Nathan Lustig - Start-Up Chile 101: Everything You Wanted to Know About Living, Working and Doing Business in Chile

Chapter 1

Introduction

In September 2010, my business partner Jesse Davis and I were in our office in Madison, WI working hard on Entrustet, dreading the start of the Wisconsin winter. I saw an article in Forbes that said that the Chilean government was offering startups $40,000 of equity free money to move to Santiago for six months, just when Wisconsin winter would be setting in.

Jesse and I were immediately interested. Because we both ran other businesses in university, neither of us had been able to study abroad. We were still battling to find a business model for Entrustet, so after some Googling, we jumped at the chance to apply for the program.

Six weeks later, after multiple Skype interviews and a video of us explaining our business, we received an acceptance email. We were excited, but a bit nervous. We didn't know anything about Chile besides that Santiago was the biggest city, Chileans liked soccer, Chile had good wine and fruit and they'd just rescued miners using world class technology...it had been Madison's most popular Halloween costume in 2010.

We did research, talked to another entrepreneur who had arrived before us, and spoke to any Chileans we could find. After a bit of debate, we knew we had to go. In mid November, right as the first snow was falling in Madison, we packed up and took off for sunny Santiago. We had no idea what to expect.

We were part of the pilot round, arriving as the 7th company to participate in Start-Up Chile. It didn't hit me until I got off the plane and was waiting in line at customs that I'd be living and working in a foreign country for half a year. Our six months in Chile ended up being some of the best of our lives.

We made lifelong friends, both inside and outside of the program. We grew our business tried out different business models and got press. I even got to give a speech in front of 200+ people including Chile's President, in Spanish, at La Moneda, Chile's version of the White House.

During my six months, I not only learned about Start-Up Chile, the country, and its culture, but I also learned about myself. I had to figure out how to fit-in in a new culture, learn a new language, all the while working through the stress of running a startup. We left after six months, returned to Madison and continued to work. Nine months later, Entrustet was acquired and I decided that I wanted to finish learning Spanish while learning about the rest of the Latin America market.

I came back to Chile in late 2011 and worked with Welcu, a Chilean startup funded by 500 Startups and Tomorrow Ventures. I had a front row seat as Welcu grew in Chile and expanded to Argentina, Colombia and Brazil. After nine months, Id learned Spanish and my inner entrepreneur was calling my name again.

A Start-Up Chile friend and I created a class called How to Build a Startup , which we taught at multiple Chilean universities including Universidad Catlica, Universidad de Chile, Universidad Catlica del Norte and Universidad del Desarrollo over the next two years. In the meantime, I helped prospective Start-Up Chile entrepreneurs get into the program by doing application reviews, getting a 60% acceptance rate, compared to the programs ~5-10% and started testing business models so that I could learn more about the market, including an ecommerce platform that helped me learn about the best opportunities for ecommerce in Latin American (Chapter 16, Section 6).

By 2013, I realized that I was doing everything an investor does (mentorship, creating connections & deciding which entrepreneurs to work with) except actually invest money. I wrote a plan to create Chiles first and only 100% private seed stage venture capital firm and started to look around for potential partners.

As fate would have it, my Start-Up Chile experience continued to pay dividends. One of the founding team members, Diego Philippi, called me up and told me that he had been put in contact with a Chilean Family Office that wanted to invest in new businesses and was looking for someone to run it. Diego and I updated my original plan and then presented it to Francisco Senz, the head of his family office. After a few meetings, we agreed to start Magma Partners , the first Chilean/US venture capital firm and the only VC firm that uses its partners own private capital.

After three years, in January 2017, weve now invested in 49 entrepreneurs from 28 companies (50% Start-Up Chile alumni) that employ 163 people from 17 countries on four continents. We invest in two niches:

1. B2B startups based in Latin America that sell to large Latin American companies.
2. Startups whose primary market is the United States, but have their technology team and/or sales back office in Latin America.

I wrote the first version of this book in 2012 to share what I learned with new Start-Up Chile entrepreneurs and am updating it in February 2017 to include everything thats changed since the 2010 Pilot Round.

You'll learn about Start-Up Chile, how the program works, what kinds of companies should apply, what Start-Up Chile looks for in an application and, once selected, how to make the most out of your time in Chile. I'll also share what Ive learned about Chilean culture, learning Spanish, the cost of living, how to find an apartment, doing business in Chile, how to find investors in Latin America, cultural differences, travel hotspots, favorite places to eat, drink and go out, and much more. After you read my book, you'll know if you should apply for Start-Up Chile, how to do it and if you get selected, how to make the most out of your time here.

Nathan Lustig

Santiago, Chile, 2017

Chapter 2

My Quick Advice For Start-Up Chile Teams

If you can only read one part of this book, this is it. This is the quick and dirty five-minute reference guide from what Ive learned in Chile. Ill go into more detail as we move through the book.

1. Spanish

If you dont speak any Spanish, youll survive and do fine, but being able to speak just a little bit will make your stay much more fun.

Enroll in a Spanish class in your hometown. Take another one when you arrive. Play with Duolingo. While Spanish is not required as part of Start-Up Chile, you should take a crash course before you leave. Take a two-week course when you get here. I regret not doing it. I got even more out of Start-Up Chile once I started learning in earnest after my third month in the program. I made friends with more Chileans and set up a weekly happy hour with a new friend to better learn Spanish. There are many more opportunities for enjoying yourself when you can at least understand whats going on and participate a little.

2. Where to live

If youre young and are not totally strapped for cash, live in Providencia between the Salvador and Tobalaba metro stops, Barrio Italia or in Lastarria and Bellas Artes. Providencia is a little nicer, but Bellas Artes has been gentrifying since 2010 and is a cool, walkable place to live. These areas are close to the metro, walking distance from bars, restaurants, grocery stores. When I first lived here, I lived right by the Pedro de Valdivia metro stop. I wished I had lived about 2-3 blocks off of Av. Providencia, as it is much quieter.

The vast majority of apartments are managed by brokers who charge you 50% of the first months rent upon signing a lease. You can find apartments yourself by looking online and you might find a non-managed apartment, but its not likely. Since youll likely pay a broker either way, I highly recommend working with a broker who is going to be on your side and specializes in helping foreigners rent apartments. Note: Two Start-Up Chile entrepreneurs and I started , to help SUP entrepreneurs find great accommodations and avoid problems with Chilean landlords. Weve helped hundreds of foreigners and SUPers find accommodation and tackle the reimbursement process from CORFO.