Start-Up Chile is a well-known program of the Chilean government to attract early entrepreneurs and support start-up creation in the country, consisting of a USD 40K grant, a visa to work in Chile, plus some extra practical help like mentoring, networking and free access to a coworking space.
Beyond the money+visa hook, how does an entrepreneur feel about going through the program? Does it actually help start-ups to reach their first sales and find their first investors?
There has been many articles on Start-Up Chile as a public policy, but only a few testimonies on the experience itself. We’ve met two Start-Up Chile entrepreneurs to know more about the inner experience of Start-Up Chile.
Start-Up Chile as an international community of start-upers
Both Alex and Elliott confirm that even though they applied for the money, the community has proven to be the most helpful part
Beneficiaries of the program are all on the same level: from mere bootstrapping to early sales, in an emerging country. And a new country for most of them, as there’s about 80% of foreign projects. They are physically working at the same place, go to the same conferences, hang out together. They basically cope with the same issues, go through the same struggles, ask for help, find solutions and learn, all together.
Start-Up Chile took an extra care to maintain a network that connects current entrepreneurs and former alumnis. Such basic things as a dashboard and a Facebook group allow newbies to ask experienced veterans how they managed such or such issue. Both helpful and reassuring.
Actually, Start-Up Chile doesn’t even introduce itself as an incubator, but as “the biggest start-up community in the world”. When asked about why the entrepreneurs didn’t have an obligation to stay in Chile after completing the six months program, former president Sebastian Piñera would answer that having all these entrepreneurs at the same place at the same time creates connections that will eventually prove much more valuable than any direct foreign investment. Economic externality you said?
Elliott Verreault is a good example of how international Start-Up Chile can be: he’s Canadian born, graduated from Cambridge in the UK, speaks about 4 or 5 languages fluently and now lives in Chile. He’s the cofounder of PrimeList, a freelance index that just ranked second best start-up of its generation according a jury Paul Ahlstrom and César Salazar, two well known investors in Latin America.
The history of PrimeList is quite interesting as it shows that Start-Up Chile’s jury can be really flexible and open-minded. Its objective is clearly to chose the projects that are the most likely to go to market, even if it means changing it at midterm and starting it all over again, from scratch.
Elliott and his partner first applied to Start-Up Chile with a project called SmartGov (a platform compiling government data on different layouts). Their initial plan was to use Start-Up Chile funds to launch a scalable product from Chile before going international.
SmartGov compile public data to produce insights through different layouts
They realized there was another opportunity while looking for a programer skilled in Machine Learning: creating a place where freelancers and companies looking for skilled workers can find each other.
They gave Start-Up Chile’s jury a new pitch and convinced them that Chile needed a platform where the demand and the offer of independent workers could meet. On the one hand, there are a lot of early-stage companies with a constantly evolving model, looking for freelancers to answer casual needs. On the other hand, many professional are independent and can dedicate their time to various projects.
Start-Up Chile selection criterias are 50% based on the project itself, and 50% on the team. In the case of SmartGovPrimeList, the team remained the same, which is probably why Start-Up Chile accepted the new deal. The SmartGov project is still on going, and doing well (they’ve just signed a big contract with a government consortium), but PrimeList is the only project currently supported by Start-Up Chile.
Start-ups are international companies too
Seeder is a very interesting case as part of Start-Up Chile as it shows that early stage start-ups can be international companies too: although Seeder employs less than 10 people, it has activities in Chile and China, and is looking at the american market!
“Chile, much like China, is a place where everything and anything can happen.”
“Seeder allows real estate decision makers to submit their project needs and information, and collects quotes from the appropriate providers and suppliers for their building or space”. Their goal is to change the perception that green buildings are expensive. Within five years, they expect to be matching thousands of projects annually and improving the quality of life of millions of people by being a part of the solution to cleaner air.
Alex was already involved in a green technology start-up in China before starting Seeder, and after a while he identified another opportunity when he got aware that real estate developers didn’t have access to the services or technologies required to build better quality and more efficient buildings.
When asked “Why Chile?”, Alex says that “in some ways, the Chilean and Chinese markets are quite similar. We’re looking at countries that are developing fast but are still closed off to cutting edge construction solutions. While this is changing, they are difficult countries to penetrate for new entrants to the market and this part of our value proposition. Fortunately, both of these markets are opening up and the opportunities are growing. Santiago and Shanghai are some of the most polluted cities in the world and we are observing increased efforts to deal with this problem both from the bottom up and top down.”
Start-Up Chile Money used to contract a team, buy a website and pay the rent
On the money side, the grant is delivered through two transfers of $10.000.000 chilean pesos each (about USD $20.000). It cannot represent more than 90% of the fundings, so founders must bring 10% of personal funds to the project, on a 6 months period. In financial meetings with Start-Up Chile’s staff, entrepreneurs will show a $111.111.111 CLP bill, but only 10.000.000 will be given back.
The bill can include operational expenses, internships, prospection trips and the ticket to come to Chile. When asked how they used the money, both Alex and Elliott confirmed it allowed them to contract a team and build a fancy website
Some personal expenses can also be taken into account in that bill, such as the entrepreneurs’ wage (to a limit of $450.000 pesos a month, about USD $900), and the rent (a predefined quota is taken into account separately).
It’s enough to live decently in Santiago. It’s even a lot compared to pure bootstrapping. Nobody is starving, and entrepreneurs can even live in cool districts near Telefónica Open Future, the Start-Up Chile workspace.
A good start for any early stage start-ups
Everything is done to make the entrepreneurs comfortable so that they can be fully dedicated to their project. They will not worry about personal inconveniences while they are in Chile, and they can make the best out of the money they’ve been granted, the network of previous and current entrepreneurs, as well as Start-Up Chile’s staff connections within Santiago’s innovation ecosystem.
If this doesn’t guarantee first sales or investment (that would be way too easy), it helps. Seeder managed to in the early revenue stage, and has raised money from S.O.S Ventures and the Fledge.co accelerator which they are currently going through in Seattle, hoping to break into the US market. Good luck to them!
For another view on Chile public policy on innovation, read our post on how INRIA, a top French computer science research center, opened a lab in Santiago to work on Big Data.
By Louis Leclerc, Fixer for Innovation is Everywhere in Latin America