Category: Latin America Startups and Investing

How to Indentify and Recruit Latin American Talent for Startups

Category : Latin America Startups and Investing
Posted on by

One of a founder’s most important duties is Identifying and recruiting top talent. Finding and convincing the best people to work for your startup can be the difference between success and failure. There are hundreds of great resources on how to find great talent in the US, but Latin America is very different. US strategies don’t usually work in Latin America.

Recruiting for startups in the US is difficult because the market is extremely competitive and well developed. But it can be easier because many people want to work at a startup because “startups are cool.” Sometimes they even pay well.

Many US workers choose a mission driven company that aims to change the world, or a company that offers workers the opportunity to work on interesting problems, rather than the company that pays the most or has the highest brand recognition. Additionally, structural advantages like recruiters and well developed stock options plans showcase startup opportunities and push more people to take a risk with a startup.

In Latin America, it’s different. It can be difficult to recruit for startups, but not because of competition from other startups. (more…)

Highlighting Latin American Startups

Category : Latin America Startups and Investing
Posted on by

When I meet with US and European entrepreneurs and investors, they frequently want to know what startups are doing well in Latin America.

There are generally three types of startups that generally do well:

1. Latin America based startups solving problems for Latin American market

2. Startups that target the US/European market and have a Latin American back office

3. Brazilian startups that generally target the Brazilian market

Each niche has their own pros and cons, but at Magma, we invest in a subset of the first niche: B2B startups that are based in Latin America and serve Latin American companies and the second niche: startups that target the US/European market, but have their back office in Latin America.

I’ll leave Brazil’s burgeoning startup scene aside for now and focus on some of the most interesting startups I’m seeing in Spanish speaking Latin America. Post in the comments if there’s a startup you think I should include. (more…)

Doing Business and Raising Money in Latin America: My SUP Academy Talk

Category : Latin America Startups and Investing
Posted on by

Last week I gave a talk at Startup Chile’s SUP Academy about doing business and raising money in Latin America. It was fun share what I’ve learned over the past five years in Chile with the next classes of startup chile entrepreneurs.

The audio quality is pretty bad, sorry about that. Hopefully it’s still listenable!

Here’s the show notes:

(more…)

Investor & “Advisor” Behavior in Latin America Can Make Startups Uninvestable

Category : Latin America Startups and Investing
Posted on by

One of the recurring problems we see with Latin American startups at Magma Partners is founders with too little equity. In the past two weeks, I’ve seen three cases where the full time founding team has 7%, 10% and 25% ownership after only one round of fundraising. Two companies had raised less than $100k, one had raised ~$200k. When we see companies with this structure, we tell the founders directly that it makes their company uninvestable. It’s especially true if the founders think they’ll need to raise even more money in the future, or plan to move to the United States. Every company is different, but founders should have at least ~70% at this stage, or even more if they plan to compete on the world stage.

We see five common causes:

  1. No Vesting – Cofounders who have left own significant equity
  2. “Part time cofounders” – People who aren’t full time who own significant equity
  3. “Advisors” – Companies with large numbers of “advisors” or “advisors” with significant of equity
  4. Unsophisticated investors – Raising money from people who view startup investing like investing in private equity or small businesses
  5. Investor Malice

Let’s unpack each one.

(more…)