Corfo's venture capital committee has unanimously decided to terminate the Program for Financing Funds for Development of Indigenous Enterprises, an instrument created in 2020 that never became operational. The program did not receive a single application from venture capital funds or management firms during its lifetime. The decision was recorded in the minutes of a September 3 session obtained by Diario Financiero through Chile's transparency law.
A Program Without Applicants
The initiative was designed to support the creation and growth of businesses linked to Indigenous peoples through credit lines for funds investing in those companies. It offered financing ranging from US$4 million to US$12 million per interested fund, according to government websites cited by Diario Financiero. The only recorded interest came from MAS Recursos Naturales in 2025, but that approach never materialized into a formal application.
Why the Structure Failed
Sergio Montero, an executive in Corfo's venture capital department, told the committee that the problem was instrument design rather than a lack of projects. He identified three specific barriers: the term of the credit lines, conditions for selling shares in invested companies, and the difficulty of obtaining returns through dividends instead of share sales. The third barrier is especially incompatible with venture capital because funds measure performance at exit, not through dividend income.
The Dividend Constraint
Venture capital funds normally generate returns when they sell their equity stakes, but the program imposed restrictions on those sales and pushed for dividend-based returns. As a result, the vehicle resembled a loan with equity risk rather than a true fund, which no serious manager would accept. Montero added that Corfo's existing programs already allow funds to invest in companies with Indigenous partners without those same requirements.
A Broader Policy Shift
Víctor Besoain, coordinator of the venture capital department, explained that the idea originated with Corfo's Committee for Indigenous Development and Fomentation, which contacted various cooperatives without success. General Manager Marcela Guerra said the instrument was conceived around the productive potential of recovered Indigenous lands but was not designed from the requirements of fund administrators. Councilors concluded the program was not fully aligned with venture capital logic and requested that lessons be captured for future policy.
International Contrast
Besoain also noted that in 2023 Corfo changed its regulations to stop creating narrowly focused programs, with priority areas such as decarbonization and gender now receiving interest rate discounts on existing instruments. This shift means public capital is channeled through known vehicles rather than new bespoke structures. In Spain, public money operates similarly, with more than 1,200 million euros committed through existing funds by mechanisms such as Innvierte and Fond-ICO Global.
What Founders and Fund Managers Should Do
For founders, the practical takeaway is to review current Corfo instruments and rate discounts rather than wait for dedicated calls. For those structuring funds with public capital, the case highlights the need to examine loan terms, exit mechanisms, and return calculations before applying. A program with credit lines between US$4 million and US$12 million can still fail if its conditions do not match the economics of the asset class.
The closure of this program shows that public venture capital instruments fail when they ignore how fund managers actually operate. Terms, exits, and return mechanisms are not technical details, they are the reason a fund decides to apply or stay away. The enduring lesson for policy design is that discounts on existing instruments are often more effective than new focused programs that nobody uses.
Source: Diario Financiero