Start-Up Chile – Deal or No Deal

Start-Up Chile’s offer of $40K for entrepreneurs to move to Chile for 6 months is obviously very attractive. But with such an offer, there must be a couple of strings attached right?

Yesterday I went to a presentation by Nicolas Shea, Start-up Chile’s founder, at the University of Waterloo. It was a pretty small gathering, so we were able to ask a lot of questions and get a bit better idea of what we would be looking at. After taking notes and looking through the terms and conditions online, here are my thoughts on the program.

Pro: Living in Chile for 6 Months

One of the first things I did after attending the info session was to check out Santiago, Chile on Wikipedia. Let me just say, wow! I could live here for a few months with ease. Average highs during the 6 month period of September-February hover around 25C/78F. Compare that to winter in Canada and you can chalk that up as a clear win for Chile. As an added bonus, the Andes mountains are right next to the city. I would finally be able to achieve my goal of snowboarding and surfing in the same day!

Con: You Must Start a Chilean Corporation

I didn’t find out about this until I read the fine print in the terms and conditions. By accepting their offer for the program you are required to create a corporation in Chile. If you are a new entrepreneur and don’t already have a corporation, this isn’t an issue for you. But if you are like me and have already created a corporation for your startup, its pretty annoying. I don’t think this would be a critical factor for me, but it does suck some of the excitement out of the program.

Edit: It turns out that the requirement to start a corporation is not actually a requirement, but more of a suggestion. According to a Start-Up Chile representative, this clause is more along the lines of “It would be great if you incorporated, but if it’s not for you, then it’s not a big deal”.

Pro: The Mega-Network of Entrepreneurs & Coverage

One of the incredible benefits of the program is the massive volume of entrepreneurs that participate. If my memory serves me correctly, the last cohort had ~200 entrepreneurs! All of them work in the same building, so it’s the concept of an incubator, just super-sized. Additionally, since the program has the full support of the government, each company has coffee with the Minister of Economy and is profiled in the local newspaper. While being profiled by a Chilean newspaper won’t make or break a company, it’s a pretty cool experience, especially for entrepreneurs who haven’t had major media coverage before.

Con: The $40K is a Reimbursement

The impression I was under when I first heard about the program was you receive $40K in cash up front, but this isn’t the case. In order to receive the money, you have to submit receipts. Rent, food and business costs are allowed to be expensed, personal spending on alcohol, tips, etc. won’t be covered. Fortunately, from the sounds of things, you can take a salary of up to $2,400 ~$675 USD per month (Edit 2: The Start-Up Chile site says you can have a maximum salary of $350,000 CLP, or ~$675. I’m not sure if this has been changed since I published before or whether I was just wrong, but don’t count on the salary to pay a lot of bills at home). As I am making approximately $2,400 less than that right now, that sounds pretty amazing.

Edit: Food and travel are no longer reimbursed. While it’s too bad that you now have to pay for food and travel out of your own pocket, it does make sense and the reimbursement process will become a lot simpler. I expect that most participants will just take a higher salary to compensate and the process will work smoothly. I’m finding it hard to justify this being a con now.

Pro: Access to Talent

From what I’ve heard, there is some incredible design and development talent in Argentina and Chile. With the cost of living being substantially cheaper in South America, labor costs are lower, making talent more affordable. It’s hard to find a startup that wouldn’t be interested in cost-effective talent additions, so this is a huge plus for the program.

The Verdict

While I experienced a slight let-down after finding out about the incorporation and reimbursement requirement, I’m still very bullish and excited about the program. I love to travel and money is always appreciated, so for people like me without any locational commitments this is an ideal program. As applications for the 2nd round of 2011 open up in early July, I have some time to make my decision, but at this point, I’m leaning heavily towards “Deal”.

Since you made it until the end, you should probably follow me on Twitter: @cross_andrew

Like what I said? Think I’m out to lunch? Hit me up in the comments!