Influence of a seed capital program for supporting high growth firms in Chile

Abstract

The main economic development agency in Chile, CORFO, implemented in 2001 a Seed Capital Program (SCP) to promote the development of high-growth firms. The SCP not only provides financial aid to entrepreneurs but also technical and administrative assistance through the support of incubators. Incubators may be universities incubators (UI) or private firms (NUI). The aim of this paper is to know the performance of beneficiaries according to the assistance of UI or NUI. A total of 238 new firms beneficiaries with the CORFO program were surveyed (84 supported by UI and 154 supported by NUI). Two logistic regression models were used, a first model to assess the probability that a new firm achieves positive sales, and a second model to assess the probability that the new firm reaches a high growth during the first five years from its inception. Overall, mixed results were found. SCP’s beneficiaries supported by either UI and NUI have the same probability of having positive sales when starting their operations. However, five years after started their operations, businesses supported by UI have higher probabilities of achieving high growth than businesses supported by NUI. The results highlight a positive interaction between private entrepreneurs, public agencies and university incubators.