Entrepreneurship policy and firm performance Chile’s CORFO Seed Capital Program

  • Lucas Navarro


This paper uses administrative data from projects for which an application was
made to CORFO’s (Chile’s main development agency) Seed Capital Program
(SCP) during the 2008-12 period. This paper analyzes the likely impact of the
program-which is a subsidy provided to new, innovative firms-on Start, Growth,
and Survival. The projects are supported by sponsors in the application process.
Results of our analysis indicate that, controlling for observed characteristics,
projects that received the subsidy had a 9.5 percentage point higher probability
of starting to sell. Among created firms, subsidized (Treated) firms showed a
17 percentage point higher probability of significant Growth (in sales) and a
similar effect on Survival. The analysis also examined a change in the program
rules in 2011, whereby sponsors were paid based on performance instead of
fixed fees, as it was before 2011. For projects affected by the policy change,
results indicate no overall association of the program with the probability of
Start and a positive correlation with Growth and Survival. These results could
be a consequence of sponsors making better project selections for funding. The
change in rules would suggest that the program contributes more to the Growth
and Survival of new firms than to their Start, which would take place anyway.
The data available for this study did not make it possible to fully control for
potential selection biases, and thus the results may overestimate the impact of
the program. This calls to suggest to improve data collection standards to help
identify the true effect of this type of program.
Keywords Entrepreneurship programs, startups, seed investment, Chile
How to Cite
Navarro, L. (2018). Entrepreneurship policy and firm performance Chile’s CORFO Seed Capital Program. Estudios de Economía, 45(2), 301-316. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/51345/53731