us. In the end we got our cash - but lost a lot of time and ultimately didn't find it to be worth it. A better approach for us would have been to find a supportive early investor.

However, all of that said - even in Singapore, with its reputation for completely clean government - the program was riddled with conflicts of interest, double dipping, and other problems that led to a fair bit of controversy. So I understand the need to put stricter controls on how the money is doled out.

Net - this isn't so much about Chile, but rather about governments trying to be investors - they can't move quickly, they are not profit motivated, and they tend to rely on relationships rather than merit in the absence of clear guidelines.

I'm hopeful that the Chileans will figure out a clean set of rules that apply to everyone equally which will make equitable the tradeoffs between the free money and the pain of dealing with some bureaucracy.

Startup Chile is a great program, but Herval's post is completely accurate (I was in his cohort there building pingpigeon.com). Drawing down on the funds takes a lot of paperwork and time and negotiation, when the government bean counters inevitably find some random reason to disagree with you.

The money is there for you to get it; Startup Chile is not "Bullshit". But once a month, the time and emotional energy spent in getting the money takes away from your ability to focus on your startup. Raising vc/angel money is the same: your company gets put on hold while you raise the round. Think of Startup Chile reimbursements as the same but on a much, much smaller scale, six times over six months.

We are currently working on http://supportbee.com in Startup Chile.

I spent some money from my Indian company's account when I was coming over but I could print out a few documents to prove it and it was done in 20 mins. Atleast that is no longer an issue here.

It does take about a month for the first reimbursement to roll in and you have to manage till then. The account executives (the ones handling your reimbursement) are quite friendly and willing to help (by giving you a date sooner if you are really running out of money etc).

The only case I have heard of someone having to give back money is of a guy who smashed his phone on stage during a presentation and had the cost of the phone, 400 dollars reduced from his $40k grant (or may be next reimbursement). I was not present in that meetup and I have never met the guy.

Startup Chile does have some problems (or starting troubles) but certainly reimbursements is not one of them. Also, they provide a great office space which is a great place to work with your team and meet other entrepreneurs. I would be happy to answer any questions here. Ofcourse, I am only two months into the program so my experience with everything is limited so far.

I came from the same country as Herval (Brazil) and I am flying to Chile on the 4th of January. Myself and my partner are working hard on bootstrapping our 2nd company for the last 1 1/2 year. We are very fortunate to have landed big contracts in Brazil this year. We will keep a commercial operation in Brazil. I can point out wonderful reasons to do business in Brazil: - Very large market, 200M people - Booming consumer market - Internet penetration, 70M - Mobile phone penetration, > 200M - Engaged social media users - Beautiful woman and beaches ;-) - More VC capital than in Chile .But there are several restraints here: - Highest interest rate in the world (11% year, in practice more than 28%) vs 3,5% in Chile - One of the worst countries in the world to employ people, according to Employing Worker Index Brazil ranks at 120th position vs 69th for Chile - Nothing similar to SUP in Brazil - One of highest taxes in the world totalizing 35% of GDP vs 18% in Chile - Very corrupted - There are in Brazil a few serious, honest and friendly venture capitalists, but Brazil is also crowded with crippled VC´s, angel investors that never invested in anything (whenever you meet one, ask them what were their last 3 investments).

(for a complete comparison look at http://www.heritage.org) So, reading Herval post I got concerned but, what he describes is pretty much what we have 'for lunch' in Brazil everyday. Sounds to me like a shallow analysis. I can live with those issues, those seems to be like micro issues that can be, at some point, fixed. What I would like to hear from the author or from someone else is if, compared to Brazil, Chile is a good place to set up a business that targets LATAM? How do those incredible better economic indicators (again, when compared to Brazil) impact your business and your life in the LONG-TERM? Did you think about the long term perspective of having your headquarters in Brazil vs Chile?

from my own experience (as an englishman living in chile) i tend to look to "social differences" to help understand conflicts like this.

one of the main themes in the link is (imho) anger at a lack of trust - the need to justify each expense, and to follow somewhat arbitrary rules, even after winning the grant. and that (again, imho) reflects a difference in culture between americans and chileans. in support of this thesis, there was a chilean presentation at startechconf (the recent web dev / technical conference in santiago) that seemed (i admit i left part-way through in search of a more technical talk) to be arguing the same point: that chileans need to trust each other more. my own amateur anthropological take on this is that the difference comes from chilean trust networks being based on family ties rather than professional relationships.

it will be interesting to see if the technocrats/bureaucrats that saw startup chile as a way to "educate chileans" will themselves learn from this. to the credit of chilean society, "they" (sorry) do (yet again imho) take criticism - particularly from outside - quite seriously, so i think there is a real possibility of change.

[edit: the talk was "Agustín Villena: Que mantener, arreglar e intentar en la industria chilena de software" http://www.slideboom.com/presentations/440025/Que-mejorar,-m... - slide 11, 89% of Chileans don't trust their neighbours]

I am from 2010 pilot group with Vendder project. Most teams will agree the reimbursement process is broken, time-consuming and painful.

I dare everybody here to push forward a type of investment, loan or subsidy that provides you 40.000USD with so little effort from your part without asking any share of your company in return.

Once again, and for the entire web to read, Startup Chile is a governamental grant/subsidy and should be considered as should, even if they have a so energetic staff who shoot fancy videos and write enjoyable blog posts. If you consider this you see Startup Chile deal is much sweeter than most government initiatives everywhere else.

A person should not compare apples and oranges.

While the reimbursement policy is certainly (quite) troublesome and extremely annoying, I'm more concerned about the climate/environment in Chile once the program ends.

More countries need to foster entrepreneurial endeavors with a solid mix of residents and non-residents (almost like an exchange program) to get a better global mix of problem/market/solution. Startup Chile appears to be a good first step at addressing this.

However if Startup Chile didn't create a strong ecosystem (including investment and other support) then there's a risk that an increasing number of companies will fail once the program ends. Programs with high failure rates won't survive and have less chance of being funded in the future.

Hopefully Startup Chile is capable of adapting and addressing these concerns and other incubator/accelerator outside of long standing startup environments (e.g. SF, NYC) can learn from this example.

I've not done business in Chile, but i have in Uruguay, which ranks about the same in terms of various transparency / economic freedom / gdp per capita as Chile. Everything he complains about is just the reality of living and working in latin america. Chile markets itself as being different, but it's not so different. Getting stuff done is hard, getting investment is hard, doing business is hard. There are lots of rules and red tape. It's just a part of the game.

Hi. In am part of Round 1 of Entrepreneurs; For me, its been a great experience.

I can't believe can we be criticizing a free 40K grant, in exchange for no equity. (A few loose strings attached, so what?)

If there are better, more entrepreneur friendly grants available; why do we never hear of them? And why dont entreprenurs go there instead?

I too had issues with reimbursements but while there are certainly issues that can be improved I don't think there's a better deal in the world available for entrepreneurs.

My stance is best summed up in this photo from earlier in the month: http://www.facebook.com/photo.php?fbid=280134802038762&s...

Thanks for this discussion. The more information that is available about programs like these, the better it is for prospective applicants. Best of luck.

Stop driving in the rear view mirror. I applaud Startup Chile for their efforts, but I think this whole conversation focuses on the wrong questions. One of the biggest challenges with Startup Chile or other similar program is that without a common language or framework around early-stage value creation milestones, the fallback mechanism is to measure how entrepreneurs spend money. This is like driving in the rearview mirror and the approach hasn't historically achieved optimal results. Is it possible that the reason we aren't achieving higher hit rates on startups is that we are measuring the wrong things?

If we look at the "startup industry" as an industry, we should ask ourselves some tough questions like... What other industry in the world has an 80% to 90% failure rate? And why is such a high failure rate acceptable?

I don't fault Startup Chile for their program and think we should all be working to push these startup conversations forward. To improve the odds of a positive outcome, here are the questions I would ask if I ran such a program. "How much more effective would these programs be if the focus was on agreed to customer-centric value creation milestones and then capital was deployed based on achieving these milestones? What if the entrepreneur or startups were measured on building products that 1) nail the customer's pain, 2) nail the minimum feature set to satisfy the customer demand, 3) nail the business model or go-to-market strategy? etc...

In addition to reimbursing for expenses, an effective startup program could tranche additional seed capital based on how the startup achieved early success and nailed early value-creation milestones. Give high-potential entrepreneurs a little bit of guaranteed runway is great. In addition, provide them follow-on financing in the form of tranched performance payments based on successful execution.

Doing this would require an agreed to framework. Here's a link to a recent conversation thread on one possible way to achieve this. http://news.ycombinator.com/item?id=3406330

Yes there is red tape here but one of the things that doesn't come up much is the OPPORTUNITY. Who cares if the idea/start-up you came here with doesn't work, if you're willing to commit to being in Chile there is a lot of low hanging fruit. If you're willing to work hard and outcompete the competition (which is much easier here than in the States) you can be successful. I'll admit that our start-up, www.bungolow.com is not a "new" idea, but there are market opportunities here that we can't take advantage of in the US.

This is sad, if true (and it kind of rings true). As soon as I saw the reimbursement policy I got the sense that the program would be bullshit. I'd love to hear otherwise.

Steve Blank says: Startup teams require a Hacker, a Hustler, a Designer and a Visionary. The title of this post could be "Make sure you bring your hustle to Startup Chile!". I know we will and I thank God every day for our little hustler :)

We're preparing to move to Chile in February to start as part of the next class. I see a couple of these blog posts along the lines of "well my 6 months are up, I'm outta here!". That seems like such a tragedy to me.

I've been to Chile before, Santiago is a wonderful city. We had only a few weeks in the country, but in that time we saw a little of the area and even went to Easter Island (which is part of Chile.) There's whole regions of Chile we didn't get to see, such as the high desert, punta arenas, etc.

SU Chile gets you a 1 year visa, and se we're planning to spend at least a year in Chile (they said they can help with renewal so we might stay 2 years even.) And while we're going to be working really hard on our startup I can't imagine a better place to do it than a county where stepping out of your door to go to dinner and suddenly you're on a foreign vacation for the evening!

I hope everyone whose considering going to Chile will also consider staying longer than 6 months. If your startup is internet or software based, you don't really need to come back to your home country right away, do you?

But looking at just that visa, there are so many moving parts we have to get aligned to get that visa. Its really no big deal in terms of visas on the global scale-- imagine trying to get a 1 year visa that lets you work in the USA! Much, much harder. So, bureaucracy is involved in the visa, and the reimbursement process.

The thing is, TANSTAAFL (there ain't no such thing as a free lunch). They don't take equity, but they want you to help the with their project. That's fine, part of our business plan is helping build a community of independant startups anyway, we've got no problem doing that. But that's how we "pay our way".

With expenses, every expense is different, and so, of course, some expenses might be approved for some people but not for others-- some people might forget to get receipts or might make an other error. The bigger question is whether the rules are straightforward, comprehensible and clear. Or not.

Maybe it would be better if the program worked as a grant, and they gave each startup $6,500 a month just as a check to spend as the startup wishes. The thing is, that would run the risk of scary stories like "These drunken 20 year olds from Amsterdam came to Chile and bought drugs with government money!!!" (or maybe not, don't know if they have tabloids in chile.) So, government money, government bureaucracy.

I havent' heard anyone say that they were cheated by SU Chile... and with any reimbursement system, you have to expect there will be imperfect coverage. Someone else commented that they spent $7-8k over the 6 months (with the rest covered by SU Chile reimbursements) -- that's a hell of a low burn rate!

So, maybe you could theoretically live in Chile on the $40k and have it all be reimbursed, but expecting that seems silly.

So, if I'm reading this correctly, starting a business in a country lacking a robust economy and business culture did not work out.

Well, I believe that.