As Start-Up Chile is about to welcome its fifth batch of teams and reach the 500 startup milestone, many would be curious to know what has happened to its previous alumni.
That is the question that US entrepreneur Nathan Lustig is contributing to answering; while Start-Up Chile’s staff is currently in the process of collecting data on the program’s first rounds, which involves contacting hundreds of startups, Lustig has already gathered his own information on a few of them.
As a matter of fact, Lustig took part in Start-Up Chile’s pilot round, which saw 22 startups move to Santiago from late 2010 in exchange for a $40k grant per company and a one-year visa.
Lustig’s personal case is quite interesting; after his time in Chile, he moved back to the US, from where he sold his company, Entrustet, which became the first Start-Up Chile alum to be acquired.
While this is already an achievement for the program, it doesn’t stop here; since then, Lustig has moved back to Chile, where he works for Welcu, a fast-growing Chilean venture which focuses on event management across Latin America and has received funding from 500 Startups. In addition, he also acts as a consultant for startups that are keen to apply to Start-Up Chile.
In other words, his case is pretty emblematic of what Chile wanted to achieve with its unique government-supported program: help global startups succeed while fostering Chile’s local startup ecosystem and contributing to the country’s growth.
Yet, Lustig couldn’t help but wonder about the fate of fellow entrepreneurs from the pilot round, as he explained in his blog post:
“Did they leave Chile? Did they all fail? Did they create any jobs? And did they have any impact on the Chilean entrepreneurial ecosystem?”
The results: 45% still have businesses running in Chile
To clear his doubts, Lustig decided to approach every single entrepreneur from his round, and here’s what he found:
- 6 companies (27%) have at least cofounder living full time in Chile;
- 10 companies (45%) have significant businesses still running in Chile;
- 7 startups (32%) have raised a total of US$4,020,000 from VCs and angels;
- 16 startups (73%) are still bootstrapping full time, of which 5 (23%) are profitable;
- Taken together 12 startups (55%) are either profitable or have raised significant money;
- 2 startups (9%) are being run part time;
- 3 startups (14%) failed;
- 1 startup (5%) was acquired;
- Founders from 14 companies (64%) have returned to Chile at least once or continue to live there;
- 19 companies (86%) still have business relationships in Chile;
- At least 16 jobs were created in Chile.
For Lustig, these results show that “Chile’s initial investment of $880,000 has paid off.” We tend to agree with him, as the number of companies that still maintain ties with Chile is very high.
Low failure rate
As you can see, the proportion of startups that have entirely stopped operating is very low – 14%. Here’s why, according to Lustig:
“First, it is important to note that it has only been a year since the last company from that batch ended their time for the program – and the one-year milestone is very important for startups, so some of them might still end up dying over the next few months.
Still, I agree that the fact that only 3 teams have stopped working on their project is a fairly unusual rate. My personal guess is that it has to do with the profile of their founders. Think about it: there was very little information available about Start-Up Chile when they signed up, no track record, and yet they took a chance and moved to Chile. This means that they are more tenacious than average, and very committed to their venture.”
With that in mind, it wouldn’t be surprising to see different results for the next batches as the program becomes more widely known – not only abroad but also in its home country. As we reported, Chile is the best represented country among selected companies that will participate in Start-Up Chile’s upcoming round.
Image credit: Gobierno de Chile