This is sad, if true (and it kind of rings true). As soon as I saw the reimbursement policy I got the sense that the program would be bullshit. I'd love to hear otherwise.
It would look really bad if the government of Chile was seen to be funding vacations. Unfortunately, that happens anyway. There are a bunch of people participating in the program that have done fuck all for the last six months and have little more to show for themselves than a Twitter account and some nice photos of the parties they've been to.
In all seriousness, this is why they shouldn't be investing in startups. Early stage investing is all about "throwing away" a bunch of money and (hopefully) making even more back when a subset of your portfolio wins big. If you're micromanaging each dollar/transaction, then you're really, really doing it wrong.
Saying investing in startups is all about "throwing away" a bunch of money isn't at all accurate.
The government of Chile isn't looking for a cash return on their investment, they're interested in the long term effects of having globally oriented entrepreneurs in the country interacting with future local entrepreneurs.
The recurring complaints you'll read are from people trying to spend the absolute minimum and running into problems. They are honest and thus reasonable, but without explicit numbers it is also hard to put them in perspective and judge the program. I think most participants will be very upfront in telling applicants they need to plan to spend more than 4k to take full advantage of the program. In our case we needed to submit around 7-8k in expenses to get the total 42k grant over about nine months. But if this is bullshit I would like to signup for more of it. My costs are at least 3k a month outside Chile. 1k a month is nothing. For teams of 2-3 people to complain about that given all of the advantages strikes me as lacking in perspective.
As far as the availability of funding, I know more people who have taken funding in Chile than have taken it in China where my business is ostensibly based. That said, the point of Startup Chile is not that you are promised future funding or that Chilean VCs offer great valuations (I had very little contact with them beyond some unsolicited emails). That seems to be a very American thing as with YC and TechStars. The point is that you DO NOT GIVE UP EQUITY during a period of high uncertainty while you iterate towards product-market fit. Anyone who can't raise funding on much better terms after participating probably doesn't have a very fundable business.