It's the plight of every startup: mucho trabajo, poco dinero. What to do?
Steve Davis packed his laptop and his Spanish phrasebook and moved to Chile. On arrival, a government program called Start-Up Chile handed him $40,000, no equity required. He also got a visa, office space, mentoring, help with networking and fundraising, and connections to potential clients.
In return, all Davis and his cofounders had to do was promise to spend six months in the country working on their startup, CruiseWise - an online travel agency for booking cruises - and engage with Chilean businesspeople.
"The government wants to bring in foreign entrepreneurs to interact with the business community," Davis says. "Having people around who want to try new things and believe it's OK to fail - that's a huge benefit for them, to foster an entrepreneurial mindset."
Davis and his partners, Amit Aharoni and Nicolas Meunier, were members of Start-Up Chile's freshman class, arriving in August 2010. When the six-month program ended, they returned to San Francisco. They raised $1.6 million in funding from SV Angel, NEA, Index Ventures and PROfounders Capital and launched CruiseWise on February 14th.
Davis says they looked for financing in the Bay Area before they applied to Start-Up Chile, and the feedback was positive, "but it was clear we wouldn't be able to raise much, given that we were first-time entrepreneurs with nothing more than a PowerPoint deck."
In Chile, they spent their time - and their funding - building a working prototype that they could later take to investor meetings. About a third of their money went to living expenses, the rest to technology they needed, like cloud storage and software.
"If we'd had to bootstrap it, I don't know if we could have done it," Davis says. "The $40,000 made it a lot easier for us to get started."
Start-Up Chile has received criticism from some participants. The primary gripe is that the $40,000 is not given up front in a lump sum. It comes in the form of monthly reimbursement for expenses - which can include salaries, marketing and housing - and the payments from the government don't kick in until a couple months after participants arrive.
But even the nitpickers concede that the program is a good experience overall. For Davis, it was almost entirely positive. It gave him and his partners time - no need to work a second job - exposure to a new culture and the knowledge that they helped teach Chileans a thing or two about entrepreneurship.
"In Chile, if you start a business and fail at it, you're branded a failure," Davis says. "Future employers look at you and say, 'I don't want to hire this person.' In Silicon Valley, if you fail quickly and cheaply, people think that's awesome because you learned a lot."
And if you join Start-Up Chile, you're that much less likely to fail in Silicon Valley.
If you're interested in Start-Up Chile, check out this advice on how to write a successful application from a current member of the program.
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