The end of Startup Chile - brnd.ws
“These things happened. They were glorious and they changed the world… and then we fucked up the endgame.” Charlie Wilson
Politicians tend to fuck up the endgame.
I am a graduate and big supporter of Startup Chile. For those who never heard of it, Startup Chile is a government-run program that offers startups a $40K grant (i.e. equity-free money) and a 1-year visa to develop their projects for 6 months in Chile. In return, they ask every founder to give back to the Chilean community through mentorship, workshops, lectures, etc.
When the program was born in 2010, it was absolutely novel, a “think outside the box” idea. Why would you give people money with no strings attached and then let them go? To make things more interesting, the first few rounds were open to foreign founders only. As you can see, this was not your typical government program. It was certainly not popular in Chile.
However, it was the right solution for the problem in hand:
- Chile did not have (and still doesn’t) a dynamic startup community
- The economy is too dependent on commodities
- The average Chilean is risk averse
- It’s not easy to get to Chile (look at the map)
How do you fix this?
- You attract entrepreneurs from all over the world to Chile ($40K, no strings attached, is a good start)
- You make them talk to local students and young professionals about their startups, their ups and downs, and how you go about starting a business (and hopefully plant a seed in their minds)
- You make a lot of noise to attract more and better entrepreneurs and build a brand around Chile as a startup destination
- You hope this kicks off a virtuous cycle of more startups being created, more people interested in working for startups, and more money directed to funding startups
It was a long shot but it worked as well as or better than you could expect in 4 years. How well? There is at least one copycat in every Latin American country and several more around the world. You know you’re doing something right when people start copying you. But this is just getting started. You don’t build a startup ecosystem in 4 years (ask people in Silicon Valley or in any city in the world who is trying to become Silicon Valley of somewhere).
So far, this is what I think Startup Chile accomplished:
- They built a great brand around Chile as a startup destination
- They brought more awareness to the entrepreneurial path in Chile, particularly among college students
- They boosted the Santiago startup community (although it’s still very much embryonic, and lagging behind communities like Sao Paulo, and Mexico City, which is not surprising)
- They made politicians happy enough to extend the program beyond its initial 4-year term
And here is where politicians fuck up the endgame. This week, Eduardo Bitrán, executive VP of CORFO (the government agency that funds Startup Chile) gave an interview where he lined up the future of Startup Chile (interview in Spanish only).
My summary of his thoughts:
- We want to keep the name because the brand is very strong
- We need more immediate impact in the economy – jobs, sales, manufacturing
- We need to increase the success rate of startups (How and how is he going to measure this? No mention)
- We want to support successful businesses and help them grow
Eduardo Bitrán is not excited about the startup community, or that more people are willing to start their own business, or even that a bunch of foreign startups came to Chile and stayed. What he is excited about is BRAND. He owes that brand to the Startup Chile team, who has overdelivered with scarce resources and plenty of creativity, and is not mentioned in the interview.
The problem is that BRAND is not the endgame. The brand was a way to attract more people, create excitement about the program and the startup community as a whole, and ultimately to help grow the Chilean ecosystem. This new plan is fucked up:
- Because it’s too early to measure the impact of Startup Chile – as any venture capitalist can tell you, 4 years are not enough to measure the performance of a portfolio, even more when we’re just looking at early stage startups
- Because the impact of Startup Chile goes beyond immediate revenue and job creation – it’s brand (he loves it but it’s SO HARD to measure!), it’s new people starting new types of ventures (some will create jobs, and some will fail), it’s tech companies looking at Chile as possible destination (and more jobs! and more revenue!)
- Because if you only want to pick winners, you will have to pick mature businesses, which is the opposite of the Startup Chile’s originally goal – no one has figured out how to pick winners in seed stage
The greatest quality of Startup Chile is that it’s trying to create the ideal environment for a startup community to grow, and then is letting the community decide how to grow. Instead of a controller, Startup Chile was setup to be an enabler, and that is apparently too hard for politicians to take. It reminds me of my times as a kid playing football on the streets – whoever owns the ball decides who plays, and how the game is played, otherwise the ball is gone, and the game is over. Politicians own the ball here.
I see a bleak future for Startup Chile, and most importantly, for the Chilean startup community. CORFO will keep the brand for now. But if they want to invest in mature businesses with healthy revenue that can immediately create jobs, they will destroy that brand, which is the only thing they care about. And then they will shut down Startup Chile, because the only thing they care about is not there anymore. I can only hope that the current dynamic is strong enough to keep the Chilean startup ecosystem growing stronger, and that the most dynamic people in that community (and there are a lot of great people) pick up the slack.
It was a good run Startup Chile…