Top pitch deck slides from UV’s G6 Demo Day

The UTEC Ventures Demo Day last week showcased polished pitches from five startups. Founders of Check, Manzana Verde, MonkeyFit, Smart Menu, and Qimi presented for three to five minutes and stayed around afterwards to discuss their businesses.

The quality of both the presentation and pitch decks showed a lot of preparation. UTEC Ventures had invited René Lomelí of 500 Startups to attend and help the founding teams get ready.

Here are some of the slides that stood out:

The basics: Use a standard pitch sequence that includes these three slides.

Timeline: I find this to be one of the most helpful slides in a deck. It serves to get a snapshot of what the startup has achieved and where it is going. Founders can use it to effectively discuss learnings, pivots, and show they are at an inflection point. The slide below from Manzana Verde somehow achieves all of this without being to too overwhelming. It highlights key metrics and shows important milestones – as well as 5x growth during UV!

Manzana Verde timeline
Timeline (Manzana Verde)

Competitive Dynamic and Positioning: This is your chance to show you both understand the market, and have a distinct value proposition. The slide plots competitors on a graph that has primary attributes for users on the x and y-axis. It is a hard slide to get right, and some people recommend avoiding this format, but I think the team from Check did an effective job. The Check team did two key things right. First, they included traditional solutions, books and after school programs, rather than just logos of startups that do similar things (startups compete for users time and money, not only against other startups). Second, they put the Check logo on the upper right, correctly showing that Check addresses the two most important attributes they have identified for users.

Check lugar en mercado
Competitive Dynamic and Positioning (Check)

Team: This slide lets you talk through the what each team member brings to the table. Alessandra Ricci of Smart Menu did a good job of not repeating what is already on the slide, but adding detail about what each team member does and how they work together. I like how Smart Menu took the time to take great fotos in the same theme. To often this slide can be distracting with too many details. If you take good pictures, less is more for the slide. The Smart Menu team also achieved the perfect balance of understated power-poses!

Smart Menu equipo
Team (Smart Menu)

Innovative additions: Add a slide that is effective at getting across a unique, startup-specific, message.

Value Propostion: The slide below compares Qimi’s offering to that of its competitors. The slide caught my eye immediately. It is clear and doesn’t try to give too much information. Founders with software solutions for small businesses can use a similar looking slide.

Qimi barras
Value Propostion (Qimi)

Case Studies: Providing real examples is the best way to show you understand the client’s needs, get into the details and are data-driven. Increasingly, B2B startups are using cases studies in order to land clients and attract new investors.

Smart Menu caso de éxito
Case Studies (SmartMenu)

Culture: Most slide decks do not go much more beyond the founding team. Jose Arellano from MonkeyFit used the slide below to talk about his team’s culture and how they workout with users at fitness centers. It says “We have spent over 200 hours training alongside our customers.” The slide gave Jose a chance to spend a key moment at the end of his pitch sharing the pulse of his company.

You can’t tell here, but the MonkeyFit pitch deck also had fotos of its users filling the entire background of each slide. This may be hard to pull off for B2B software startups, but for B2C startups, full-slide fotos definitely can set pitch apart!

MonkeyFit 200h
Culture (MonkeyFit)

Congratulations to these five startups for going through the UTEC Ventures 6th Generation program and sharing their startups with the world. I appreciate them sharing their slides here with me.

For more ideas about pitch deck, see: The pitch deck forwards and backwards.

A Series A

If there was any doubt that Peru is a dynamic player in the regional startup ecosystem, Crehana has put that to rest.

The Edtech startup led by Diego Olcese and Rodolfo Danino, has been supported by a vibrant local ecosystem. In 2014, Wayra Perú first funded Crehana when is was still a minimum viable product called Flikn.com. In 2015, Crehana was a beneficiary of the second generation of startup Peru. Then in 2016, Diego was selected as an Endeavor Entrepreneur.  

Crehana Series A.png

Now, Diego and his team at Crehana have raised a $4.5 million Series A round from Accumen, Dila Capital, and Mountain Nazca. With this round, the startup adds an impressive group of global and regional investors to an investor base that already included, ReThink Education and Emerge Education, venture capital funds with deep experience in the education sector. 

With this round, the largest to-date for a Peru startup, Crehana joins the list of startups that have received funding from regional venture capital funds. In 2018, MiMediaManzana and Turismoi raised funding rounds from Axon.

Peru is now solidly on the regional startup map.

 

Show your colors

The first time I saw Hugo Piñarreta pitch his AgTech startup Agros was at the PAD DemoDay. He was wearing work boots and a collared shirt with the company logo. He didn’t dress like other startup founders, but he did look like he just came from a client meeting in the field, which transmitted a powerful message.

When you pitch, be true to yourself and don’t hold back. Use the time to show off your emotions, product and even your startup logo. It is an effective way to connect with potential investors and pitch competition judges.

Martín Beas Núñez (getlavado) and José Arellano (MonkeyFit) showing off their startup logos

At the UTEC Demo Day, I saw Jose Arellano with a MonkeyFit logo on his shirt and Martin Beas Núñez with the getlavado logo on his hat.

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The Wabu logo on a light post in Lima

Most of the time I see Fernando D’Alessio, he is wearing a Juntoz.com jacket. Walking around Lima I often see the logos of Wabu. One of the founders, Daniel Portugal, has even covered his car with a big Wabu logo.

I’m not suggesting you go that far, but there is no reason not to wear your logo proudly. You may inspire investors or talented team members to join you in your mission. At the very least, it is marketing that will help lower your all-important Customer Acquisition Cost!

Lima Landing

Over the past few years, global startups from the U.S. and Spain, including Uber, WeWork, Cabify, Glovo have quickly built up teams in Peru .

Now regional startups are validating the growth opportunity in Peru, especially in mobility, delivery and logistics in Lima. Rappi recently entered by teaming up with the Diloo founders. Now Grin and Liftit have raised rounds to finance regional expansion and are hiring teams in Peru.

Lima Landing

Rappi in Lima is led by Jose Ignacio Bernal and Eugenio La Rosa, who founded Diloo, a UTEC Ventures portfolio company in the hyperlocal delivery space. Their titles are City Manger, rather that Country Manager, which gives some insight on Rappi’s model and how it views the region.

Grin hired Dusko Kelez, previously at Taximo, to launch operations in Peru. The company recently combined with Yellow and raised a $150 million round.

Liftit just announced a large round from regional investors, including Jaguar Ventures and IFC. Brian York, founder of Liftit, spoke of the startup on a podcast with Nathan Lustig. Liftit is currently on the lookout for talent to lead the Peru operation.

My favorite night of the year

I enjoy DemoDays. Founders get five minutes to present to 50 (or over 100!) people the startups they dedicate every waking hour to building. It’s not the full picture of who they are, or the potential of the startup, but it’s fun, and a great way to get people together.

No one does it better in Peru than UTEC Ventures. The Demo Day for batch 6 is today, January 31st. Jose Deustua and his energetic team put on a good show with great startups. After the pitches, participants can stay and meet the teams. Here is a video of last year’s event

UV DemoDay 2019
UTEC Ventures Demo Day announcement

The UTEC Ventures alumni demonstrates the quality of the program. Joinnus and Mesa247 are a couple of the UV startups that have achieved solid traction and attracted investment post-acceleration. At Angel Ventures, we have invested in two UV alumni: Fitco and Riqra. We expect to invest in more.

UTEC Ventures is a proven breeding ground, not just for great founders, but also for startup talent. Whether you are a current founder, potential investor, or looking to get plugged into the startup community, the UTEC Ventures Demo Day is a great place to start.

It’s still not too late to register: UV DemoDay 6G.

I hope to see you there.

 

How do programmers in Peru rank?

Three years ago, Peru wasn’t on the map when it came to software development. HackerRank didn’t even include the country in its 50 country country leaderboard. 

This is starting to change:

Peru’s increasing attractiveness as a source of programming talent could be due to two factors: (i) a growing talent pool and (ii) the comparatively low cost of hiring talent. A recent StackOverflow report indicates that 33% of programmers in Peru are looking for jobs. This is good news for employers since median salaries for developers in Peru are around $13,000 annually compared to $17,000 in Mexico. 

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StackOverflow’s Developer Salary Survey

Continue reading “How do programmers in Peru rank?”

Scale-ups making a mark

Crehana, Tekton Labs and Xertica are making a big impact on Peru’s startup scene. These scale-ups are led by tech savvy founders who have proven ability to scale their companies.

Scale-ups

The companies are:

  • Hiring top-talent
  • Growing their teams quickly
  • Expanding regionally with operations and customers outside of Peru
  • Building business that generate cash
  • Attracting interest from regional and global investors (Salesforce Ventures and Endeavor Catalyst invested in Xertica)
  • Led by Endeavor Entrepreneurs who are giving back (Kenneth Lopez of Tekton Labs is the Endeavor Entrepreneur of the year in 2018 for his hours giving back to other founders and Saul Chrem of Xertica is a board member of startup Quantum Talent)

This is good news for our startup ecosystem. Based on a recent Endeavor Insight(1) report, “entrepreneurship communities become productive by generating a relatively small numbers of companies that reach scale.”  By building these companies, founders Diego Olcese, Kenneth Lopez, Saul Chrem and Luis Arbulu are playing a part in making Lima a productive entrepreneurship community.

Continue reading “Scale-ups making a mark”

Corporates in Peru look to startup founders for help

Yesterday fans of Universitario, a historic football team in Peru, became fans of Joinnus, a once-small startup launched in Lima. The fans used Joinnus’s ticketing platform to purchase 30,000 seats in 10 hours. This beat the previous record, for a Peru national team game, of 72 hours.

Universitario fans reacting to the success of the Joinnus ticket sale on twiiter
Fans of Universitario reacting to the Joinnus ticket sale on twitter

Joinnus is one example of a startup that a large corporate player in Peru has invested behind. In 2017, Grupo RPP, a large media company, backed Joinnus’s tireless founders Carolina Botto and Domingo Seminario with a financing round.

In another example, BCP, the largest bank in Peru, announced it had teamed up with the startup Culqi to help improve the bank’s payments platform.  Culqi is led by Amparo Nalvarte and Nicolas Di Pace, who launched the startup after graduating from Universidad del Pacifico.

These founders are teaching some of the biggest corporations in Peru how to innovate and scale. Technological disruption has come to traditional sectors like media, banking, and retail in Latin America. Even the most dominant incumbent players are turning to startups. Learning from startup founders is one way, and perhaps the best way, for them to stay ahead. 

This is exciting for Peru’s startup community. Even with the odds stacked up against startups, founders do have a chance to make it big – 30,000 adoring fans big.

Venture capital activity in Peru

Last year was a takeoff year for Peru startups seeking funds from venture capitalists.

Here a list of investors who were active in 2018:

Another Peru-based venture capital team is Ataria Ventures, which invests in startups in the U.S. and Israel.

Other funds including Mountain Nazca, DILA and Jaguar Ventures are talking to founders in order to be in a position to invest at later stages.

This is great progress over the status last year as shared by Nathan Lustig of Magma Partners.  On the PECAP website, there is a link to a comprehensive database of venture capital investors in Latin America.

It is a solid (and growing) list! If you are a startup founder looking for venture capital in Peru, or an investment professional looking to get into the space, there are great options for you at all different stages of the startup lifecycle.

It takes a village to raise a startup in Peru

Building a successful startup in Peru is hard enough. You don’t need to try to do it all alone. There are many free resources available and people willing to help you on your journey. 

Whether you are a founder or investor, you will need all the help you can get. Seeking out help (especially equity free help!) won’t take away the merit from the founding team and will increase your probability of success. It shows you are open to learning and putting together the best group of people possible to lead your startup.

If you look at the pitch deck or cap table of many successful startups in Peru you will see they have had help along the way. Most are beneficiaries of the StartupPeru program. Many have passed through one (or more) accelerator programs. Almost all of them have multiple investors who have jumped on board at different moments in time.

Co-founders, team members, mentors, investors, and ecosystem allies love to brag about being a small part of your startup’s story. It’s okay. Free press and referrals are great.

If you are able to achieve an exit one day, you will take home more money the more equity you retain, but you don’t get extra credit for doing it all by yourself. You may even meet some great friends along the way.

Accelerated start to 2019

January has started off with a bang in the Peru startup community, with multiple options for accelerating your startup.

Endeavor Peru ScaleUp is already on its 3rd generation. The program connects founders with top global mentors. 500Startups is a great opportunity to receive capital from a top investor in the region and enter Mexico. Peru startups Decompris, Apurata, Rebajatuscuentas, and Fitco all participated last year. Sully Siucho of Rebajatuscuentas shares here what see learned in the 500Stratups program.

Keep in mind that some programs like Liquid Ventures Studio have rolling admission that allow founders to apply any time during the year.

These programs provide opportunities for exposure, mentoring, and (sometimes) money, for your startup. They can also be a great way to travel and explore market opportunities outside of Peru.

The application process will give you a good chance to sit down with your co-founders to put in writing your goals for the year, articulate your value proposition, and practice your pitch. If you don’t get in, don’t despaír. It’s normal! and doesn’t mean you won’t get in next year. Simply going through the exercise will be beneficial. It’s only January, there will be more opportunties throughout the year!

Startups and Creative Destruction

Change is a healthy sign for a growing economy. The number of companies that rise and fall in the global economy over time is striking.  Key benchmarks like the Fortune 500 or Dow Jones Industrial Average have a healthy turnover of members. For example, only 60, or 12%, of the Fortune 500 companies in 1955 where still on the list in 2017.

Creative Destruction

There is economic theory behind the turnover of top firms. Joseph Schumpeter, an austrian economist, promoted the positive effects of Creative Destruction. Schumpeter observed that, in a healthy economy, new products and business models destroy incumbent players. The continual emergence of new leaders is a sign of a well-functioning economy.

Status quo in Latin America

This type of change seems less prevalent in Latin America. Large business groups and economic inequality combine to drown out innovation and cause economic stagnation. Success stories do exist of large businesses that were built from scratch, but the reigning leaders seem to solidify their dominance and stay at the top for a long time.

Last year, I saw a challenge by political scientist Joaquín Rey that resonated with me: “en el empresariado . . . toca renovación.” He was reflecting on CADE, an annual conference for business leaders in Peru. I agree with Joaquín and believe that the startup community, led by founders, has an important role to play in this renewal.

Startup’s role

Startups add a dynamic element to the economy. They grow quickly, often die out, but always provide a way for a relentless team to jump in and create disruption. 

Pivots, customer churn, and employee turnover all occur in a startup’s natural lifecycle. Though excruciating, they are necessary stopovers in a startup’s path to success. While individually they are often seen as failures, together, they are the spark plug for disruptive changes. The type of changes that can impact an entire economy. 

Investing behind startup founders is one important way to make positive economic and social impactStartup-led innovation will lead to the creative disruption that Peru’s economy needs. A dynamic startup ecosystem feeds off change and destruction to drive the creative forces that will grow the economy.

Drag along and tag along 101

Drag along and tag along are legal terms that refer to clauses in a shareholders’ agreement. Together, they help align founders and investors to facilitate the all-important exit. 

  • A drag-along clause allows majority of shareholders (or a certain group of controlling shareholders) to make other shareholders participate in the event of a sale.
  • A tag-along clause, or co-sale agreement, allows minority shareholders to participate (go along) in a transaction led by controlling shareholders, often the founders.

At first glance, the drag along is friendly for founders and the tag along for minority investors, usually angel investors. Digging deeper, they act as a pair to align investors and facilitate a sale or liquidation of the company. See this article by Delvy Law & Finance that provides a great explanation (in Spanish)of the duality of these clauses.

Here are a few parameters for seed stage founders and angel investors:

  • Look for these clauses in the term sheet – they will also be in the Shareholders’ Agreement (Convenio de Accionistas)
  • In early stages of a startup, the founders should be the controlling shareholders
  • Angel investors, as minority shareholders should be able to tag along – they backed the founding team so should be able to go in the team goes
  • Seed investors should sign a drag along and tag along clause – this aligns everyone together in one solid group
  • Founders should avoid angel investors that seek a drag along clause that allows the investor to drag along the founders – it makes sense to wait (Series A) to share this right
  • In later stages (ie. Series A) the venture capital investors often join the controlling group as preferred shareholders that can drag along other shareholders.

Some examples of what these clauses look like in English and Spanish:

Example in Spanish from open-source documents provided by PECAP. You can find them in the Convenio de Accionistas under article 4.3 and 4.4.

“Derecho de acompañamiento (tag along): En caso uno o más de los accionistas que – individual o – conjuntamente tenga más del 50%+1 de las acciones con derecho a voto de la sociedad (“Accionistas Controladores”) reciban y acepten una oferta de un tercero adquirente para la transferencia directa o indirecta del control de la Sociedad; el Inversionista tendrá el derecho y la opción de sumarse a la venta bajo los mismos términos y condiciones y vender todas o una parte de sus acciones.”

“Derecho de arrastre (drag along) “Bajo un escenario de venta de control, los Accionistas Controladores que deseen vender la totalidad de sus acciones en la Sociedad . . . podrán exigir a los demás accionistas de la sociedad. . . la transferencia en venta del íntegro de las acciones”

Example in English from Venture Deals, Second Edition, by Brad Feld and Jason Mendelson:

“Drag-along Agreement: The holders of the (Founders/Common Stock) Series A Preferred shall enter into a drag-along agreement whereby if a majority of the holder of Series A Preferred agree to a sale or liquidation of the Company, the holders of the remaining Series A Preferred (and Common Stock) shall consent to and raise no objections to such sale.”

“Co-sale Agreement: The shares of the Company’s securities held by the the Founders shall be made subject to a co-sale agreement (with certain reasonable exceptions) with the Investors such that the Founders may not sell, transfer, or exchange their stock unless each Investor has an opportunity to participate in the sale on a pro rata basis . . .”

 

Equity for intros?

Your startup’s equity is too precious to trade for contact information. If you are a startup founder, please don’t give up equity to someone in exchange for access. If you work hard, and the startup community is healthy, you won’t have to.

When I think of startup communities, I see an expanding pie. Startups use technology and scaleable business models to quickly reach a large number of clients. They create new markets enter existing ones that are growing. If this growth occurs in a healthy ecosystem, more and more capital will be available to fund new startups. The pie grows and the cycle continues.

The one exception is the cap table. It’s limit is, and will always be, 100%. Every percent is crucial and should be used optimally. Giving equity away can be a very effective tool for attracting and motivating talent or capital. It should be reserve for people who are deeply involved in the day-to-day business or who invest capital and add value.

So don’t give equity away to someone because he or she “knows the industry,” has a lot of great contacts to introduce you to or promises to help out in the future. If you are persistent and have a good product, you will get to the right people yourself. That is part of your job as an entrepreneur.

There is no shortcut to building a strong network. Work hard to build relationships and rely on ecosystem actors you know well to help you. If the startup community is functioning well, you will be able to meet the right people for free.

Here are some alternatives to avoid trading equity for intros:

  • Build relationships with fellow founders. When the time comes, they can be a great source of intros.
  • Apply to government programs like Startup Peru for equity-free cash
  • Give away equity only after an intro produces a tangible result (ie. closed investment or commercial contract)
  • Enter accelerator programs that provide a breath of services, knowledge, and contacts that will help your startup on multiple fronts
  • Incentivize advisors with equity only after they put some money in

Keep working to build a genuine network yourself. You, and the equity of your co-founders and future employees, are worth it.

9 disruptive startups in Peru

As the Peru startup community grows, so does the number of startups with truly disruptive solutions.

These startups have some combination of the following characteristics:  (i) tech savvy co-founders, (ii) regional or global market from day one, (iii) data-driven decision-making, and (iv) new or tweaked business models.

Here are is a list of 9 startups in alphabetical order:

  • AmigoCloud – Collaborative mapping platform with a cloud-based dashboard
  • Anda – Watch with a has messaging system and symbol language to allow parents to connect with their children
  • Apurata – Loans to the un-banked in under 30 minutes
  • Arrivedo – User-centric guide that helps travelers to find and enjoy experiences around their hotels
  • Ecovol – Device that lowers gasoline consumption by up to 20%
  • Quantum Talent – Software with AI to automate recruiting and selection
  • Simcase – In-class simulations that allow students to have engaging learning experiences on-campus
  • Space AG – Imaging and software solutions that help optimize crop production
  • Valia – Data-driven real estate platform to provide information to owners, buyers and renters.

This list is not complete, and does not include many edtech and fintech startups which are all providing solutions that will bring transformational impact to those industries. I expect this list will grow over time as more founders in Peru push the envelope and seek to disrupt the status quo.

The best of the best – Seedstars comes to Peru

This week marked the Seedstars LATAM Summit (#SSWLATAM) in Lima, Peru. It was a punctuation mark to a year full of startup community events in Lima that included Foro Xcala, 2 fintech conferences, PVCC and WeXchange. By my count, that is 6 regional events  for the calendar year. Add to this the multiple other local events, and we have had a great year in the Peru startup community.

The Seedstars team was tireless and seemingly everywhere all at once throughout the summit. A key member of the team, Romulo Navarrete, is a peruvian who is making his mark in the global startup community. UTEC Ventures was the host of the summit.

img_6712-364588158-1544185922388.jpg
Romulo Navarrete of Seedstars leading a panel prior to the Investor <>Startup 1:1 meetings

Seedstars, besides putting together a content filled 3 days, held 1-1 investor meetings for the 20 winning founders who came to Lima. These founders were carefully selected as the representatives from countries across LATAM. Check them out. Literally the best of best from each of the participating countries. The Peru-based participant was Rebajatuscuentas.com.

Day 2 of the Summit was highlighted by one of the best, most dynamic founder-investor meet-ups I have attended. Investors rotated between 20 tables where founders from each country had their pitches ready. Some of the tables were two and three investors deep. I’ve never seen that before in Lima. . . 

Seedstars Twitter handle says: “Talents are everywhere.” This week (and this year) that has proven true in Peru.

Why play catch-up when we can integrate?

We often talk about Peru startup ecosystem in terms of how far behind we are to neighboring startup ecosystems and what we need to do to catch-up.  In the meantime, founders are pushing the envelope by expanding to new cities across the region. They are demonstrating that the way to accelerate our growth as an ecosystem is not to catch-up, but to integrate.

Here are some examples of how this is happening in practice:

A siloed approach (i.e.  focused only internally) to startup community development will be limiting in a small market like Peru with challenges of talent and capital. We can help founders by working to get foreign investment (capital) into startups in Peru and make Lima a destination for founders (talent) in the region.

Let’s stop playing catch-up. Let’s connect and integrate into an increasingly dynamic and interconnected startup community in Latin America.

5 ways to reduce your startup’s accounts receivable balance

B2B business models often provide a recurring revenue stream to startups. This can result in a high Customer Lifetime Value (LTV).

However, getting B2B clients to pay on time (or at all) is often tricky. Patricia Teullet recently brought this subject to attention during CADE Ejecutivo, a forum for business leaders in Peru. 

For cash-starved startups clients’ payment policies can have real consequences on cash burn and financing needs. If you go after large clients, keep in mind that not only is the sales cycle is long, the payment period is also long, sometimes 60 to 90 days.

Clients often have set payment schedules and are usually inflexible. This can cause accounts receivable for B2B startups to increase. As founders and investors watch revenue growth, they should also keep a close eye on account receivable.

I recently received some ideas from Saul Chrem, co-founder & EVP Marketing and Business Development of Xertica. Xertica is a successful B2B business in Latin America.

Here are some tips Saul and other founders have offered:

  • Charge for setup, implementation and pilots. You may be surprised that clients (especially the ones that will provide long term value) will be willing to pay for this work.
  • Be explicit in the terms of service. Add into your service agreements not only consequences of shutting off the service, but also fees for turning it back on.
  • Incorporate accounts receivable into your metrics. Your true LTV will be lower than you think if your customers are paying late (or not at all).
  • Track accounts receivables by due date and plan ahead to identify certain cut off dates.
  • Create automatic alerts prior to cutting off service. The more automatic these messages seem, the better.  This is profesional and is an effective way to avoid awkward and inefficient calls to collect payments.

Rather than turn away clients, these practices will help filter out less interested clients. If you start with, and stick to, these principles, you will train your clients to work within a scalable process. This will allow your startup to achieve growth with a healthy group of clients that will provide sustainable LTV/CAC ratio.

Founders helping founders

This week during CADE Ejecutivo, a conference for business leaders in Peru, Endeavor Peru is playing an important role by showcasing some great startup founders. Endeavor is hosting various activities, including startup pitches, in one of the conference areas.

This year marks the 5th anniversary of Endeavor Peru. From the beginning, Endeavor recognized that founders are key “nodes” of a healthy startup community. As the startup community in Peru matures we are seeing more and more founders working with other founders as advisors and mentors. This is a natural evolution of the startup ecosystem and a great sign. Endeavor Entrepreneurs have been at the center. Here are a few examples:

These are four entrepreneurs who, while fully immersed in their current companies, still find time to circle back and get involved with other founders. It is part of their founder DNA.

It is no surprise that all four founders are Endeavor Entrepreneurs. Endeavor Peru, a pioneer of the startup ecosystem in Peru, continues to leave a mark by reinforcing the benefits of having founders give back. This creates a mutually beneficial virtuous cycle that will sustain and push our startup community.

5 steps to foster venture capital in Peru

Over the last few months, I have received some input from founders, investors and advisors on suggestions for promoting the venture capital industry in Peru. 

Here are five steps that will improve the prospects for venture capital in Peru:

  1. Reduce costs for startups. Tech startups in Peru face a withholding tax (retención) on technology services purchased from overseas. Vital expenses, like Amazon Web Services and Facebook Ads carry an additional burden that the startups are unable to deduct. This is counterproductive and hurts startups.
  2. Implement tax reform that facilitates early stage investing. Today local investors pay a 30% capital gains tax for investments in foreign companies and 5% tax for Peru-based companies. Many of the most successful cases of Peruvian startups will end up (or launch) as US-based companies. An apparent incentive for investing locally becomes a disincentive for investing in startups.
  3. Empower emerging managers. The government and local investors can take actions to incentivize the creation of early stage funds. As an example, IDB Lab has invested in 74 venture funds over the last 20 years. We should put the investment decision making power in the private sector and promote startup investing at a regional level (not just peru-only investments).
  4. Facilitate the entrance of local pension funds as Limited Partners. This is a hard one. And will take time. But we must start a dialogue now. In Mexico, an initiative that created Certificados de Capital de Desarrollo (CKD), allowed local pension funds to invest in funds as limited partners. Venture funds are small and carry risks, a hard combination for large pension funds. But pension funds are an essential investor in an industry that will have long term gains in innovation for the county. This will, in turn, benefit all peruvians.
  5. Learn from our neighbours. We are behind in the region, but we can accelerate our learning curve as an ecosystem by building on the many success cases (and learnings) from other countries in Latin America. In Mexico, the number of the number of venture capital funds grew from 15 in 2011 to 63 in 2017. In Chile, CORFO has initiatives to promote venture capital by provided matching funds. 

It is in our interest as a startup community to promote these changes. Many ultimately depend on government legislation, but it is our job to begin making the case by articulating the benefits of these ideas in a collaborative way.


Thanks to Jose Miguel Porto, Aldo Franciscolo, Andres Benavides and Vicente Leon for their input on this post. I originally, put ideas together in Spanish for an article in Revista Procapitales. You can access the article here.