Category: Latin America Startups and Investing

How To Come Up With Startup Ideas

Category : Entrepreneurship, Latin America Startups and Investing
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Note: A version of this post originally appeared in Spanish with the title Cómo encontrar ideas para emprender in El Mercurio, one of Chile’s leading newspapers. I use my monthly column to give mainstream readers exposure to startup ideas. It’s a shortened version of Paul Graham’s original post How to Get Startup Ideas.

Lots of people dream of starting their own business. They want something of their own, to be their own boss and to try to build their business into something big and successful. As an investor, I meet with hundreds of hungry potential entrepreneurs looking for capital to start businesses. Their ideas run the gamut from small businesses to scalable tech startups. Their funding plans cross the specturm from VC, friends and family to bank loans.

The vast majority of the best Latin American companies that I see come from people looking for solutions to problems they’ve seen close up in their daily lives. Paul Graham, the cofounder of Y Combinator, the world’s most successful accelerator, put it extremely directly: (more…)

Startup Valuations Created By Government Investments Aren’t Real and Can Hurt Startups

Category : Latin America Startups and Investing
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A version of this post appeared in the Chilean newspaper El Mercurio on August 18th with the headline Inversión sin riesgo no es inversión.

The Chilean government, via CORFO, has tried to seed the Chilean startup ecosystem to get it to grow more quickly. There’s always room for improvement, but overall, they’ve done good work and the ecosystem has grown. The three main programs CORFO has to support startups are:

  • Startup Chile – $20m ($40-25k depending on exchange rates) equity free grants
  • SCALE – $60m (89k-120k) equity free follow on grants
  • SSAF – $20m, then $40m (89k-120 total) follow on either direct or via incubators for 7% option for up to three years

CORFO awards many SSAFs each year, most via incubators that use CORFO’s money to “invest” in startups. These startups pass a selection process, then get $10-20m upfront, and then if they make it through each incubator’s unique process, they can get the $40m follow on. The incubators put the startups through an acceleration process, which can either be helpful, neutral, or in some cases harmful to the startup, depending on the incubator’s skillset. (more…)

US Startup Valuations and Their Effect on Latin American Startups

Category : Latin America Startups and Investing
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A version of this article originally appeared in El Mercurio, one of Chile’s largest newspapers with the title Valorizaciones de startups en EE.UU. y su efecto en Chile. I write a monthly columns with the goal of helping Chileans understand what’s going on in the US startup market.

Many people have been talking about the “third tech bubble” in the US, including many investors like Mark Suster, Bill Gurley and Fred Wilson. At least up until now, the bubble’s been deflating, and hasn’t crashed. “Unicorns” have been the most strongly affected, but all startups are are affected when the most successful VC backed and public companies lose value.

VCs make the vast majority of their money by investing so that they can either sell their shares in the company in an acquisition, or currently less commonly, when the company goes public. If valuations for the “best” startups go down, the upper limit for startups that haven’t gotten to “the pay window” yet go down, at least in the short term. These startups then have to adjust their valuations lower at each step down the chain, as VCs are not as likely to pay high valuations of their ultimate upside looks to be lower, at least in the short to medium term.

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Doing Business in Latam: Advice for Foreign Entrepreneurs

Category : Latin America Startups and Investing
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This post is a modified version of a talk I gave to Startup Chile entrepreneurs called “Doing Business in Latin America: Advice to Foreign Entrepreneurs.” 

When Startup Chile invited me to share my advice for new foreign entrepreneurs doing business in Latin America, it gave me an opportunity to synthesize the things I’ve learned over the past five years living and working in Latam. After coming to Startup Chile with a startup that did business in the US, teaching entrepreneurship at Chilean universities, starting a Latin American property business, starting my own ecommerce startups and meeting hundreds of entrepreneurs looking for investment via Magma Partners, I’d gotten a pretty good feel for the cultural differences between Latam and the US.

When I first got to Chile in 2010, I knew there were cultural differences, but I just worked under the impression that if I worked hard in the same way I did in the US, I’d be successful, like I had been in the US. Working hard helped, but there were many cultural misunderstandings that hampered my progress.

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