Bureaucracy Mode On: Start-Up Chile Uncensored

They say that things people need to have more awareness about usually happens in 3′s and last week that was exactly the case for Chile’s startup and entrepreneur community. Unfortunately, it appears that after a year full of positive press and buzz, as we kick off the new year, Chile will be focused on doing a bit of ‘damage control’ more than anything.

 

Darth Vader Was Here

First, the week kicked off with a post on The Next Web about foreign investor Arnon Kohavi and his abrupt exit from Chile after just 6 months, citing a few of Chile’s monopolistic families who still run the country, at the top of his reasons for leaving. This in turn set off a lively discussion thread and a wave of posts, rebuttals, and opinion pieces.

Second, word got out that Octantis, the oldest incubator in Chile was closing, mas o menos. Who knows? It was all a little ‘fuzzy’. And for some reason I see them re-branding themselves as something else. I have some ideas but I will hold my opinions for now.

And third, Herval Freire (Hervalicious, jejeje) a Start-Up Chile (Chilean Government sponsored program for startups) participant from Brazil made a post about his 6 month stay in Chile working in the startup grind. Within 24 hours the post made first page of Hacker News. Unlike pretty much all of the Start-Up Chile participants before him, he did not sugar coat his experience (and he made the post before he left the country….how’s that for startup gangsta?)

Excerpts from Hervalicious’ Post….

The ACTUAL mission of Start-Up Chile is very clear (and I was kindly reminded of it a couple of times by the lead paper-tosser executive officer)….

The first, cold truth, is that there’s no VC money in Chile. And I mean no money at. All….

“Reimbursements” – the core of the Start-Up Chile “carrot on a stick” strategy – is a long, broken and biased process, specially devised by some devil from the high ranks of hell….

The Making of a Startup Jedi

From the earliest days of Start-Up Chile, in the name of innovation, disruption and progress (naturally), I have engaged in a few ‘colorful’ conversations with Startup Chile directors and teams alike.

My greatest challenge are some things said by their startup founders, which I believe put Chilean startups in an inferior space (case in point, second sidebar comment). I used to give them grief about this, but since I have started working with my fellow startup co-founder Carlos Leiva Burotto, his authentic Chilean charm and kindness has rubbed off on me a bit and in the early days he instilled in me our greater responsibility to the Chilean startup community at large.  So I have been working harder to give more value, education, exposure and support for Chilean startup founders. Not to mention, given that Carlos works a lot more hands on in and with the Start-Up Chile community, I have learned essentially not to take my frustration out on the people who have no direct control over how the organization is structured and governed.

I understand a lot of our differences have also been cultural ones. In terms of entrepreneurship in the U.S.A. you would never (and I mean never, ever, ever) hear a startup founder say they are seeking investment for their venture from the U.S. government. But in Chile, few believe their startup or company (or most things in this country can function and/or improve) without financial support and involvement from the Chilean government. Corfo, Chile’s leading economic development agency, is a government entity, and while the government can work to pass laws and develop protocols that facilitate the process of starting a business (which they have been doing), governments are not responsible for starting businesses. Hence the work of AndesBeat and working to build/train/educate a culture of bootstrapped startups and tech entrepreneurs that clearly understand where those boundaries are.

While many of the startups have expressed a positive response to the Start-Up Chile program, there are also a number of startup teams who have expressed their struggles within that structure and need to be supported, promoted and integrated into the larger Chilean startup ecosystem as well. And those are the ones we are especially trying to reach and better support. Realistically, it is a good thing for Chile when Start-Up Chile works/does well and startup founders and every organization connected to them has a good experience, they will hopefully reciprocate the experience for Chile and it is our responsibility among other organizations working in the space of entrepreneurship/innovation to work complimentary to them and fill in the gap for the long term and greater benefit of Chile.

The Chilean Empire Strikes Back

Alas, the way that I see it, perhaps biased since I am from Washington, DC (home to government and big business alike), is Start-Up Chile is a ‘necessary evil’. The government often works counter intuitive with the nature of startups/entrepreneurship. But given the culture and history here in Chile, it needs to be the pivot or bridge to launch the ecosystem. With the ‘government’ as the primary engine for economic growth, as more and more people (foreigners and Chileans alike) experience its inefficiencies, gain more education about what it means to be an entrepreneur or startup, along with gaining a deeper understanding of each others culture, disruption and innovation will surface from a few people who decide to stay the path and work to make things better, simpler and/or faster. Vamos Chile! It’s YOUR time.

Photo Credits: foolstopzanet

  • http://twitter.com/BrokerChange Ayman Al-Abdullah

    What was the reimburesement process like? How long was the wait for the money?

    • http://www.AndesBeat.com Shonika Proctor

      Hi Ayman,
      Ken made a post above to his experience. And he says it takes approximately 21 days to receive your reimbursement.  See post here:

      http://nextmontreal.com/start-up-chile-is-a-great-experience-but-be-careful-too/ 

      However, note, Ken was a Start-Up Chile participant and is not an actual employee. To ensure you have the most current program info, I would recommend you do 1 of 2 things:

      1. Go to their website and check out their FAQ’s about the program. 
      Direct link here >>> http://www.startupchile.org/about/faqs/

      Or

      2. Go to the contact form and ask directly so you can be sure. They are generally very responsive.

      Saludos.

  • http://twitter.com/civisidedotcom Ken Seville

    Start-Up Chile is also a startup and should be treated that way. They are figuring it all out as they go. My experience in the program has been largely good. Yes, reimbursements are frustrating, and the system should be discarded, but the staff have to work within the limits that are imposed on them from above. I think that they are doing a decent job in finding the balance. 
    As for sugarcoating commentary, truth, like medicine can be coated with honey to make a lot easier to swallow. Herval’s post is coated with vinegar. 

    • http://www.AndesBeat.com Shonika Proctor

      Ken,Thanks for your comments and sharing your more balanced
      post.

       

      “Start-Up Chile
      is also a startup and should be treated that way.”

       

      Point noted.

       

      As for Herval’s post….when we are not unreasonable or challenge the
      status quo, progress cannot be made. Sometimes you gotta keep it real to keep
      it moving. Hope that if nothing else, we will see more of Start-Up Chile’s ‘tribe’ build a stronger bond (and more collective voice) over these coming weeks and months. 

       

      Besides, we have to give him a little slack as he is not from Canada….Canadians are so darn nice (:

       

      Cheers.

    • Anonymous

      It’s not coated with anything, Ken. I’m a realist, nothing more.

    • http://twitter.com/BrophyWorld Mark Brophy

      SUC is a government entity supported by taxpayers, not a startup funded by private investors. Private investors carefully monitor their investments, but taxpayers aren’t able to direct the government to invest their money. The connection between the taxpayer and SUC is very loose because each taxpayer has only a couple of dollars invested, and there are millions of them; while a private investor will have a much bigger stake, a corresponding incentive to monitor, and a small number of other investors.

      Government programs last a long time even when they operate poorly, but private startups are dissolved constantly.

      • http://www.AndesBeat.com Shonika Proctor

        I hear you. And thanks for your comment.

        But Start-Up Chile staff can often be heard saying that they are a ‘startup’ themselves. And if in fact the Chilean government is the biggest ‘VC’ in Chile as Herval’s post suggests…well I guess we have to say on ‘Chilean Terms’, they are a startup.

        Anyway, suppose we will have to get a second opinion on this…

  • http://twitter.com/civisidedotcom Ken Seville
  • Anonymous

    I had a skype interview with them for my startup called wikispeedia.org

    They were very professional. I didn’t get the gig. Life goes on.

  • Javier Salcedo

    If Startup Chile has the goal to create an athmosphere for entrepreneurship, VCs and all that, this kind of opinions and analysis is exactly what we are looking for
    Herval says “there si no VC in Chile, at all” and that is something every chilean entrepreneur knows, but for VCs to appear in Santiago, lots of people must make noise to be noted by the ” Chile´s monopolystic families” that Kohavi mentions. There is a LOT of money this group he describes well but you must be chilean to undestand. We must convince them, or at least the dreamer-young-son of one of them, to create VC and accept the rules

    Chilean $$ = Used to 20% profit/year
    The way of the VC = 1:10 rate of success

    • http://www.AndesBeat.com Shonika Proctor

      If Startup Chile has the goal to create an atmosphere for entrepreneurship, VC’s and all that, this kind of opinions and analysis is exactly what we are looking for….

      AMEN to that Javier! 

      But to your point about Kohavi….if he recognized the challenges with the monopolistic families, then he should be the first to understand why it is even more important that foreign investors who are here be willing to take risk and help shift the culture.  Additionally, what does it matter if the monopolistic family ‘ruled’ Chile? If he made the investment in the company, he would be one of the the primary shareholders and many of the startups that are here, have scalable products/services that can be offered throughout LatAm or other global marketplace.

      And I am sure he also knows VC’s usually invest in companies that are close to them and given the economic structure here in Chile, it is very cost prohibitive for the majority of the population to travel outside of the country. But he left…and had the nerve to say maybe he will come back in 10 years when everything is ‘developed’. Whatever. As far as I am concerned, with those sentiments, he needed to go. And Chile is better for it.

      As for what’s next….I think that those of us here on the ground who have links to the ‘outside world’ are going to have to be more resourceful/creative in linking our networks and aggressive in supporting Chilean startups with bootstraping their first $3-5 million USD (not Chilean Pesos :-P) in annual revenues. Let’s start there for now and I think with that we can sort the other stuff out a lot easier (: 

      Saludos.

  • http://twitter.com/FrancescaDulce Francesca Larson

    SUP participants get one major perk of StartUp Chile being a startup themselves – the government run program takes ZERO equity. Yes, there is some nonsense along the way (I’d expect that in any grant-like situation). But the fact that entrepreneurs retain 100% of their company in the program means that bureaucracy does’t infiltrate the companies. 

    It’s up to all entrepreneurs to navigate the challenges they face. And frankly, understanding and learning how to work with government is a great asset moving forward – especially when governments around the world are beginning to develop legislation that affects the tech world. 

  • http://www.facebook.com/edoher Eduardo Hernández

    There are lots of Innovation contests for chilean entrepreneurs, like Movistar Innova, but just like any “VC” here in Chile, they are just big fat companies that look for “baked breads” to take out of the oven and sell. If you have a developing project, they are not interested, even if it is a game changer.

    • http://www.AndesBeat.com Shonika Proctor

      Understood.

      But when more Chilenos who have been frustrated by the experience learn to bootstrap their startups to $1+ million USD sin incubators and crying about the money that CORFO doesn’t give them, then people have every right to ‘complain’. I am not saying this is you. I am just saying ‘in general’. Eso.

      See you here (scroll to the bottom of the page)? – I co-facilitate the workshops ‘Shoni Gangsta Style’ with Carlos and the support of top level international network so it’s all good: http://andesbeat.com/about/

      Abrazos.

    • http://www.AndesBeat.com/ Shonika Proctor

      Eduardo -

      OYE!

      YOU are the GAME CHANGER. Eso.

      When more Chileno developers, startup founders and tech entrepreneurs who have been frustrated with the experience they have had with incubators or VC’s or even CORFO whomever, start to bootstrap their businesses to $1+ million USD, all the nonsense is going to go away for you and for them. 

      I know it is difficult for a lot of entrepreneurs to ‘see how that happens’ now because here in Chile and LatAm in general, you don’t know what you don’t know. But you know something compadre, I know a thing or two and got a little sumtin’ sumtin’ for that (:

      Go to http://www.andesmade.com/about and scroll to the bottom. Sign up on the list. 

      Learn hard core bootstrapping, networking, business growth and what you don’t know via Shoni and Carlos gangsta style + you will be able to work with our top level international mentors (limited space available). You don’t have to worry anymore compadre. You don’t have to worry. 

      The internet has leveled the playing field. But if Movistar cuts your line to the rest of the world bc of your whack comment, jejeje, sorry, can’t help you there.

      Besitos.

      • http://www.facebook.com/edoher Eduardo Hernández

        Money talks; if I become successful Movistar will forgive and forget, so don’t worry ’bout me, sis. I’ll join to that list of yours anyways, leverage won’t hurt, right?

        • http://www.AndesBeat.com/ Shonika Proctor

          Right on Eduardo.

          Love you too much!