5 Reasons Chile's Entrepreneurship Grant is Awesome

You might have noticed a story in the last edition of Weekend Entrepreneur Links about the Chilean government's new attempt to attract budding entrepreneurs to the country. In short, they're offering young companies up to $40,000 in grant money in exchange for being willing to spend a few months building their companies in Chile. I think it's an awesome initiative, and here's why:

1. It lets the country sell itself. The idea of the program is that a key early stage, entrepreneurs are spending time in Chile. The bet is that Chile has enough to offer that those entrepreneurs will actually want to invest in Chile as a secondary (or perhaps even primary) business zone. Entrepreneurs will get to meet local officials, and the people who can help with red tape, making the country more appealing as an international starting place. But more than anything else, the entrepreneurs will be living there during an extremely tough but highly romantic period in their organization's life. Living in a place does far more than visiting it as part of a whistle-stop business tour to give people a sense of connection, and Chile is smart to play that.

2. Offers something attractive without creating undue burden. First of all, for a young company $40,000 isn't bad. If nothing else, it takes care of the founder's salary for months they'd be in Chile. What's more, for a certain type of founder, being able to start their company from Chile will feel like getting a head start on the freedom in life that they're looking for by starting their own company in the first place. And ultimately, if it ends up not being a great experience, the commitment to be in country is only a few months, and there are no strings when it comes to future business dealings.

3. Recognizes the new reality of startups (particularly web startups). Chile is looking particularly, it seems, to attract young technology startups. They seem to recognize first that the cost of that sort of company has decreased enough that $40,000 is meaningful money and second, that we live in a Skype world where people can build a company anywhere with an internet connection. Of course, certain types of companies require more in-person relationship building up front, but for many hacker entrepreneurs, this program could be perfect.

4. Provides potentially long term benefit (and a long term perspective). When you're an early stage entrepreneur, your life is a balance of trying to keep what's 10 inches in front of your nose aligned with what's 10 miles down the road. One of the things I think is so cool about this program is that even if the short term benefit is the $40k and a cool place to hack, the long term benefit is a whole new market with great connections to people of influence. That creates a context in which young entrepreneurs think beyond their nose a little bit, and whether something materializes or not, that's valuable.

5. It's cheap. This is a seriously inexpensive program for the Chilean government. Let's round up and call the cost $50,000 per entrepreneur who participants. For a million bucks a year, they could have 20 new global entrepreneurs who are calling Chile home and looking at Chile as a market. If they do it right, each of those entrepreneurs is not just a future market bet, but an influencer and supporter of local talent as well. Honestly, it seems like a damn cost-effective way to seed innovation.

This model could be a total bust. It could turn out that going to Chile just isn't that attractive to young entrepreneurs. But I think it's smart and forward thinking, and could be a huge win for them. I'll be watching to see how it works. If anyone applies and actually participates in this program, please let me know.

Photo credit: Diegosaurius Rex