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.
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
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.
Looking at this list and adding up what Chile is getting for their money, it looks like this is a win-win (even without Chile getting equity). Of course, when in start-up mode, people want to evangalize too : and Chile just wants part of that positive PR (and to create a tech feed-back loop).
Compare this to the USA Startup program that's spending $200k on a standardized startup application. Y-combinator could create the same by adding 'oh, and contribute to building standardized form' to the end of their conditions for their funding : It would be hacked together within a week by 30+ teams of very smart people... Alternatively, get participation from a collaborating set of VCs : Free PR if you contribute.
That's interesting... I am one of the participants in the program and I can tell you that you definitely do not have to incorporate in Chile OR hire any Chileans. They're doing this to build an international network, not to produce jobs directly (their economy is doing quite well at the moment). They do want you to go to events, but the events are very valuable. We are treated as guests of the government... it's an amazing opportunity. Feel free to email me if you have any questions.
- Hank, info@knowledgestreem.com
Looks fantastic but I have the following questions:
1. The T&C states max cash salary of $700. Is the $3K you mention including other salary components or do you mean they accept up to 4 founders/employees on payroll?
2. Would they accept putting in a premium domain name (purchase price way over 4K) as required own investment of 10% of the 40K?
3. Would they welcome applications from a non-developer solo founder (me) explicitly looking for Chilean developers?
4. Although possible according to the T&C, is it allowed in practice to hire foreign developers until Chili dev is found? (I already have devs supporting my idea, possible subcontractors if there is budget to work with, but none of them willing to move to Chili.)
5. Would you be willing to pre-screen my application for tips and potentially leads to interested local talent?
6. What are people's plan after the 6/12 months expire? Would applying for Ycombinator be realistic and acceptable in the program's spirit?
1. We've been told $3k is the limit. I'm not taking salary myself, but have a non-Chilean national on payroll getting $2.5k a month. It's common for two person teams to have one person on payroll and one not take salary at all.
2. The focus is genuinely on helping people ramp up their businesses, not nickle-and-diming them on how they are spending matching funds. Life is easiest if you expect to spend a few thousand of your own on random stuff it won't make sense to expense.
3. My guess is that 30% of the accepted applicants are single-founder (my own is and own ownership structure never came up). The focus is funding businesses that can earn money and scale and have a reason to come to Chile.
4. You need to be able to provide a proof of payment (receipts, etc.) in order to expense stuff. If you have a foreign company you can write yourself an invoice. Again, it just has to be reasonable in the context of your project.
5. If you have specific questions about your application you're probably best off writing the team. I'm happy to share a sanitized copy of my application if that would help but don't have the time to review yours.
6. Some teams are staying, some teams are going. If it's investment you want you'll have options down here too if you're fundable.
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.