CHILE Trends and Developments Contributed by: Francisco Barreda, Barreda Legal Tech
The Role of CORFO in Chile’s Venture Capital Ecosystem In recent years, Chile’s venture capital (VC) eco - system has experienced sustained growth, driv - en by initiatives from both the private sector and the government. One of the key players in this development is the Chilean Economic Develop - ment Agency (CORFO), a state agency that has played a central role in supporting entrepreneur - ship and innovation. This article explores how CORFO has influenced the VC ecosystem and how its policies have been crucial in encouraging investment in startups and early- and growth- stage companies. CORFO and Its Mission in the Entrepreneurial Ecosystem As a public entity, CORFO’s mission is to pro - mote the country’s economic development through innovation, entrepreneurship, and pri - vate investment. Within this context, it provides resources to startups to help them validate ideas, scale, and even fund research and devel - opment (R&D) activities needed to create and commercially validate prototypes. In the VC sphere, the agency has been a key driver in creating programs that promote invest - ment in new businesses, particularly in high- impact and technology-based sectors. CORFO works to reduce Chilean startups’ funding gap, especially in their early stages, where private investment is often limited. Through its funding programs for VC funds that invest in startups, CORFO facilitates access to capital for entrepre - neurs who would otherwise struggle to attract investors. CORFO’s Investment Funds and Programs CORFO offers three main programs that pro - vide credit lines to investment funds focused on
early- and growth-stage companies, including some of those outlined below • FET Program (Early-Stage Technology): CORFO provides loans of up to 300% of the private capital committed to the fund, with a financing cap of USD13.5 million. Fund investments must target early-stage technol - ogy companies with growth and innovation potential and with annual sales of no more than USD350,000. • FT Program (Early-Stage): CORFO provides loans of up to 200% of the private capital committed to the fund, with a financing cap of USD 15.8 million. Investments must be in early-stage companies with growth and inno - vation potential and annual sales of no more than USD3.5 million. FC Program (Development and Growth): CORFO provides loans of up to 100% of the private capi - tal committed to the fund, with a financing cap of USD24.8 million. Investments must be made in growth-stage companies with high potential and no more than USD23 million in annual sales. These funds have been crucial in stimulat - ing investment flows into Chilean startups and have fostered the creation of new VC funds in the country. According to CORFO’s latest Public Report on Venture Capital (from 1998 to December 2023), the agency’s contributions to these financing programs include: • USD1.069 billion in credit lines granted to investment funds; • 72 investment funds with approved credit lines; • 475 portfolio companies receiving investment; and
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