Acceleration – Looking beyond Peru

Founders in Peru are pushing beyond borders and seeking out regional and global acceleration programs.

Regional Accelerators v4

Participating this these programs can help founders:

  1. Think beyond Peru. These founders infuse a “regional DNA” in their startup’s culture and organizational chart.
  2. Find sector specific knowledge. Spacedat was recently accelerated through the NXTP Labs program and the process allowed founder Guillermo de Vivanco to find agriculture industry experts that helped him refine his value proposition.
  3. Enter new markets. The Startup Chile program has been a great first point of entry for Peruvian startups like Aprendiendio.la, Mesa247, Juntoz and others.
  4. Meet other founders that think big. Jean Pierre Carrere of TuRuta recently participated in the Plug And Play program in Guadalajara that has enriched his network with a fresh group of founders and potential investors. Entrepreneurship is a solitary journey and talking to customers and local investors is draining.  Building a mutual support network of other founders at different stages of advancement can be motivating. Founders can accelerate the learning curve and avoid pitfalls.
  5. Achieve a valuation bump. Founders that have gone through programs like 500 Startups in Latin America and Y Combinator in the U.S. have finished with a larger and more sophisticated network of potential investors. These can lead to larger rounds at higher valuations than local investors are prepared to invest.

Founders can be hesitant to go through these programs since they often require an in-person component and take equity of startups. Most founders I have talked to are happy to have gone through these programs and can point to direct or indirect benefits.  Talk to fellow founders that have gone through these programs in order to determine which is best for you. Fellow founders are also the best people to recommend you.

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Articles – Pedro Neira, Startups to Watch

Over the past week, two great articles were published that I would like to highlight:

  1. Building a Startup in LatAm: Advice from 4-time Serial Entrepreneur Pedro Neira Ferrand
  2. Peru Startup Snapshot: Part 1. Top 10 Startups to Watch in 2018

The first article is an interview with Pedro Neira, the founder of MiMediaManzana and an Endeavor Entrepreneur. Pedro spoke with Founders Network about his experience as a serial founder in Latin America. This is a must read for all leaders and feeders in Lima. Pedro is a founder that consistently gives back to the Peru startup community by sharing his story and meeting with other founders. He has also paved the way for future founders by educating local angel investors on how to evaluate and invest in startups.

The second article is a list of ten dynamic Lima-based startups by Ana Sofia Almagro of I-DEV. She gives a great summary of a diverse set of startups that have achieved traction in Latin America. Ana Sofia observes that these startups are “embracing Peru’s strengths” by identifying sectors like “agriculture, food, and biodiversity– as core opportunities that differentiate the country.” Startups that achieve success in Peru in these sectors will be well positioned to compete globally.

Valuation Benchmarks

Comparable transactions are a great benchmark for founders and investors and one way to get comfortable with a startup’s valuation as it is raising capital. There are many ways arrive at valuation and a range of values using multiple methodologies often provides more comfort than a fixed number extended out to various decimal places.

In a nascent market like Lima, building trust between founders and investors is essential and angel investors will need multiple reference points in order to be comfortable with valuation levels of startups. Most valuation exercises use various methods or inputs in order to arrive at an acceptable range.

The comparable transaction methodology seeks to group transactions of companies of similar size, sector and geography.  In the case of startups, stage is also essential. We don’t have a large sample size of comparable startup transactions in Lima, but PECAP has put together a report that does provide some input on current valuation levels. The latest Q4 report notes that the median seed road in Lima is $350,000 at a pre-money valuation of $1.9M for 16% of the equity in the startup.

This data is taken from startup seed rounds in Lima raising from primarily Peru-based investors. For startups with a regional or global client base or which are raising from money international investors, it makes sense to incorporate other comparable transactions outside of Peru.

Founders can consider that since these are median figures for Lima, founders raising larger rounds at higher valuations will likely need to provide some justification for the premium compared to the median level, and the round may take longer to raise.

Most startups will raise multiple rounds of capital at different valuations. Founders and investors can keep in mind levels of prior and potential future rounds when evaluating seed round valuations. Investors expect a valuation increase, often 1.5x-3.0x, from one round to another.

Early stage accelerators in Lima have typically proposed valuation caps around $500,000 and, later on down the road, Series A investors in Latin America may look for valuations below $10 million. A seed round somewhere in the middle of these levels will put the startup in a good position to align current and future investors. The current median level for seed rounds in Lima as reported by PECAP falls within this band.

Global and Regional Startups in Lima

Global and regional startups are entering Lima and having a relevant impact on our ecosystem. In some cases they represent a threat for local players, including startups. However, overall the effect is to inject the startup ecosystem with talented, tech-savvy managers.

For this new crop of first-time founders, larger startups are a great training ground. Working as a country manager or key professional in a well-funded global startup in Lima is a founder-like experience. Arguably more relevant than earning an MBA or working in a management position at a large corporation in Peru. These founders have experience launching and leading agile teams through a rapid growth phase. They also understand best practices in technology development.

Regional Startups
Regional Startups in Lima

One example of this profile of founder from a well-funded regional startup is Facundo Turconi, who went from country manager at Afluenta to found Solven. Facundo successfully raised capital from local angel investors in Lima and was selected for the Endeavor Scale-Up program. Another founder, Luis Miguel Rubio, formerly of OLX,  recently launched Decompris. Luis Miguel is one of two Peruvian founders to go through the recent 500 startups batch 8 in Mexico.

Global Startups
Global Startups in Lima

Some important examples of founders coming from global startups are Courtney McClogan, who led Cabify’s marketing operation from Lima prior to launching Runa and Carlos Lau, formerly Uber’s operations and logistics manager in Lima and now founder of Kurios.

I expect big things from these four founders.  Watch out for them and others like them. I am confident that global and regional startups will continue to churn out future founders who will be key drivers of the Lima startup ecosystem.

Service providers for startups

Startups are often looking for expert opinions on legal matters, technology and capital raising. PECAP has published a helpful list here: Directory of startup service providers in Lima. The list has contact information for some companies that have worked with startups before and have good references.

There are many ways for startups to find expert advice. Most accelerators and incubators have mentors committed to provide help for free. Some of the people listed in the directory are also mentors. However, startups are initially small, with limited resources, so is often hard for services providers to foresee how startups represent attractive clients.

I encourage all ecosystem actors to actively integrate these service providers into the Lima startup ecosystem by referring them to others and holding them to the highest standards at accessible prices. The more startups they work with, the greater level of knowledge sharing we will achieve and the more likely these service providers will find feasible (low cost) ways of supporting startups. We can create a virtuous cycle that mixes both open source for basic standards and paid services for specific, expert help. The service providers will, in turn, become increasingly more sophisticated.

If you have additional references of service providers please add them to the comment section below or contact PECAP to ask them to update the list.

 

Media – Getting the word out

Media plays a big role in developing our local ecosystem in Lima. Startups benefit from sharing their stories without spending money on marketing.  Positive spotlights on founders and their startups can help attract both customers and investors.

Local: I like the Start Up Peru Facebook feed for daily updates on startups and events.  They also have good interviews through CafeSUP, like this recent one with Rodrigo Lopez from Arrivedo.  Weekly print publications like the Dia 1 section of El Comercio and SemanaEconomica often have sections dedicated to startups. Gan@Mas is a monthly magazine that spotlights ecosystem actors and provides summaries of events. It also has a digital subscription.

International: I encourage entrepreneurs and ecosystem actors to share their stories to a wider international audience as well. Sites like LatamList, PulsoSocial, and LAVCA are always looking for good content and news about regional expansion and fundraising rounds.

We can be proactive in reaching out to media so that the rest of Latin America learns more about the growing Lima startup community. Founders are busy, so mentors and investors can help by writing articles and connecting them with media to get the word out more effectively.

 

Startup Metrics – GMV

Startups que han logrado tracción de usuarios y ingresos pueden empezar a hacer un seguimiento de sus KPIs (key performance metrics) y KFIs (key financial metrics). Founders escogen las métricas que son las mas relevantes para su startup. Las métricas pueden variar de una startup a otra y para la misma startup durante su trayectoria.  Founders deben compartir esas métricas claves con sus equipos e inversionistas.

El mejor articulo que he leído sobre métricas es 16 Startup Metrics del blog de de Andreessen Horowitz.  Explica métricas que aplican a muchas startups.

Una métrica que veo mucho en modelos de marketplace en Perú es “ventas”.  Recomiendo reemplazar este concepto con un seguimiento mensual de (i) monto bruto transaccionado (gross merchandise value) e (ii) ingresos (revenue). Ver #6 de 16 Startup Metrics . Esas métricas en paralelo expliquen en monto que dinero que pasa por el marketplace y el valor que la startup extrae por conectar el vendedor con el comprador.

 

Start Up Perú – 6ta Generación

Start Up Perú está en el proceso de seleccionar su 6ta generación. A la fecha el programa ha seleccionado a más de 300 founders para dar un impulso a startups con fondos de InnóvatePerú.

El programa se está fortaleciendo y creciendo en tres áreas que considero muy positivo.

1. Data. Start Up Perú está analizando el rendimiento del programa y el impacto sobre las startups ya seleccionadas en las primeras generaciones. El viernes pasado en el Foro Xcala, Andres Benavides, Líder del programa, mostró la evolución en ingresos de las startups seleccionadas previamente. Esa data les va a permitir tomar mejores decisiones en el futuro.

2. Selección. El proceso de selección es algo que el equipo de Start Up Perú ha buscado mejorar continuamente. Se ha incorporado jurado externos con experiencia en evaluación de startups. Muchos de esos jurados son founders de Perú y Estados Unidos que han vivido los retos de lanzar una startup.

3. Plug. Este año una nueva iniciativa de Start Up Perú llamada Plug, va a dar apoyo a startups extranjeras que desean entrar al mercado peruano. Tener mas startup extranjeras en Perú va a agregar un nivel de dinamismo a nuestro ecosistema a través de talento e innovación.

Start Up Perú está enfocado en mejorar su proceso y promover nuevas iniciativas. A la vez, está dando más protagonismo a actores del ecosistema para tomar mejores decisiones e generar may impacto.

Lima’s startup ecosystem

I really enjoyed reading this recent article on Lima’s startup ecosystem. It is a comprehensive take on the progress and status of our startup community. I like how it highlights the role of various actors: WAYRA, Startup Peru, PECAP, all working together and each contributing in their own way. I also like how it correctly identifies serial entrepreneurs as a key driver of the ecosystem.

The article comes from a positive angle. We are often asking “what is missing?” or “where are the problems?” and lose sight of the great progress that is being made. Let’s keep spreading the word and backing founders so that what is going on in Lima will no longer be a secret.

Updates mensuales

Los updates mensuales recurrentes generan confianza y puedan ayudar en encontrar nuevo talento, contactos comerciales y futuros inversionistas. Recomiendo compartir información básico con stakeholders importantes en los primeros días de cada mes. Consistencia (formato similar) y frecuencia (mensual) son claves.

Quisiera compartir este template para founders interesados en mandar updates mensuales a sus inversionistas y stakeholders. El template está basado en los mails que recibo de Fernando Langschwager de Aprendiendo.la y Jaime Chiarella de Riqra. Las dos startups han sido acelerado por UTEC Ventures y han recibido inversión de algunas redes de inversión ángel en Perú. En el caso de Riqra, yo soy uno de los inversionistas.

El mail es breve pero logra (i) compartir avances, (ii) mostrar KPIs (key performance indicators), (iii) difundir noticias y (iv) pedir apoyo. No debe tomar mas de una hora en preparar.

Gracias Fernando y Jaime por su apoyar en armar este template.
Update Mensual

Foro Xcala (Lima, Peru)

Esta semana en Lima la Universidad del Pacifico va a ser host al Foro Xcala el evento anual en Latinoamerica sobre inversión ángel. En nuestro ecosistema en Lima la inversión ángel es un actor cada vez mas importante, ya que tenemos muy buenos emprendedores abriendo rondas de capital semilla. Aún tenemos mucho por aprender y hacer para sofisticarnos y invertir de una forma prudente. El apoyo de organizaciones como Xcala ha sido clave en el desarrollo de redes de inversión ángel en Lima. En el sitio web PECAP, pueden encontrar algunos de las redes activas en Lima. Espero que puedan asistir el foro y nos vemos ahí.

Análisis Cohorte

Yo uso mucho el análisis cohorte para entender comportamiento de usuarios en una startup. En etapas tempranas es la mejor forma de llegar a un estimado de LTV (lifetime total value) verdadero de un cliente. Es una métrica importante para entender los unit economics y estabilidad del negocio. A mi me ayuda a entender el compartameinto natural del usuario. Adjunto un template sencillo y ágil que uso y que me permite muy rápido entender la dinámica de las startups que evaluamos.
Análisis Cohorte

¿Cuanto tiempo toma levantar una ronda de financiamiento?

Rondas de capital toman tiempo. En Perú, con un ecosistema en desarrollo y inversionistas no sofisticadas el reto es aún mayor. Founders deben considerar un plazo de seis meses para levantar una ronda de financiamiento, desde lanzamiento hasta desembolso. Durante este periodo un founder va a ser 100% dedicado a este esfuerzo. No hay una forma de hacer fundraising a medias. O estás fundraising o no estás fundraising – no hay punto intermedio. Algunas maneras de acortar el proceso son: (i) tener toda documentación (marketing y legal) antes de lanzar el proceso (ii) contar con una lista de 25-50 inversionistas (acá hay una lista de las redes y VCs mas activos en Peru y la  la región) y (iii) dar plazos definidos a los inversiosnistas. Estas actividades ayudan en generar “momentum” para la ronda y señalar que el inversionista debe tomar una desición

Journey

Este blog es para compartir mis observaciones y aprendizajes como miembro del ecosistema de startups en Lima, Perú y Latinoamérica. Espero poder destacar las buenas practicas de los founders que lideran el ecosistema y apoyar a otros compartir sus perspectivas.