Los términos, directorio y buen gobierno corporativo, suelen asustar a muchos emprendedores, en parte por falta de entendimiento de ambos conceptos. El sentido común imperante es que formar un directorio y e implementar buenas prácticas de gobierno corporativo debe atrasarse y no es necesario hasta que se levante dinero institucional (VC). Es decir, se ve como una condición para recibir fondos y no necesariamente como algo que añada valor.Continue reading “Directorios para startups, mientras antes mejor”
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. Continue reading “Drag along and tag along 101”
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. Continue reading “Equity for intros?”
I attended an investor matchmaking event last week led by Endeavor Peru. Of the 8 startup teams I spoke to, half were led by founders over 35 in age. At a similar event in Santiago, Chile in October, three quarters of the of the founding teams I met with were over 35 in age. The fact is, startup founders are old, or at least older than you might think.
Recently, Harvard Business Review published a report on the average age of successful startup founders. The report found that the average age is 45.
I am not aware of any similar studies on the Peru ecosystem, but if we take a sampling of the of startups in Peru using the recent PECAP report, many of the founding teams in Peru that have raised seed rounds have had relevant operating or startup experience prior to launching their current startups. These include Endeavor Entrepreneurs like Pedro Neira, Fernando D’Alessio, Gonzalo Begazo, Nicolas Droguett, as well as Courtney McColgan, who participated recently in Y Combinator. For example, Fernando led Linio Peru prior to leaving to start Juntoz.
On the newer end of the startup spectrum, there are up-and-coming founders that bring deep experience to their ventures. Valia, a recently launched startup in Peru, is led by Carlos del Carpio. Quantum Talent, were I am a board member, is led by Carlos Ganoza and Alvaro Collas. These are founders bring great analytic experience to companies that use technology and data to solve problems in traditional sectors.
Why is this important for startup investors:
- Founders that bring sector expertise to the table, help to “de-risk” investments (startup investing in Peru is risky enough as it is!) by coming in with commercial contacts and a credible path for go-to-market
- Many founders in Peru are experienced at building and leading teams, essential characteristics of high growth startup founders.
- Startup founders are your peers.
Why is this important for startup founders:
- The opportunity costs of leaving the comforts of a corporate job and building a startup in Peru is falling. Older founders have been able to raise significant seed capital locally.
- Founders considering building a diverse team, should consider age as a proxy for the real issues of management skills and sector expertise that they may lack.
- Investors are your peers. You can treat them that way.
The anecdotal examples above do tell a story that older, experienced startup founders exist in Peru. I imagine this will be backed up by data. In the future, we will have better surveys of Peru’s startup ecosystem. I hope the data will encourage more (older) founders to join the startup community.
Angel investing, when done well, involves commitment to founders, thoughtful strategic advice, and often significant purpose. It is not a hobby. Continue reading “Angel investing is not a hobby”
.…la respuesta no podía ser otra: depende. Depende del estado de la startup, requerimientos del inversionista, horas y viajes dedicados a pitchear… y la lista sigue. En este post se compartirá información relacionada a los gastos legales. Continue reading “¿Cuánto cuesta una ronda semilla en Perú?”
Investors in Peru often ask to see traction before investing in a startup and evaluate founding teams based on their execution ability, or capacity to achieve traction. Continue reading “What is traction, anyway?”
Tax implications are low on the list of investment criteria for angel and seed stage investors in Peru (as they should be). However, as the probability of a successful exit increases, tax considerations come to the forefront. Venture capital investors will seek to optimize returns and avoid startups that have inefficient tax structures. Continue reading “Tax 101 for startups in Peru”
A cap table is the list of owners (equity holders) and how their ownership percentage is distributed. In high-growth startups, proper distribution of equity is key for keeping founders and investors aligned over time. Here are some points to consider: Accelerator programs often take equity in startups Startups typically share 10%-20% of equity in each … Continue reading “3 key moments to examine your cap table”
A cap table is the list of owners (equity holders) and how their ownership percentage is distributed. In high-growth startups, proper distribution of equity is key for keeping founders and investors aligned over time.
Here are some points to consider:
- Accelerator programs often take equity in startups
- Startups typically share 10%-20% of equity in each financing round
- Founding teams in Latin America often seek to reach a Series A round with at least 50% of the company
Below is a graph of how a cap table can change over time.
Cap tables are re-organized at financing rounds so these are the moments to make sure you are set up for optimization.
Three key moments to review your cap table:
1. Founding: This is the most important part of the cap table and founders are benefited from having tough conversations up front. It often seems fair to divide ownership equally between three or four people, but it may not be optimal for the startup. The more founders a startup has, the less equity each individual will have and equal amounts spread across many people can make decision-making slower. I believe one or two founders should have significant share of the equity of a startup.
Founder vesting is a tool that can help align and incentivize founders as well as avoid “dead equity” left by members of the team who decide to leave, but retain equity stakes. Many future investors will require this term.
2. Angel, Acceleration, Seed Rounds: According to PECAP the median seed round in Peru is for 15% of the startup. Often, this 15% is split among more than one accelerator program or angel investor, leaving a cap table atomized without one investor or investor group having a significant share of the startup. This can make it hard for investors to dedicate time to add value and improve corporate governance. Founders want pick accelerator programs and investors that can add the most value by helping the startup achieve operating milestones and raise the Series A round.
3. Series A: Preparing for Series A can put a startup in a position to succeed long term. Series A investors will be keen to make sure that a founding team has enough incentives following the round – a good goal is 50% of the company going into the round. Investors should be aware that Series A investors may require a 10% Employee Stock Option Pool (ESOP) and ask that it is included in the pre-money valuation.
- Ragi Burhum of AmigoCloud recommends that founders should up an employee pool much earlier that prior to a Series A round
- Facundo Turconi of Solven, pointed out to me that for single founder startup it may make sense to consider a larger ESOP, of perhaps 15%.
Takeaway and Cap Table Example:
Founders and investors should seek to maintain a cap table that leaves enough incentives for founders and flexibility to add the right investors at the right time. You can find a template example for a cap table in Excel here.
Members of Peru’s startup community have collaborated with advisors outside Peru to develop a report outlining considerations for startups evaluating creating international holding companies.
When should a startup evaluate creating an international holding company?Continue reading “When is the right time to set up an International HoldCo?”
I don’t like the term corporate governance much, but I am a huge fan of what it represents and how much it can help startups. It should just be called “getting the best people together to support a startup”. Good corporate governance can help founders achieve their goals, both by building trust with investors and pointing founders in the right direction. Continue reading “Just don’t call it ‘Corporate Governance’”
PECAP has recently shared templates for legal documents for seed rounds in Peru. The documents are a great starting point for discussing general terms with early stage investors and making seed rounds less costly for both founders and investors. The Swiss Entrepreneurship Program provided a key role in supporting this initiative. Montezuma & Porto law offices led a collaborative effort that included input from founders, investors and other lawyers. Continue reading “Free legal documents for seed rounds!”
I recently spoke to Fernando Langschwager about his startup, Aprendiendo.la. After a short time, he looked at me and told me I was asking the wrong questions. For novice startup investors like me, it is easy to fall into the trap of evaluating startups from the wrong perspective. I spent the rest of the chat with Fernando listening to his views on where I was getting off track and he helped me come up with three pitfalls startup investors fall into: Continue reading “Startup investor pitfalls”
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. Continue reading “Valuation Benchmarks”
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.