I am currently participating in the 3rd round. I stay in Santiago. It's rated #1 on the NYT list of 41 places to visit last year. http://www.nytimes.com/2011/01/09/travel/09where-to-go.html?...
My experience with Chile and Startup Chile have been very positive so far. For me, it's the best way to bootstrap a company.

Here is my answers to a few of the FAQs.

Lack of Mentorship

Though there is no mentorship program from Startup Chile. There IS a 3rd party program that matches you up with powerful Chilean business people.

You fill in a questionnaire about what you are looking for, and they try to match you up. I was looking for someone with lots of marketing experience and gets technology. They come back with exactly the right guy for me. My mentor works for TVN (equivalent of CNN in Chile) and used to be marketing manager for P&G, BP, and Coca-cola.

I frankly cannot imagine having a mentor with similar experience elsewhere. Being a Startup Chile entrepreneur definitely gives me lots of leverages within Chile.

Reimbursement

This has been a concern for lots of people. But it comes down to being organized and be sure to bring enough dough down here.

If you keep track of the spending, it's really not such a big deal. Sure, paper work sucks. But it's nothing that an organized person cannot handle.

If you have hard time adopting to rules, look elsewhere. Seriously, you probably should just take a job and not play the survival of the fittest game.

Not SF

I've never stayed in SF. But there are lots of Startup Chile participants who had lived in SF in the past. Sure, it's the center of the universe for startups, but the price you pay for living in SF or even just another North American city is the tunnel vision.

Living in Chile has given me so much more perspective about how the rest of the world operates. This could be handy down the road.

Giving back to Chile

You can travel to teach entrepreneurship in other regions of Chile. It's a great way to travel to other regions of Chile as well as giving back what you know. I am half way through the program, and I am already done with my RVA points. It's really pretty simple and fun.

There are 20 of us who taught entrepreneurship in a university in Temuco. Where is that? Exactly, how else would you travel to the beautiful southern part of Chile, teach university students about entrepreneurship and get almost all travel expenses paid for?

Language Barrier

There are tricks to go around this.

I am paying a Chilean intern to help me with setting up customer development meetings. So far we have done 5 sessions in Santiago. Almost all of our clients speak English.

And if you want to learn Spanish, the program pays for the tuition!

Below is a list of my surprises so far.

Friendly Chilean

I got invited to Chilean family parties. I served tequila to grandpa all the way down to the people who are barely legal to drink. And I speak very little Spanish. I am totally surprised by how friendly and welcoming Chileans are to foreigners. If you are friendly and positive, you will have little problem adapting.

Living expenses

By far, this is the biggest surprise for me. Before coming to Chilean, I read some report saying that Santiago's living expense is 30% of that of Vancouver. That totally throw me off.

The living expense here is actually pretty HIGH. I would argue it's pretty much the same as any other North American cities.

But the program pays you a sufficient salary as well as your monthly rent. So, that definitely helps.

Other Entrepreneurs

This has been stated over and over again, but I didn't expect to meet so many talented entrepreneurs from all over the world. I got helpful feedback on my product from people who worked at 37signal, pivotal tracker, london school of economics, stanford, harvard, microsoft, techstar, Skype… The list goes on an on.

The community here is superb. No wonder it was recently rated #12 tech hub in the world:
http://techcrunch.com/2012/04/10/startup-genome-compares-top...

Conclusion

Maybe I am just very lucky. But I cannot imagine what I would do if I didn't get into Startup Chile. Prior to coming to Chile, I was burning through my savings on a $2000/month burn rate trying to bootstrap my business. My other option was to go back and find a job.

Startup Chile gave me the chance to continue working on my business. The only thing they ask for is to give back to the Chilean entrepreneur community. This is a no brainer for me.

The program is getting increasingly competitive every round. So, there is really no better time to apply to get your $40K equity free grant while living in the jewel of Latin America.

If you have any other questions, send me a tweet @tianjerry