#1435 2010 · Start-Up Chile (CORFO) · Government innovation program
Chile paid founders $40,000 to move to Santiago — and asked for no equity
the problem
A country with no startup scene couldn't attract founders; equity and visas blocked entry
background
Chile in 2010 had capital programs but no startup ecosystem: local accelerators were nonexistent, foreign founders had no visa path, and the country's equity culture expected ownership stakes that early founders would not surrender. CORFO, the economic development agency, inverted the usual state logic: instead of investing in Chilean companies, pay the world's founders to come.
Start-Up Chile offered selected startups about $40,000, equity-free, plus office space, mentoring and a one-year visa, on two conditions — spend six months in the country and share knowledge with local students and businesses. Selection ran three times a year; over 5,000 applications arrived annually for roughly 240 places.
what everyone would do
Fund a state venture capital fund to take equity in local startups — which selects firms willing to sell equity to the state, imports no outsiders, and measures success in portfolio returns the ecosystem was never built to deliver.
what they saw
You cannot inject a startup scene, but you can rent one: pay founders to be present, take no equity, and make teaching locals the price. The ecosystem arrives as people, not as investments.
the move
The mechanism buys presence, not ownership: the grant is a subsidy to founder time and location, and the return sought is ecosystem spillover — knowledge transfer, local hiring, networks — rather than portfolio returns. The social-capital obligation (workshops, hackathons, classes) turns each foreign founder into a node of local diffusion, and the equity-free design attracts exactly the founders an equity-taking program repels.
why it works
Equity-free money changes the applicant pool: founders with good options will take a grant and a visa but not government ownership, so the program attracts people a sovereign fund never meets. The six-month presence requirement converts money into density — a thousand founders at once create the coffee-shop collisions that make a scene — while the mandatory social-capital work exports their knowledge to Chilean students and firms. Equity-free also sidesteps the state's terrible position as minority shareholder: CORFO pays for spillovers it wants rather than returns it can't capture.
the payoff
By 2015, 1,200+ startups from 72 countries had graduated; they raised $100M+ and created 1,500+ jobs, from 5,000+ applications a year
where it breaks
The honest data shows the leak: up to 80 percent of foreign participants left after six months, and only 24 percent of foreign grantees started their business in Chile versus 83 percent of Chileans; firms staying abroad raised nearly three times more capital than Chile-based ones. A subsidy for presence evaporates when presence ends — hence the 2014 restructuring toward staged grants and a co-investment fund conditioned on staying. The model seeds contact, not permanence, and works only where some pull factor (market, talent, lifestyle) can eventually hold people.
what came after
Start-Up Chile became the template for dozens of national startup visas and equity-free grant programs worldwide, and pushed Chile to streamline incorporation to a single day; the program's published data made it the most-studied experiment in ecosystem seeding.
references
- [1]Start-up Chile: A start-up for start-ups in Chilecon ValleyBrookings Institution, 2015brookings.edu
- [2]Start-Up Chile (WIPO Magazine)WIPO Magazine, 2015wipo.int