No doubt, Start-Up Chile has proven a driving force in putting Chile on the world’s entrepreneurial map. Launched in 2010, the organization has worked with over 1,300 entrepreneurs on upwards of 700 projects from 65 countries all over the globe. It has organized and hosted countless workshops, conferences and gatherings, provided hours upon hours of mentoring and training, and spurred copycat programs in Peru and Brazil.
A raging success. Or is it? That depends on your parameters.
“We have two main objectives,” explained Horacio Melo, Executive Director of Start-Up Chile. “The first and most important one is to convert Chile into a hub for entrepreneurship and innovation, and we’re convinced the only way to do that is to have a cultural change. The second main goal is to increase the probability to be successful of our companies as much as we can.”
The motives and objectives driving Start-Up Chile are manifold, and not all of them have to do with creating game-changing startups. In fact, company building is just one piece of a greater puzzle put together with other social, economic and cultural factors.
There is no concrete data available regarding the revenues generated by Start-Up Chile’s companies or the tangible impact they’ve had. And right now, the organization is the process of gathering information on how their startups have developed – including how many are still around.
Success stories a component of the formula, as they will likely help the program to attract more talent and encourage Chileans to give the entrepreneurial route a go themselves. But the organization has laid out a few other guidelines for measurement that are largely unrelated to revenue, impact and survival.
Flow of Investment
One figure Start-Up Chile points to is fundraising. Of the 663 startups composing its pilot and first seven generations, 12.7% have landed investment, totaling over $32 million. In other words, the organization is betting on one sign of success being the willingness of other organizations to back its picks, too.
But investment doesn’t translate to triumph in the startup world, in Chile or elsewhere. In fact, three out of four of all venture-backed firms fail. “Raising money isn’t an objective at all. We have that measure … principally, because raising money is a good signal of a hopefully successful startup,” Melo clarified.
A similar line of thinking lies behind statistics put out on the Start-Up Chile companies that have moved on to “bigger and better” things, a.k.a. those that have been selected by big-name accelerators like Y Combinator and 500 Startups or were acquired.
As to the extent to which such figures can be used to gauge success, Melo again was careful in his response: “Like raising money, it’s a good signal. But also, in this case, if we have alumni getting accepted into Y Combinator, 500 Startups, it’s good validation for the program, because in the end, it shows that, first, we select companies properly and, secondly, that we help them to accelerate so that they’re prepared to be part of these accelerators.”
Three years in and with its ninth generation of projects on the way, Start-Up Chile is still working out the kinks in its system. It is refining the program to improve its companies’ chances of success beyond funding and a second go at acceleration in hopes of churning out a high-impact business.
One issue the team is still tackling: handing out the $40,000 equity-free funding it offers and ensuring entrepreneurs stay on track. “From the very beginning, we were worried about that, because we don’t want to give money that came from taxes to people that are just traveling around, but at the same time, we don’t want to have the bureaucracy that governments normally have,” Melo said.
At the program’s outset, funding was dealt with in an often inefficient reimbursement scheme that left both entrepreneurs and staff frustrated. As of generation five, funds are handed out in two lump sums – half at the start of the program, and half three months in. And in each generation, five to 10 teams are denied the second $20,000 (generally, those that fail to contribute to the ecosystem or aren’t growing their businesses).
“We challenge ourselves to make sure that the money isn’t a relevant part of the equation, for many reasons,” Melo said. “We think the program as a whole should have a lot of value, not just because of the money. We want to make sure that the money is the first step but that, on top of that, we add more value.”
So if it isn’t the money, and it’s not necessarily putting out the next big startup, what is the value of Start-Up Chile?
Essentially, the organization is creating a global network of entrepreneurs, investors, incubators, accelerators and businesses of which Chile is at the center. It is building up the country’s startup ecosystem, contributing to the worldwide entrepreneurial community and promoting the Chile brand.
Is Success Visible?
Vitor Peçanha, a Start-Up Chile alum who is now working with SEED, a new initiative in Minas Gerais, Brazil that is, in many ways, modeled after the Chilean program, shared his perspective of the organization’s aims. “My perception is that the main goal of Start-Up Chile is to bring attention to the country and put it on the map as a place where there are opportunities for entrepreneurs and innovative companies. I think that they are being successful on that front, as Chile is often appearing in the media as a promising place for doing business in Latin America. But it’s still too early to tell if this is going to actually have an impact on the economy and the society,” he remarked.
Balasundaram Lavan, whose startup, Pace4Life, was the first non-profit accepted by Start-Up Chile, gave his input. He noted a shift in the types of companies the organization is accepting, away from more “typical” tech startups in social media e-commerce and towards other arenas like education and healthcare, which are relatively immature and have a greater potential to be disrupted by startups. “I like a quote from Sahar and Bobby Hashemi’s book ‘Anyone Can Do It.’
They describe an innovator as somebody who comes up with new ideas and an entrepreneur as someone who just takes an idea and runs with it,” he said. “Being a startup, being an entrepreneur, is often just blindly going with something. You’re not sure you’ve dotted all your i’s and crossed all your t’s, but you have faith in what you’re doing, and you’re willing to ride the smooth with the rough. I think Start-Up Chile has described itself as the past as a startup for startups, and during my time and post, it has continued to evolve and innovate.” In other words, Start-Up Chile is largely a startup in itself.
And like any startup, Start-Up Chile is expected to produce results – even though those results may not come in the form of a slew of revolutionary startups.
“Because of this social objective, the government is not expecting a short-term economic impact. Even when we’ve been creating new jobs because of Start-Up Chile startups and adding value to the economy, it’s not our short-term objective,” Melo explained. “If you see Start-Up Chile in a big perspective, we attract entrepreneurs from all over the world to start their businesses here, we ask for some help, because we want to make sure that they create a cultural impact, short-term or mid-term. And because of that cultural impact, we want Chileans living a long-term economic impact.”
Start-Up Chile has certainly made an impact, though the nature of that impact remains largely to be defined.