Cash from clients and users in the best way to finance a startup. Founders avoid giving up equity, spend time talking to clients not investors, and get a clear validation signal for their solution.
There are working capital tactics that startups can use to improve cash management. I wrote some ideas here that included tips Saul Chrem of Xertica in Peru had passed along. US-based mentor Greg Dickens highlights in Go Fund Yourself to some ways to “hold onto your cash longer and get paid quicker.”
In Peru and the rest of Latin America, this is often easier said than done, due to the leverage corporations have when negotiating with small and medium-sized businesses, including startups. Fernando Calmell del Solar and ASEP are leading the initiative to promote legislation that would require companies to pay small and medium business in 30 days. It is called “Pago 30 Días” and is a concept that is making progress in other countries in the region.
Angel investors are a key stakeholder in this cause. Many work as C-level executives and directors at corporations in Peru. They have a front seat both as investors watching startups’ runways shortened by growing accounts receivable accounts and at corporate board meetings making payment policy decisions.
#Pago30Días is an initiative that all stakeholders in Peru’s startup community can get behind. You can show your support for the cause by voting here.