Just over half of the 1,309 companies that have graduated from Start-Up Chile in the six years since the programme's launch, are still operating, a report revealed this week.
The report, by Chile’s economic development agency Corfo which runs the programme, revealed that 51% of those companies that have graduated from the programme are still in operation - about a third of which have remained in Chile.
The agency says the 51% figure is similar to that of accelerators such as Y Combinator and Techstars, but higher than the average success rate in Silicon Valley, (not more than 10%).
Launched in 2010, Start-Up Chile provides equity-free funding to early-stage start-ups from around the world. The funding is accompanied by a one-year temporary visa. In exchange, participants must take part in activities that promote entrepreneurship.
Just under quarter of graduate companies (24%) are run by Chileans, with the remainder of from outside Chile – most of them from Argentina, the US, Colombia and India.
Corfo noted that about half of those firms still in operation are run by Chileans. This it says suggests that the cultural link and ability to tap the local network are critical.
Revenue, value exceeds public funds
Corfo says the revenue generated locally by graduate companies still in operation as well as their total value, far exceeds what the government spends on the programme.
Those companies that have graduated and are still in operation generate sales of $276m ($143m in just the last year) and are worth a combined $1.35bn (about 34 times the almost $39.8 million spent by the Chilean government on companies that have graduated, since the programme's launch in 2010).
The figure is likely higher as just 21% have been officially valued. The figure also does not include Spanish ride sharing app Cabify, which is valued at $320m.
Of the sales, a total of $42.6 million were generated in Chile ($26m of this in the last year alone – three times what Corfo spends on the programme per year).
In the last year, firms that graduated from Start-Up Chile calls between 2010-2013 posted incomes up to four times higher than those from 2013-2016 calls. This shows that it takes time before supported firms begin to take off, says Start-Up Chile director Rocío Fonseca.
In the same way, graduates from the first three years of the programme have raised over twice the amount of funds as those from the last three years. About $421m in capital has been raised worldwide, including $30.5m in Chile.
An analysis of 46% of all graduates showed that they have generated 5,162 jobs worldwide, 30% in Chile, with monthly salaries ranging from $1,216 to $1,280.
Following its initial single seed-funding programme, in which participants got grants of $40,000, Start-Up Chile now accelerates 250 companies a year in three programmes, one for female-led start-ups, another for existing start-ups and a follow-on fund for graduates.
Start-Up Chile has long been seen to hold greater social than economic benefits (see this post), but the report reveals that it is now beginning to produce the latter too.
As Chile's economy slows after years of booming growth important will be whether the programme can continue to help foster high-growth firms - and get them to stay in Chile.
Timm is a South African who writes on small business. He last visited Corfo in 2014. Click here to sign up for the monthly Small Business Insight newsletter.
Stephen Timm is a