

On (Startup) Chile - ew
http://hervalicio.us/post/14915671294/on-startup-chile

======
amix
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.

~~~
rubyrescue
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.

~~~
andrewcooke
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>

~~~
abalashov
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.

------
fapi1974
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.

------
mguimaraes
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?

~~~
herval
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... ;)

~~~
mguimaraes
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.

------
ykomada
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.

~~~
pjscott
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.

~~~
ykomada
"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.

------
prateekdayal
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.

~~~
ojbyrne
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)?

~~~
prateekdayal
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.

------
andrewcooke
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...](http://www.slideboom.com/presentations/440025/Que-
mejorar,-mantener-e-intentar-en-la-industria-de-software-chilena) \- slide 11,
89% of Chileans don't trust their neighbours]

~~~
davidw
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!

------
tmatos
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.

~~~
skolk
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

------
crcsmnky
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.

~~~
ew
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.

~~~
nirvana
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.

~~~
herval
The idea (at least we thought so) was to incentive us to stay. If everyone
leaves, there's no ecosystem...

~~~
skolk
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 )

~~~
ew
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.

------
rabble
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.

~~~
GFischer
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...](http://www.anii.org.uy/web/convocatorias/apoyo-j-venes-empresas-0)

It's a similar system (government reimburses 80% of the expenses), and with
the same problems from what I've heard.

------
Gaurav569
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?

~~~
herval
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.

~~~
ew
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 :)

~~~
herval
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)

------
SkiAlta
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>

------
mtr
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...](http://www.facebook.com/photo.php?fbid=280134802038762&set=a.280128665372709.81130.110074692378108&type=1&theater)

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

------
scottieb33
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.

------
ojbyrne
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.

~~~
ew
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.

~~~
hexis
"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.

~~~
ew
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.

------
chefsurfing
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 :)

------
nirvana
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.

~~~
herval
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!)

~~~
Sherlock
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.

------
funkah
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.

