On (Startup) Chile(hervalicio.us)
hervalicio.us
On (Startup) Chile
http://hervalicio.us/post/14915671294/on-startup-chile
59 comments
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
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
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.
The program is not bullshit, it's just that the government isn't in the business of throwing money away. There a lot of legitimate startups here that have gone from an idea to a proper product with actual customers. There is, however, a lot of red tape to cut through in order to ensure that money is spent properly, that's why there's so many rules.
It would look really bad if the government of Chile was seen to be funding vacations. Unfortunately, that happens anyway. There are a bunch of people participating in the program that have done fuck all for the last six months and have little more to show for themselves than a Twitter account and some nice photos of the parties they've been to.
It would look really bad if the government of Chile was seen to be funding vacations. Unfortunately, that happens anyway. There are a bunch of people participating in the program that have done fuck all for the last six months and have little more to show for themselves than a Twitter account and some nice photos of the parties they've been to.
"it's just that the government isn't in the business of throwing money away"
In all seriousness, this is why they shouldn't be investing in startups. Early stage investing is all about "throwing away" a bunch of money and (hopefully) making even more back when a subset of your portfolio wins big. If you're micromanaging each dollar/transaction, then you're really, really doing it wrong.
In all seriousness, this is why they shouldn't be investing in startups. Early stage investing is all about "throwing away" a bunch of money and (hopefully) making even more back when a subset of your portfolio wins big. If you're micromanaging each dollar/transaction, then you're really, really doing it wrong.
You do realize that VC funds try to invest in startups that have that 1/10 chance of being a massive success. They don't wilfully throw their money at 9 crappy businesses that they don't think will succeed and really just hope for the 1 they think will do ok. It's simply a reality that you can't have 10/10 startups all succeed so they accept the odds.
Saying investing in startups is all about "throwing away" a bunch of money isn't at all accurate.
The government of Chile isn't looking for a cash return on their investment, they're interested in the long term effects of having globally oriented entrepreneurs in the country interacting with future local entrepreneurs.
Saying investing in startups is all about "throwing away" a bunch of money isn't at all accurate.
The government of Chile isn't looking for a cash return on their investment, they're interested in the long term effects of having globally oriented entrepreneurs in the country interacting with future local entrepreneurs.
Startup Chile is fantastic. The program helped us double sales and expand our product line far in advance of what we could afford. It was a life-changing experience for my girlfriend who now wants to start her own business instead of working for someone else. And it took away a lot of the drudgery of starting up a company. We got the chance to live in a great apartment with a view of the Andes, eat well, socialize with many smart people, and even travel to places like San Pedro de Atacama to see the stars.
The recurring complaints you'll read are from people trying to spend the absolute minimum and running into problems. They are honest and thus reasonable, but without explicit numbers it is also hard to put them in perspective and judge the program. I think most participants will be very upfront in telling applicants they need to plan to spend more than 4k to take full advantage of the program. In our case we needed to submit around 7-8k in expenses to get the total 42k grant over about nine months. But if this is bullshit I would like to signup for more of it. My costs are at least 3k a month outside Chile. 1k a month is nothing. For teams of 2-3 people to complain about that given all of the advantages strikes me as lacking in perspective.
As far as the availability of funding, I know more people who have taken funding in Chile than have taken it in China where my business is ostensibly based. That said, the point of Startup Chile is not that you are promised future funding or that Chilean VCs offer great valuations (I had very little contact with them beyond some unsolicited emails). That seems to be a very American thing as with YC and TechStars. The point is that you DO NOT GIVE UP EQUITY during a period of high uncertainty while you iterate towards product-market fit. Anyone who can't raise funding on much better terms after participating probably doesn't have a very fundable business.
The recurring complaints you'll read are from people trying to spend the absolute minimum and running into problems. They are honest and thus reasonable, but without explicit numbers it is also hard to put them in perspective and judge the program. I think most participants will be very upfront in telling applicants they need to plan to spend more than 4k to take full advantage of the program. In our case we needed to submit around 7-8k in expenses to get the total 42k grant over about nine months. But if this is bullshit I would like to signup for more of it. My costs are at least 3k a month outside Chile. 1k a month is nothing. For teams of 2-3 people to complain about that given all of the advantages strikes me as lacking in perspective.
As far as the availability of funding, I know more people who have taken funding in Chile than have taken it in China where my business is ostensibly based. That said, the point of Startup Chile is not that you are promised future funding or that Chilean VCs offer great valuations (I had very little contact with them beyond some unsolicited emails). That seems to be a very American thing as with YC and TechStars. The point is that you DO NOT GIVE UP EQUITY during a period of high uncertainty while you iterate towards product-market fit. Anyone who can't raise funding on much better terms after participating probably doesn't have a very fundable business.
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 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.
They are getting better with each iteration. For example, when we first arrived nobody knew whether it was acceptable to pay for something using PayPal. That took months to clear up and me and others directly asking for clarification.
The hardest part of the entire situation is that we came here to work, not do a song and dance. Even the fact that I feel obligated to post about this on HackerNews is a giant waste of my time, but it will ultimately be good for everyone involved (from the government to the startups) to grow and learn from the discussion.
The hardest part of the entire situation is that we came here to work, not do a song and dance. Even the fact that I feel obligated to post about this on HackerNews is a giant waste of my time, but it will ultimately be good for everyone involved (from the government to the startups) to grow and learn from the discussion.
I'm the author of the post.
And I was here at HN, 4 months ago, defending it EXACTLY like you are now :)
My reimbursement processed in 6 business days, with 100% of receipts approved on a $xx,000 request.. Forming receipts together took a few hours but they've improved significantly since the OP's days.
Perhaps its best to discuss the present or future rather than complaining about the past? They're like any start up - evolving quickly.
Perhaps its best to discuss the present or future rather than complaining about the past? They're like any start up - evolving quickly.
So the other post suggested that paying yourself was problematic. Can the money be used for living expenses (essentially the largest expense for any software-related business)?
Yes. The rules are very clear about that. You get 800 USD as single team member and USD 1200 if you are two or more. Also for upto three team members, you can take USD 700/month per member salary. The office space (with snacks, coffee etc) is free for upto three team members. Your tickets, Visa fees, Medical insurance etc is all reimbursed.
You have to register at SII, get a taxpayer code and file taxes before the 10th day of every month. So it is straightforward indeed
This is quite clear now - in our round, it was an "open issue" for 3 months, over which only a select few were able to get a salary (due again to personal relations - I was one of the benefitted ones in that case). So that's "excusable" - they were "figuring it out"
This is quite clear now - in our round, it was an "open issue" for 3 months, over which only a select few were able to get a salary (due again to personal relations - I was one of the benefitted ones in that case). So that's "excusable" - they were "figuring it out"
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.
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.
As it stands I have little (actually zero) incentive to stay here after January. I'm distanced from my partners, friends, family, and investors who actually spend their money. I'm also not interested in spending 3 months, and a lot of money, incorporating a company here when I already did it in less than 24 hours back home in Canada.
Why would you need to incorporate in Chile in order to stay? The initial visa is for a year, right? I'm curious because we're planning to stay the full year, and may stay a second year if we can get a renewal.
Every time someone asks me if I'm coming back I answer that I would love to have a reason to, and I really hope the small business ties I have made here will pan out. As it stands, being an "internet company" (as you mentioned in a different comment) means I'm not tied to any location. I have no business reason to stay here, which is unfortunate, and it's not from lack of trying. I've met a lot of awesome people, Chilean and otherwise, but they aren't reason enough to remain uprooted from my life back home.
The idea (at least we thought so) was to incentive us to stay.
If everyone leaves, there's no ecosystem...
The incentive was to make Chile the Silicon Valley of Latam. The SUP vision is to "Convert Chile into the innovation and entrepreneurship hub of Latin America by attracting the world’s best and brightest entrepreneurs to bootstrap their startups in Chile."
Notice it doesn't say anything about people staying, just about people coming. Of course that if no one stays there is no ecosystem, but this is a work in progress. By attracting nerds, they got at least one part right (http://www.paulgraham.com/siliconvalley.html).
The chicken/egg problem is that we can't find follow-on investment here, so we leave. But if we leave, no VC will want to be here to make follow-on investments. What should we do?
Notice it doesn't say anything about people staying, just about people coming. Of course that if no one stays there is no ecosystem, but this is a work in progress. By attracting nerds, they got at least one part right (http://www.paulgraham.com/siliconvalley.html).
The chicken/egg problem is that we can't find follow-on investment here, so we leave. But if we leave, no VC will want to be here to make follow-on investments. What should we do?
and what is that incentive? there's no extended office space, mentor-ship, or support network, I was working with George on this, but we felt like it got slipped out beneath us when we tired :/ I agree with Herval that this could have be executed better, but more accurately that if these complaints don't exist the program will not improve (though many are extreme.. along with zac's comments :p )
Really it all boils down to there being no VC opportunities. The only angel/VC investor that was formally arranged for us to pitch to has left the country.
In fact, the Demo Day needed to be arranged by us instead of SUP staff taking the initiative. Hell, they were actually against it when asked on multiple occasions for their support. In the end all they did was blog about it as if it was their idea.
The above two paragraphs really sum up the problems. Reimbursements are tough, without clarity, etc., but the program will surely fail if they don't figure out the above.
In fact, the Demo Day needed to be arranged by us instead of SUP staff taking the initiative. Hell, they were actually against it when asked on multiple occasions for their support. In the end all they did was blog about it as if it was their idea.
The above two paragraphs really sum up the problems. Reimbursements are tough, without clarity, etc., but the program will surely fail if they don't figure out the above.
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.
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.
It sounds like Startup Chile is bullshit if (and only if) you have better options available. Startup investor quality is judged relative to other investors.
"Better options" is always relative. If you absolutely need cash-flow and freedom from administrative hassles, Startup Chile is not for you. But if you want some seed money to build on an idea without giving up any equity, and have ~8 weeks of working capital, this is a great deal. It all depends on the context of you and your company.
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]
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]
The whole article made me think of life here in Italy. Seems like there are a lot of things in common. Well, except for the massive copper resources.
They should have picked me, dammit:-) After years of living in Italy, these sorts of bureaucratic hurdles are easy to deal with. And I may not have an awesome, world changing startup, but at least my niche effort makes money, and... I've been around. I have war stories!
They should have picked me, dammit:-) After years of living in Italy, these sorts of bureaucratic hurdles are easy to deal with. And I may not have an awesome, world changing startup, but at least my niche effort makes money, and... I've been around. I have war stories!
[deleted]
>real possibility of change
Maybe, but I doubt it. The problem is that Latin American societies, and to a lesser extent Southern European countries, are fundamentally lower trust societies than northern European ones, and especially the Anglo-sphere. While there is possibility of change, it will be a slow, hard process. (For a historical example of the difference, compare the development of Japan, a high trust society, with that of China, which is lower trust.)
Maybe, but I doubt it. The problem is that Latin American societies, and to a lesser extent Southern European countries, are fundamentally lower trust societies than northern European ones, and especially the Anglo-sphere. While there is possibility of change, it will be a slow, hard process. (For a historical example of the difference, compare the development of Japan, a high trust society, with that of China, which is lower trust.)
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 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 don't think it's a spoiled brat mentality. It's the difference between what Startup Chile appears to be and what it is. The pitch is it's a 40k grant. The reality is it's a 40k credit and anyone who doesn't really understand latin american bureaucracy doesn't know what they're getting into. I live in Argentina and deal with mind-numbing bureaucracy every day and I have warned some people to be careful before they accept... that said, i'm on the advisory board of one startup attending the next class and i think it's a huge opportunity for them because one of the founders is a "yankee" living in Argentina and he knows what they're getting into.
i'd be careful in extrapolating too much here. the cultural differences between argentina and chile are significant. for example, on the index of economic freedom, chile ranks 11 (just 2 below the usa at 9) while argentina is 138. similarly, on the corruption expectation index, chile ranks 22 (slightly above the usa at 24) while argentina is 100. those are huge differences - please don't tar chile with argentina's problems.
http://www.heritage.org/index/Ranking http://cpi.transparency.org/cpi2011/results/#CountryResults
http://www.heritage.org/index/Ranking http://cpi.transparency.org/cpi2011/results/#CountryResults
Yeah, but Argentina's a lot more lively. :-) I'd definitely do my startup there if my goal were anything that could be described by the words "lifestyle business" or "work-life balance". Come to think of it, that is my goal. See you in Buenos Aires.
except that what the OP writes is what i experience anytime i want to pay for something with my SRL, renew my DNI, etc.... the cultural differences are of course vast, but in terms of government bureaucracy - they are strikingly similar.
Fully agree with Amir.
Getting 40k free money is reason enough to love the program and tolerate any bureaucracy. I mean, thanks to SUP Chile I could avoid spending lots of time looking for angels. In fact, I found the angel willing to invest almost the exact date I was accepted in SUP Chile, but thanks to SUP Chile I could avoid giving away equity and retain control at such an early stage.
So, I can't understand the complaints about bureaucracy or simple requests to spend time telling other people how is it to be an entrepreneur.
Yes, there is bureacracy and yes, sometimes you don't want to spend any time doing anything besides making progress in your project (I can understand the guy not wanting to go out of his appartment mentioned below) But c'mon... what's to not like about this deal. It's amazing, and I can't wait to be succesful and give back in any way I can regardless of the "RVA points", and prove that the SUP Chile way (trusting a team of hungry entrepreneurs and enabling them early) is one of the best ways in which a govermnent can estimulate entrepreneurship.
Getting 40k free money is reason enough to love the program and tolerate any bureaucracy. I mean, thanks to SUP Chile I could avoid spending lots of time looking for angels. In fact, I found the angel willing to invest almost the exact date I was accepted in SUP Chile, but thanks to SUP Chile I could avoid giving away equity and retain control at such an early stage.
So, I can't understand the complaints about bureaucracy or simple requests to spend time telling other people how is it to be an entrepreneur.
Yes, there is bureacracy and yes, sometimes you don't want to spend any time doing anything besides making progress in your project (I can understand the guy not wanting to go out of his appartment mentioned below) But c'mon... what's to not like about this deal. It's amazing, and I can't wait to be succesful and give back in any way I can regardless of the "RVA points", and prove that the SUP Chile way (trusting a team of hungry entrepreneurs and enabling them early) is one of the best ways in which a govermnent can estimulate entrepreneurship.
Complacency made Latam what it is today. I'm sure SUP would love everyone to think that way: less hassle for them, no benefit for anyone (except for those who learn how to "make things happen" - aka "steal"), which (coincidently) had zero issues with the reimbursement process
Dude! U are one of the clever guys!
I just presented a point of view from someone that tried to follow the rules, that's all. Spoiled is the last thing I am, I can assure u. Just honest.
Can't comment on Chile one way or another, but great story amix. Lots of respect for your Dad. Think doing a start up is hard? Try doing it in a new language you learn at age 40. Awesome.
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?
(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?
For brazilians in specific, there's a big plus for being on SUP: being "international" automatically doubles your perceived value in our dear xenophile country.
Although sny incubator would do the trick - even having a friend in Palo Alto and use his home address as "headquarters"
The ironic truth... ;)
Although sny incubator would do the trick - even having a friend in Palo Alto and use his home address as "headquarters"
The ironic truth... ;)
Xenophile for sure! ;-) . Anyway I am thankful that you and others are shouting aloud your thoughts. Perhaps the program improves and people adjust their perspectives as a result.
Thanks for this discussion. The more information that is available about programs like these, the better it is for prospective applicants. Best of luck.
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.
Here in Uruguay we have a local-only, lower-scale program sponsored by the governmental agency ANII (Agencia Nacional de Investigación e Innovación):
http://www.anii.org.uy/web/convocatorias/apoyo-j-venes-empre...
It's a similar system (government reimburses 80% of the expenses), and with the same problems from what I've heard.
http://www.anii.org.uy/web/convocatorias/apoyo-j-venes-empre...
It's a similar system (government reimburses 80% of the expenses), and with the same problems from what I've heard.
>It's just a part of the game.
The problem is that for nerds, the game is making stuff. The "doing business" part is what we have to go through in order to keep making stuff. And, as long as it is harder in Chile and other parts of Latin America, they will never come close to catching up to Europe, much less the US.
The problem is that for nerds, the game is making stuff. The "doing business" part is what we have to go through in order to keep making stuff. And, as long as it is harder in Chile and other parts of Latin America, they will never come close to catching up to Europe, much less the US.
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.
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.
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.
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.
Excellent ideas, although it would never stick with a government... (I proposed that myself ;))
Santiago is a GREAT city indeed (one of the best in latam), although a bit expensive (specially if u eat out a lot!)
Santiago is a GREAT city indeed (one of the best in latam), although a bit expensive (specially if u eat out a lot!)
According to my experience, in Santiago the food and general bills are pricier and housing is cheaper compared with the rest of latam (Colombia, Argentina, Peru). The most expensive city here is Sao Paulo, by far.
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.
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.
Is there a startup incubator/seed funding break down chart? It would really highlight some of the differences that all of these programs have- when starts up more or less (we did) blindly enter
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.
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 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?
A simple question: How many RVA points did u guys make? :)
If u don't give anything back, not complaining about "zero equity" makes total sense. If u were as involved as I was in the local "big picture", the fsct that there's no 40k grant means I basically worked for the government FOR FREE, or at least with a VERY HARD return on my time.
Very good proposal for a "noobie entrepreneur" hoping to build a "name", a terrible waste of time for any serious startuper.
If u don't give anything back, not complaining about "zero equity" makes total sense. If u were as involved as I was in the local "big picture", the fsct that there's no 40k grant means I basically worked for the government FOR FREE, or at least with a VERY HARD return on my time.
Very good proposal for a "noobie entrepreneur" hoping to build a "name", a terrible waste of time for any serious startuper.
My experience so far, 2 months into the program.
Many problems with the reimbursement program seem fixed. Stories from earlier rounds seem to have changed things, which is a sign that things can get better.
Given I had all the right information up front, I got the full amount returned on my first report. The housing allowances are very generous for Chile and things like requiring a housing contract is not exactly a 'pile of paper'. I finished my entire first report in a single morning, having kept myself organized ahead of time.
The legalization process for foreigners is also pretty slick. Try coming to Chile (or anywhere) and getting an ID card, bank account, and apartment in 2-3 weeks without government help. You may feel your time was wasted by RVA, but you win a lot of time if you choose to. If one doesn't feel that these things are worth his time, it may make sense to raise money from friends and family and stay home.
Regarding the RVA involvement there are many ways you can participate. For example, spend some hours teaching a local Ruby or web design. This sort of thing may actually help you work better too.
Above all the biggest problems are in communication, which seems to get better over time.
My feeling is that more accountability for teams (required demos) and the impact they have locally would help everyone build a better sense of trust. So would a stronger commitment from Startup Chile to communicate their goals clearly to new arrivals.
Many problems with the reimbursement program seem fixed. Stories from earlier rounds seem to have changed things, which is a sign that things can get better.
Given I had all the right information up front, I got the full amount returned on my first report. The housing allowances are very generous for Chile and things like requiring a housing contract is not exactly a 'pile of paper'. I finished my entire first report in a single morning, having kept myself organized ahead of time.
The legalization process for foreigners is also pretty slick. Try coming to Chile (or anywhere) and getting an ID card, bank account, and apartment in 2-3 weeks without government help. You may feel your time was wasted by RVA, but you win a lot of time if you choose to. If one doesn't feel that these things are worth his time, it may make sense to raise money from friends and family and stay home.
Regarding the RVA involvement there are many ways you can participate. For example, spend some hours teaching a local Ruby or web design. This sort of thing may actually help you work better too.
Above all the biggest problems are in communication, which seems to get better over time.
My feeling is that more accountability for teams (required demos) and the impact they have locally would help everyone build a better sense of trust. So would a stronger commitment from Startup Chile to communicate their goals clearly to new arrivals.
They had to implement the Return Value Agenda program because a lot of the teams in the pilot project outright refused to participate in any way other than work on their startup. Christian, an ex-staffer with Start-Up Chile told me that there were people who literally never left their apartments and when asked whether they would host a meetup outright said "Nope".
It's unfortunate that happened, it's kinda of screwing it for the rest of us. Actually, a more comprehensive application process would have fixed a lot of the problems :)
It's unfortunate that happened, it's kinda of screwing it for the rest of us. Actually, a more comprehensive application process would have fixed a lot of the problems :)
There's more than one person in this thread that fall into that category...
Christian was one of the great guys actually interested on helping btw. A real, real shame he left, making people have to interact with mr budeguer...
(too much inside info, sorry)
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 :)
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.
Well, I believe that.
My stance is best summed up in this photo from earlier in the month: http://www.facebook.com/photo.php?fbid=280134802038762&s...