How Start-Up Chile Works: An Insider Guide for Start-ups
A rundown of what goes on inside the top start-up accelerator and what to expect if you plan on applying.
This summer, our homesharing community Human Hotel was accepted into Start-Up Chile’s SEED acceleration program for start-ups with a functional product. More than 2000 start-ups had applied for a chance to participate in one of the world’s most successful start-up accelerators and receive 25 million Chilean pesos (approx. $34,000) in equity-free investment as well as other perks. This year, we were 60 start-ups who made the cut. Human Hotel being the only one from Scandinavia.
In July, I packed my bags and traveled to Chile to launch Human Hotel and assemble a team on the ground. While my co-founder Martin stayed in Copenhagen focused on our ongoing communities in Europe.
Since my arrival in Santiago a few months ago, our little community has grown from 0 to hundreds of hosts. Connected with the local activist ecosystem. And been ranked top of Start-Up Chile’s 22nd generation.
In this post, I will do my best to share how we’re doing it.
Running a homesharing community built around creatives and climate activists, Start-Up Chile was the ideal opportunity for us to establish Human Hotel in Chile’s capital Santiago — the city set to host the next UN Climate Change Summit. Aside from equity-free investment and a golden opportunity to test out our case in a brand new region, the SEED program also provides free Santiago office space, work-visas, mentorship and a chance to pitch your start-up to national and international investors at the programs Demo Day.
If that all sounds like a very great deal — well, that’s because it is.
Before you jump in and prepare your application for Start-Up Chile, however, you should be aware that the program is not for everyone. Locating to a new country (not to speak of continent!); adapting to a new culture; managing bureaucracy and red tape; and living up to the highly competitive terms of Start-Up Chile’s program is no easy task. And might not be the best thing for you and your start-up. Add to this the major civil unrest we experience in Santiago as I write this — and you have quite a bite to chew!
In this post I’ll share my experiences, explain how the Start-Up Chile program works — and give 5 primers to help you decide whether you will be a fit for the adventure.
Background
Start-Up Chile’s SEED-program is a six-month accelerator program for early-stage entrepreneurs who have a functional product and early validation. Your start-up cannot be no older than 3 years. It has to have a potential for scaling fast. And you will have to explain why you are interested in Chile and how you will use Chile as a platform to grow globally.
Start-Up Chile’s programs are renowned for their high success rate. Of all Start-Up Chile generations, 54% are either profitable or have raised significant capital today. And 56% still have revenue in Chile. Many of Start-Up Chile’s alumnis have also successfully exited, including Cinepapaya, Tulum, DoubleMap, Nina’s Box and CruiseWise.
SEED is the most prestigious and successful program of Start-Up Chile and it is highly competitive. For its 22nd generation, only 3% of applicants were accepted. If those odds sounds too daunting, or if your star-up still doesn’t have a fully functional product there are two other, less-competitive (but equally perk-filled) programs: HUELLA for start-ups with a social or environmental focus. And S FACTORY for female founders.
If you get accepted into SEED, Start-Up Chile will ask you to specify the metrics you want to achieve during your seven months in the accelerator program. It can be growing your revenue, your user base, etc. If your goals are not ambitious enough, the administrators will make sure that you higher your ambitions. They want to pressure you into performing at your maximum.
When you have set your metrics and all the paperwork is cleared, you will be invited to travel to Santiago, Chile. Since Start-Up Chile wants you (or your co-founder) to engage with the local entrepreneur community, they want you to arrive in Chile by a specific date.
Once on the ground, Start-Up Chile will provide you with approx. USD $34,000 in equity free capital, temporary work visas, free office space, mentorship, access to well-connected social and business networks.
If you do well during the program and reach your goals, you will most likely be invited to Start-Up Chile’s Demo Day. Here you will have the chance to present your start-up to prominent national and international investors. This is potentially the biggest prize of Start-Up Chile — some of the best and most experienced investors and funds from all around the world will be tuned in.
If you perform well in the program — with or without Demo Day — you can apply for another USD $34,000 to extend the Start-Up Chile SEED program with another 7 months.
If you team is looking to expand geographically, this is a great opportunity to test your organization, improve your skills, expand your network and even be supported by equity-free capital. But to get the most out of your experience there are several things to consider. Below are five things you should be aware of before applying to Start-Up Chile.
1. Understand the objective of Start-Up Chile
Start-Up Chile is different from other seed accelerator in one important way.
Where most incubators are run by private investors who take equity, Start-Up Chile is run by the Chilean government. That means that the main objective for Start-Up Chile is not to grow your company. Rather, their main goal is to improve the entrepreneurial spirit of Chile and turn Santiago into a start-up hub.
During the program, Start-Up Chile’s administrators will have you participate in their Founder’s Lab which is meant to boost the start-up system in Santiago.
This is vital to understand if you want to be invited to the Demo Day or receive the $34,000 extension. You will not only have to reach your metrics. You will also have to show that you are committed — in one way or another — to setting up a business in Chile and contributing to the start-up community in Santiago.
As part of the program you will be asked not only to build a company in Santiago but also to participate in Start-Up Chile’s Founder’s Lab. You will have to: 1) Share your experiences with Chilean entrepreneurs at workshops at talks. 2) Organize and participate in events, inviting locals to create with you. 3) participate in morning meetings every two weeks with other start-up founders to share knowledge and build community.
If your start-up is not sincerely interested in improving the lives of Chileans or in contributing to the Santiago start-up community in one way or another, you might have a difficult time achieving success at Start-Up Chile.
Takeaway: Start-Up Chile’s primary objective is to develop Santiago and Chile into an entrepreneurial hub. You will have to prove to administrators that you are contributing to that goal.
2. Work with locals to make an impact for locals
Some start-ups have found the Start-Up Chile administration too rigorous and the scoring of your metrics too tedious and bureaucratic. We don’t agree — so far we have had a relatively un-bureaucratic time in Chile.
But this much is true: You cannot fake your engagement with the local entrepreneur community. You have to actually contribute to the start-up scene.
In our experience, the best and most direct way to participate in the local community is to create actual value for this community. Hire Chileans. Partner with locals. Collaborate with local activists and non-profits. Get your product out of the office and onto the streets on Santiago as fast as possible.
If your start-up focuses on creating real and permanent value for Chileans, you will naturally be partnering with local entrepreneurs, training local workers, building relationships within the local ecosystem. This will improve your position in Santiago — and increase your chances of making it to the Demo Day.
But if you are mainly looking for the $34,000 in equity-free investment and plan on taking off from Santiago as soon as the program is over, Start-Up Chile is likely to be a frustrating experience for you. You will have a hard time making it to the Demo Day. And dealing with the administration is likely to feel bureaucratic and cumbersome.
On the contrary, if you aim to improve Chileans’ lives, you will also be making the most of the assets that Start-Up Chile supply you with. The free office space in Santiago. The excellent access to local mentors and networks. These assets will help you grow quickly in Santiago. But they might be of little help if your start-up is only focused on users or clients outside of Chile.
Takeaway: Your start-up should aim to create an impact for local Chileans. If your start-up is not focused on improving the lives of locals, Start-Up Chile might not be the place for you.
3. Beware that you are self-funded for the first 3–4 few weeks
The terms of Start-Up Chile stipulate that you will receive part of your grant one month after the beginning of the program. This delay means that you will be covering accommodation, flight and other expenses for you and your team out of your own pocket.
As various bureaucratic issues might arise with bank accounts, wire transfers, etc., you could end up waiting up to 4 or 5 weeks before the first part of your grant comes through.
Most start-ups find a way to fund their first month (which should be approx. $4.000–6.000 depending on your expenses). You can use other seed funding you might have. Your savings or your credit card. And eventually the money will come through. But if you are bootstrapping and have no access to funding, be aware that the first 4–6 weeks might create a cash flow problem for you.
Takeaway: Have enough capital to cover your running cost for your first month in Chile.
4. Finding accommodation is difficult — and the first days can feel alienating
Finding affordable accommodation in Santiago is surprisingly difficult. In our case, our first local hire (our Country Manager) helped find an apartment through a friend. However, if you are not well-connected in Santiago it will most likely not be easy.
Shortly after I arrived in Santiago myself, the Fiestas Patrias festival was just beginning. During the festivities, our Country Manager Diego lost his phone. Without the phone, I had no way of reaching Diego — who didn’t return to our shared apartment for two whole days.
Much as I was impressed with the serious party skills of the santiaguinos, it was a lot less exciting to be stuck alone without any way of communicating with my only local contact and team member. Losing a phone is a case of bad luck, but leaving your family and friends behind and arriving in a sublet in a foreign city can leave you feeling very alienated. I certainly did.
My advice is to make sure you connect with friends-of-friends before you arrive in Chile. Reach out to people through Start-Up Chile or by using your own network. Make sure you have people you can reach out to. Because it does get lonely those first few days and weeks.
To help out with both homes and connections, our Human Hotel will be setting up a homesharing solution for future generations of Start-Up Chile participants. By staying with a local entrepreneur, you can solve your housing crunch and build relationships with Santiago’s start-up scene — so if you are coming to Santiago and are looking for accommodation, do reach out to us.
Takeaway: Try and connect with local Chileans before you arrive in Santiago. If you are looking for accommodation in Santiago with like-hearted creators, Human Hotel can help you.
5. Don’t incorporate too early
Most start-ups hurry up and register as a company when they arrive in Santiago. We waited.
Not every company will need to incorporate immediately to start their activities in Chile. Especially not tech-companies.
If you can avoid incorporating for the first few months, you will save an immense amount of time. Time that is essential during your first months in Santiago.
Chilean authorities like to brag about how they are one of the easiest places in Latin America to register a company. Still, the process involves a lot of red tape: Registering online and with the tax authorities. Notarizing company statures. Acquiring municipal working licenses — the list goes on.
Be aware that you will be very busy getting your start-up off the ground, assembling a team, interviewing candidates, finding accommodation and everything else that goes into setting up a life in a new city. And most importantly of course: you need to get working on your product or service locally. Filling out bureaucratic forms is the last thing you have time for.
Here is a guide on how to incorporate your company in Chile. And here’s another one. Also keep in mind that corporate and tax laws can be complicated affairs. You might want to consult an attorney before you take the jump and incorporating yourself.
Take away: Incorporate when you need to. Don’t just incorporate to incorporate.
Summary
Start-Up Chile’s SEED program is a life-changing opportunity to grow your start-up, meet dedicated activists and entrepreneurs, and make an impact on Chile — and on you and your company’s life.
However, if your start-up is not aiming to make an impact for Chileans; if you have not done your research and found an opening into the local; or if you are mainly interested in receiving the equity-free funding and want to take your organization elsewhere — then Start-Up Chile’s SEED-program is most likely not for you.
If, on the contrary, your start-up is sincerely interested in creating value for the people of Santiago, this is an amazing opportunity and you will not be disappointed.
— Sixten, co-founder of Human Hotel
