

The Program - Start-Up Chile – Entrepreneurs Welcome - nyellin
http://www.startupchile.org/about/the-program/

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yuvadam
A friend of mine wrote up a very nice review of his experience with Startup
Chile [1]. If you're looking for an objective review from the eyes of a
founder, check it out.

[1] - [http://www.shaharnechmad.com/2011/02/19/building-your-
dreams...](http://www.shaharnechmad.com/2011/02/19/building-your-dreams-in-
chile/)

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nickpinkston
I didn't do the StartupChile program, but I did study in Santiago and
Valparaiso on a dual business / engineering trip.

I can vouch that Chile is certainly a great country to live in. Very warm
people who always helped us out when we needed it, and if you get time to
travel around it's incredible how diverse the culture and landscape is.

As far as the business / regulatory climate is very progressive - I believe
Transparency International gives them higher marks than the US on government
corruption. I never had any run-ins with bribery or other shady practices. All
the cops I met there were super-chill too - like they were actually supposed
to help people...

Great country - I hope this program does them well.

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fierarul
I am surprised how little focus is put on the legal and financial aspect of
running a business there.

I see on one of the pages that the business income tax is 17% and individual
income tax is progressive (up to 40%), VAT is 19%. Then you have some weird
"general tax on payments abroad" that's 35%, "license fees" 30% and "advisory
services" 30%, "interest on loans" 4%-35%.

In the double taxation paragraph, dividends are taxed at 15% so I guess these
aren't one of those amounts where the 35% "general tax on payments abroad"
applies. That is assuming they allow you to send dividends abroad.

I guess this isn't seen as important since a startup is mostly burning cash
(ie. the $40.000 grant and some?) but it just seems odd to me to just move 1
year in Chile without understanding all these rules and more.

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trevelyan
I'm in the program and these taxes are not an issue for anyone. Don't let it
discourage you from applying. The business environment is good. And consider
that:

* companies are taxed on profits not revenues (!!) * legitimate expenses made to foreign companies are not subject to the fees you describe * income earned abroad by new residents to Chile is not taxed for three years (!!!)

Practically, start a foreign-incorporated business to collect payments
internationally and start a Chilean company to hire local staff and cover
development costs in country. If your Chilean business makes such an
embarrassing amount of money that you cannot spend it, then congratulations!
You can spend some of your profit to restructure.... :)

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ekanes
> companies are taxed on profits not revenues (!!)

Businesses are always taxed on profits, not on revenues.

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ahoyhere
Not true. Seems like quite a few places in the world have a tax on gross
receipts - including, of all absurdity, Philadelphia.

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born2web
same is the case in the state of Washington - 2% B&O tax on revenue.

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mdink
So question - I have seen this before and it is very intriguing. But the
worry-wart in me says.. "Hmm what's the catch??" Does the local govt own a
large piece of your startup? Can you leave anytime and take your company with
you? I have seen other offers such as from Dubai, but they turned into horror
stories. Now granted we are talking about 2 VERY different cities... help a
skeptic out.. :)

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nyellin
The about page is very clear about the financial terms. It calls it _"a
$40,000 subsidy (no equity)"_

Also, here is an excerpt from TechCrunch's article on Startup Chile 2010
(formatting is mine):

"Seems too good to be true, doesn’t it?

 _No obligation to stay; no equity ownership in return for the money; no
onerous contracts that promise a pound of flesh—as VCs typically demand._

Why would Chile do this? Because they’re betting that if they get enough
smart, talented people there, three things will happen: first, many of the
entrepreneurs going there will fall in love with the country and decide to
stay; second, they will enrich the local ecosystem by teaching local
entrepreneurs about global markets; and third, their tech community will
develop stronger links to the world. Who knows, a couple of startups may also
hit home runs. After all, isn’t this how Silicon Valley left tech centers like
Boston in the dust and became the world’s tech leader?"

Source: [http://techcrunch.com/2010/08/21/chop-shop-workers-and-
boots...](http://techcrunch.com/2010/08/21/chop-shop-workers-and-
bootstrappers-chile-really-wants-you/)

Disclaimer: I am not affiliated with Startup Chile in any way. Hopefully
someone from the organization can answer your questions.

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jjm
It's up to 40k. There is also a schedule table which outlines what funds may
be used for. A few things not accounted for is living expenses, food, medicine
etc... (I could have read wrong, I'm not a lawyer). Now I believe that some
incubators allow you to decide what you want to do with the cash, and place no
restrictions on it. Then again, they ask for equity. My point is moving to
Chile is a big deal, and you'll have expenses. It's cheaper than living in the
US or Canada but not by THAAAAT much.

Another point required in the docs is you must incorporate and leave your base
of operations in Chile.

The one big question I have is how is the talent pool If I setup shop in
Chile? I don't want to outsource.

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trevelyan
I'm in the program and am happy to answer any questions. Short version is that
this is very much the real thing.

The expenses need to be reasonable (there is a nominal review process), but I
haven't run into problems. You can expense most things except alcohol and
cigarettes as long as they are related to the business. This includes giving
yourself and your staff salaries of up to around $3k USD per month. So a team
of two can rent a nice apartment, pay for airfare and insurance, and spend the
remainder on personal salaries -- effectively paying themselves to start a
business.

Eating out costs about the same as the US and Canada, but cost-of-living is
otherwise much lower. And Santiago is an amazing city. Chile has a smaller
pool of technical workers than elsewhere, so you can work with people here but
are probably best off being a developer. And there's no requirement to
incorporate and leave your base of operations in Chile.

~~~
jjm
I hear what your saying, but I'm confused. The terms are at:
[http://www.startupchile.org/wp-
content/downloads/terms_and_c...](http://www.startupchile.org/wp-
content/downloads/terms_and_conditions.pdf)

Particularly points 3.i, and 3.iii talk about incorporation in Chile as a
requirement. 3.iii talks about the 'intention' of leaving operations in Chile.
I've copy/pasted the section.

It's pretty hard to develop and do CEO/partner duties at the same time,
especially in such an early stage. In fact I would think doing the hustle is
about as much time consuming as doing the dev work. Also, It's hard to tell
Chile that your not going to hire anyone because you couldn't find anyone;
while taking their money. For more specific note, if you look at the
requirements (dinners, talks, evaluations, presentations, publications), I
don't see you'd find time to do more than 20% dev work without hiring someone.

I would love to take Chile up on their offer, and as a super hyper serious
startup founder I'm excited BUT at the same time very weary of anything 'too
good to be true'.

Section 3 below: 3\. RESULTS AND ANTICIPATED IMPACTS. At a minimum, it is
anticipated that the Projects and their Participants:

i. Are incorporated to the national entrepreneurship environment and execute
their Project in Chile for at least 24 (twenty-four) weeks.

ii. Carry out activities required for the fulfillment of the goals proposed in
their Projects.

iii. Are incorporated in Chile as formal companies, with the intention of
leaving operations in Chile.

iv. Contract local talent.

v. Attend at least 70% of the events 3 of the Program.

vi. Lead at least 6 (six) group workshops.

vii. Attend meetings with potential investors with the intention of raising
capital during their participation.

viii. Participate as mentors of national entrepreneurs.

ix. Create and publish 3 (three) notes in English on the basis of their
experience in international media

* Update: Edited for spelling mistakes.

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trevelyan
We're considering incorporating a business here because we want to have an
office in Santiago long-term. But no-one has a gun to our head. I'd read those
requirements as a guideline for the sort of involvement they want from
participants. And if you can't spare an evening a week to come out and
network....

Very practically, if your goal is a quick acquisition by a company in
California this is not the place for you. But if you're starting a business
that can drive revenue this is a huge win in a number of ways. Either you'll
get cash-flow positive or more without giving out equity or you'll be able to
expand faster than you would simply bootstrapping, or you'll be in a better
position to raise investment six months out.

EDIT: worth noting -- the subsidy is denominated in Chilean Pesos (20 million
CLP). So it's technically something like 42.5k USD at this point. You have to
spend it all in six months though so it's possible not to use it all.

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ilovepiccsy
If anyone has any specific questions, feel free to e-mail me info@piccsy.com -
we've been here three months and are having a great time / happy to help
anyone applying.

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tmatos
We've also moved vendder.com to Chile since November and has been great so
far. Some of us wrote about our experiences here:
<http://tiagomatos.org/blog/?p=873>
<http://www.nathanlustig.com/2010/12/20/start-up-chile-faq/>

