Find the right investor for your startup

We are continuing our series on “Hacking your fundraising”. We have already written about where to find the investors if you are an early stage startup and what you will need to give and what you should expect to get from your investor. This time you will find out how to decide if you have found the right investor for your startup.  We will focus on angel investors and accelerators, as they are the most common investors in early stage startups.

Human factor

Signing a contract with an investor is a bit like getting married. You will need to start sharing, meet regularly and commit to many things you may not always feel like doing. Although you are marrying rich, don’t forget it’s almost impossible to get a divorce with your investors and having a no-strings-attached relationship is not an option.

Like with any relationship, times might get tough when things are not going as planned – a fairly common issue in Startupville. It is therefore important that the relationship is based on mutual respect and understanding. A great investor will help you brainstorm when things are bad and will stay out of your way when you need the space to figure things out. For that very reason make sure you select your investor carefully and not go for the first one that flashes you the money. How to do it? Do your due diligence. In addition to using Google search, you can and should:

  • For angels: Ask them to put you in touch with a few of their portfolio companies. You should even go as far as selecting the founders you would like to talk to yourself. Try to go for the successful and the ones that did not go well. In the latter case, you are likely to find out more valuable information, because hard times present a better test of anybody. If the angel investor refuses to give you these contacts, this is a clear warning sign. Surprisingly, very few startups do this.
  • For accelerators: Talk to graduates of their programs. The list can be easily found on their websites. Best reaching out directly to the founders through LinkedIn. Simply ask them if they would do the program again. No response from a number of founders may be a warning sign.

Human factor is much more important when you look for an angel investment. In case of accelerators, you will deal with more people and the relationship will be intense for a relatively short period, during the program.

Terms of investment

In general the most heatedly debated terms in a term sheet relate to valuation. However, whilst financial terms are very important, the devil lies in the details, legal details. Investment terms, presented to you by investor in a legal document called term sheet, are a good indication of the relationship you may have in the future. Some things to be especially careful about:

  • Board seats. In general, if you agree to have investors on your board, make sure their vote is in line with the amount of equity they have.
  • Additional equity not linked to amount invested. Sometimes investors will offer non-cash benefits (e.g. mentoring, office, advisory) in exchange for equity. It is a normal practice for accelerators, but need to be checked more carefully when analysing an offer from angels. We wrote more about it in our previous post.
  • Valuation caps. This is an important point when your investor doesn’t get equity, but rather receives a convertible note for their investment. It is a very common practice when funding early stage startups. You can read more about it here.
  • Trigger events and conversion mechanics for a convertible note.
  • Reserved matters – list of really important matters where the investor has veto rights. Common examples include hiring and firing of key staff and raising additional funding. This means that without the investors’ consent the items cannot be approved by the rest of the board even if they form a majority.
  • Anything that looks weird.

The term sheet and related documents will be overwhelming. This is normal, so it’s better to ask and perhaps look stupid than not ask and actually be stupid. If you have questions about the investment terms like: “Why is your fund registered in British Virgin Islands?” or “What does it mean that you want to cap…?” – ASK. If they are honest, they will be understanding, open and not defensive. Remember, the deal will not fail because you ask questions.

Please do not treat the above as legal advice and, if unsure, show your term sheet to an experienced lawyer or another founder, preferably one who has raised capital from professional investors before.

Additional value

One of the things you should be doing your due diligence on, is how much you will get from the investors in addition to money. The most valuable are mentoring and introductions.

Mentoring

Accelerators are all about mentoring and most make the network of available mentors their key value proposition. That’s great, but mentors are not created equal. Study the list carefully and think if you would be excited to work with some of them. Then, while doing your due diligence, find out how much time mentors will actually have for you and how the mentorship works. The best arrangement is to have a small group of mentors work with you consistently through the whole program. Some accelerators (e.g. Techstars) organise mentor-startup speed dating at the very beginning of the program, which is something founders generally like.

Angels can and should offer mentoring too. If your prospective angel investor has already made investments in your space (not in current competitors!) and/or has operational experience running startups, there is a chance their mentoring will be useful.

Introductions

Your investors should help you grow your network of contacts through introductions. This means introducing you to other investors, potential clients, potential hires and anyone who can help you grow your business.

Even if you don’t secure direct introductions to investors from your accelerator or angel investor, you should not hesitate to name-drop to get introduced yourself. Never underestimate the power of brand and social proof, especially that investors, as a group, are famous for having herd mentality. What it means in practice is that when they see another investor already interested in you, they will more likely look at you with more interest themselves. That works even better, if it happens to be a name they already know well.

Thanks for reading and stay tuned for more. In the meantime, we would love to hear from you in the comments below. You can also subscribe to this blog and receive notifications when we publish something new.

Startup funding – what you get and what you give up

In our previous post we listed the main sources of external financing for early stage startups and where you can find them. Today you will find out what you should be prepared to give in exchange for their money, but also what you should be expecting to get. This is a continuation of our series “Hacking your fundraising”. You can see the whole presentation on that topic embedded at the bottom.

1. FFF – Family, friends and…fools

You get

Unless your friends or relatives are experienced entrepreneurs and can give you relevant business advice, the deal is quite simple – what you get is cash to run your business. On top of it, there is however a non-material bonus included. You will be getting an enthusiastic group of fans of your startup, who will cheer for you and talk about your product to everyone they know.

The amount of money you can get will differ on the number and wealth of FFF you involve, but commonly it will be up to 20k USD.

You give

The easiest arrangement you can make is to take money in a form of a simple loan that you commit to repay, with accrued interest, when you start making money. Another good option is to issue a convertible note, which converts into preferred or common stock at a discount (usually 20 percent, although currently often reduced to 10-15%) to the valuation in the next round, which usually involves professional investors. Granting stock in your company in exchange for the investment is much more complicated and should require involvement from lawyers, which at this early stage can be both expensive and time consuming. In any case, to avoid possible misunderstandings that can harm your relation with your relatives or future funding from professional investors, it is better to sign a legal document.

You need to be aware that there may be additional costs of having your friends or family financing your startup, especially if you don’t reveal to them risks involved, or if they don’t full understand them. If you got money from your relative promising that “this is a sure thing and nothing can go wrong”, in case it does, those family dinners may suddenly become very awkward.

2. Angels

You get

Angels are wealthy people with passion for startups, often being former entrepreneurs themselves. For that reason, in addition to money, you should expect to get valuable insights, helpful advice and contacts to grow your business. That is in fact what angels usually promise as their added value alongside the financial investment. Therefore, when reaching out to angels, focus on ones that actually have contacts or experience in the sector that is relevant to you.

You need to remember however, that in order for their involvement to be useful, your angel investor would need to have time and relevant experience to understand your business really well. That may not be a realistic expectation in many cases.  Angels are very busy as they usually invest alongside their other fulltime commitments such as running their own business. Don’t let that deter you. Keep hustling even after they invest because the non-tangible value is significant and you need to extract it.  Push to arrange regular catch-ups even if it means scheduling several weeks in advance.

Usually, angels invest from USD20-100k, although it may be more if you manage to get an angel group to invest.

You give

In exchange for their investment, angels will want equity or a convertible note, which is a form of debt that converts to equity when pre-defined conditions are met (called “conversion trigger events”). Sometimes angel investors require additional equity in exchange for their advice. If you agree to that, make sure to make granting of equity conditional on them delivering specific results. Otherwise, you risk taking someone on for a free ride. We recommend you use the Founder Institute’s Founder Advisory Template to help you structure the advisory relationship.

Once you have them on board, angels will often require you to send them regular reports about your performance, which means you will need to start sharing details of what you do. Some angels may also require some control of the business, in form of a board seat. It is not a common practice however, so think twice before agreeing to that. It is your business, you take the most risks and you should be the ultimate decision maker. By giving a board seat early on, you also set a precedence for later stage investors to do the same. You also risk that a small investor will have a significant say in the future fundraising rounds. They will push to have their rights protected and their requirements may be in conflict with that of your company, thus negatively impacting your negotiations.

3. Accelerators

You get

In addition to cash investment in your startup, accelerators usually offer office space, access to professional services (e.g. lawyers, accountants) and other business/technical resources such as free or discounted access to servers or various SaaS tools. However, their biggest value-add is supposed to be access to a network of mentors. These are people with relevant business experience, who will work closely with you during your acceleration program to help you grow your business.

Another benefit of accelerators is the connections that startups establish with other entrepreneurs. In each in of the programs there are between 10 and even 60 startups, all in one place and going together through very difficult times. This means that not only professional relationships, but often strong friendships are formed.

Finally, being an alumnus of a well-known accelerator definitely helps with introductions to VC investors, some of whom you might meet at the accelerator’s Demo Day.

You give

Accelerators take equity for their investment and services. It is usually 6-10%, often in a form of a convertible note, although it depends on the country as in some countries it can be significantly higher (20%+)

4. Venture Capital

You get

If you manage to attract VC investors to your early-stage startup, you must be doing a lot of things right. It usually implies you have a good product (usually post MVP) that solves a well-defined problem in a huge market ($1billion+). In addition, VCs look for a talented and balanced team, as well as impressive traction that can translate into hockey stick growth.

As opposed to most angels, VCs are professional investors that do this full-time, so in theory they should be able to give you more valuable advice and make better introductions than other investors. They may also get involved in the operational side of your business, for example by helping you make a high profile hire, analyze a new market opportunity, plan and execute an acquisition or position your company to be acquired by a large player.

VC investors are the ones you go to when you need more than $1m of funding.

 You give

At the early (seed funding) stage you are likely to give away up to 20% of the equity, although many funds, particularly outside of Silicon Valley, would want to take a bigger chunk of the pie. VC funds usually invest more than $500k in a startup, which means they will want some control of your business to make sure you are spending this money on things that help you grow. You can expect them to want to receive regular updates from you and often a board seat.

Remember, with VC investment you are getting a lot of pressure to make it big. They give you rocket fuel for your business and expect you to take them to the moon, then to mars.

Thank you for visiting us. Stay tuned for more posts. If you want to receive notifications for new posts, please subscribe to our blog.

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Sources of funding for early-stage startups and where to find them

At Fundacity we want to help connect startups and investors, so we have prepared a presentation to guide startups that are looking for funding. We called it “Hacking your fundraising”. In this blog post we would like to give you some tips about where to look for finance if you are an early stage startup. This means you have at least a team, some form of a validated idea (preferably a Minimum Viable Product) and lots of drive and passion to grow the next big thing!

At this stage your financial needs are probably not that big. Assuming you have technical skills to build your product, you may need money to:

  • Pay basic company expenses like cloud server, non-free software, co-work office space, accountant, etc.
  • Survive: pay your rent, eat and occasionally go out to disconnect (important!)

Even if you can survive for some time from your savings, you will eventually need additional money to keep your business going. There are three main sources of funding for early stage startups:

1. FFF: Family, friends and…fools

The FFF are people who know you well and are ready to support your idea financially, because they believe in you. FFF can be your parents, a rich uncle, or a successful/wealthy best friend. Getting money from them is also a very important first test for you. If you manage to get money from FFF, it should be easier to raise money later.

The amounts will be small (unless your uncle is very rich and not that smart), but good for a start. It is probably best to take money as a loan and not formalize too much. This funding is 100% based on trust, so they know you will repay them nicely when you become the next big thing. Common mistakes here are giving too much equity (10%+) for a non-active role, including non-dilutive rights or agreeing to pay monthly cash interest which is tricky for a growth stage company.

2. Angels

Angels are a bit like FFF in the sense they are individuals with some disposable income who are ready to make a bet on you. The difference is that you probably don’t know them yet. Angels are often former entrepreneurs, who like helping build new businesses. They may also be wealthy people who like startups and want to invest in something with a big potential to diversify their investment portfolio. The important thing is that they are also prepared and can afford to lose this money.

There are several ways to find angels:

  • Angels like to form groups, so check online if there is one in your area. For example in Brazil you have Anjos do Brasil, Angel Ventures Mexico in… Mexico, or Tech Coast Angels in the US.
  • Many will have a formal way to be contacted, through website. For example, Juan Martin from Club de Business Angels de IAE in Argentina told us that startups can contact him directly through their website. He will review the idea, ask for additional information if your business seems interesting and then present the business to the other angel group members.
  • Personal introductions are however the most effective ways to get introduced to angels. For that, you need to network with your local startup community. Go to events, talk about your idea with many people, then establish relationships and ask for introductions. The best events to attend are accelerator demo days. They are generally neither costly, nor difficult to attend and angel investors go there to find interesting opportunities. You don’t have to pitch on stage to get a chance to talk to them.
  • Investors usually have LinkedIn or AngelList profile, where you can see what companies they have invested in. This will not only give you information if the angel is the right fit for your startup, but help you find ways to get introduced to them, for example through someone you know in their portfolio startup.

Securing angel investment depends a lot on personal relations and trust you build with them. They need to believe in your idea and that you are the right person to deliver it. For that reason you cannot expect that securing investment will be a fast process. It can be however really worthwhile as many investors can offer valuable advice in addition to money. Speaking about money, angels will invest typically up to $100k in exchange for equity in your business.

3. Accelerators

Accelerators invest in early stage startups not only by providing money, but, more importantly, by offering valuable services (mentoring, work space and contacts).

The way they work is by inviting startups to participate in short programs, which usually last a minimum of three months and require you to relocate to their offices.  During that time you not only work hard on your business, but go through a structured program of workshops and meetings with mentors. The idea is that in this short time they will help you, well… accelerate your business, by teaching you essential skills and advising you on your business model.

In return for their services and cash (usually around $20k, some offer more), you will have to give up a small amount of equity (6 to 9%).

How can you find accelerators and incubators in your area? The most famous accelerators are in the US, such as Techstars, 500 startups or Y-Combinator. In Europe you have Seedcamp, in Latin America Nxtp.Labs, Aceleratech or 21212 in Asia JFDI, etc. You can look for them on Fundacity or AngelList. All of them can be easily contacted online, some take applications all year round.

4. Others

There are a number of other options you can consider looking for funding.

Venture Capital firms usually do not look for early stage startups, unless you have a rockstar team, previous relevant experience and a product that already has some good results – impressive user growth in a big market is the best.

Take a look at government programs, grants or loans such as CORFO fund in Chile and Startup Brasil. There are also various funds provided for entrepreneurs by the European Union if you happen to do business in one of the EU member states. However be aware that government grants often come with lots of headaches as you need to report your plans and later expenses very diligently and there is little flexibility to pivot your business. However, it is worth investigating them as conditions for some are really attractive (cheap or free money).

Crowdfunding is a good option to get not only funding, but also help to promote your product by your backers or investors. The most popular type of crowdfunding is when people give you money to build a product and then you usually offer them this product on attractive conditions (or for free) once it’s ready. For obvious reasons it works best for consumer products that people can actually buy and use themselves. It is much more difficult, if unheard of, to crowdsource e.g. an enterprise SaaS solution this way.

The most popular sites to get funded by people this way are Kickstarter and Indiegogo. Another option for startups is equity crowdfunding, where sites like AngelList or Seedrs can help you find many small investors who pool their money to fund your business in exchange, you probably already guessed it, equity.

 

Thank you for visiting us, stay tuned for more posts. If you want to receive notifications for new posts, please subscribe to our blog.

 

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Incubators are Bullshit, or are they…?

At Fundacity we regularly read an awesome CB Insights newsletter. In addition to really high quality content they put there each time about VC investing, they also include a section with interesting articled about startups and starting up from around the web.

Today an article that caught our attention was called Incubators are Bullshit. We read it with interest, as at Fundacity we work with many accelerators around the world. The author raised some valid concerns about the structure of some programs that pack too much activities, when founders should really be focused on talking to customers, looking for product/market fit, etc. We thought however that the article was quite one-sided and quite unfair to accelerators (which the author kept calling incubators) in general.

Below is our response added in the comments section, which was promptly marked as spam. The admin of this blog of course had the right to do that, but we found that qualification a bit harsh, hence this blog post. Please see for yourself.

“The problem with being that judgmental as you are in this post, is that one tends to include only arguments (or rather opinions) that support their view. There are few of them that caught my attention in particular.

1. At Fundacity we work and know many accelerators, helping them manage their startup selection process and soon portfolio management. The value they give to startups indeed does differ and in many cases I am sure there are too many meetings and not enough actual work being done. However, the vast majority of accelerator graduates are happy with their experience and would repeat it (http://techcrunch.com/2014/03/10/these-are-the-15-best-accelerators-in-the-u-s) Since they are the best people to evaluate if their startups have made any progress during the program, it makes your argument flawed.

2. Track record. Most of the accelerators have been around for short time and Y-Combinator is the oldest one really. I am sure you know that most startups are not an overnight success. At the moment most people agree the jury is still out if accelerators work or not.

3. Networking. Accelerators give you many people to network in one place, which makes it a very time saving exercise. What startups also get is a kind of automatic referral – accelerator’s brand – which opens more doors. Founder that wants to network outside of such ecosystem will inevitably spend more time doing that. Since, as you point out in your post, they need to be primarily focused on building their business, most of them will simply do little networking. Besides, the quality of networking depends primarily on how one does it. You can suck or be good at this regarding of how many people you meet, but meeting more people at least makes you practice. Also, I cannot imagine anybody is forced to network instead of working. Smart founders know hot to balance both.

4. Who are you modelling yourself after? I do not understand this argument at all. So if you join Y-Combinator you will somehow model yourself after Dropbox or Heroku? In what sense – culture, success, client acquisition? Why is it good or bad?

5. Investors. Is it the same investors who go to Demo Days and then invest in graduates of acceleration programmes? What would be a traditional way? It’s the same investors in most cases – graduate startups can just meet them easier and they get a “stamp of approval” from an accelerator, which works as a good referral. Investors do their own one too. Again, time saving for startups. Also, most of startups enter programmes in a very early stage, often too early for an investment by VC funds. Accelerators fill in the early stage funding gap around friends, family, sometimes angels.

By the way, there is a difference between incubators and accelerators, All your examples referred to the latter, so unless you intentionally tried to be dismissive, your research could have been more thorough on fundamentals.”

Austrian high-net-worths should invest into startups

Austria, a country associated with high standard of living, skiing, snitzel and somewhat conservative attitudes has over the last few years taken large steps in creating a startup ecosystem of its own. In fact, several of my high school friends are now actively working in startups or with seed investors in Vienna.

Today, I was pleasantly surprised that Bank of Austria head, Willibald Cernko is calling Austrian high net worths to invest into startups. He states that not only can they make a great return and help Austria generate new jobs but also help Europe in its growth.

Wise words Willibald! Keep rocking!

Article (in German): Reiche sollen Start-ups fördern – futurezone.at.

El Junior World Entrepreneurship Forum Santiago

El Junior World Entrepreneurship Forum Santiago: ¡Dos días exitosos que inspiraron a  200 jóvenes a cambiar el mundo!

Santiago, Chile – Los pasados 27 y 28 de septiembre tuvo lugar el Junior Word Entrepreneurship Forum (JWEF), un foro mundial de emprendimiento que se organizó por primera vez en Chile en la Facultad de Economía y Negocio de la Universidad de Chile. El evento reunió a 200 participantes durante dos días de charlas, talleres prácticos, un concurso de pitch universitario y eventos de networking.

Los oradores excepcionales, expertos en emprendimiento y sustentabilidad, compartieron su experiencia y aportaron su visión sobre el tema del evento: “Emprendedores – Navegar el cambio para un crecimiento sustentable”.

Los momentos fuertes del JWEF Santiago incluyeron:

  • El discurso de apertura de Nicolás Shea, fundador de Start-Up Chile y ASECH y CEO de Cumplo. Presentó una charla inspiradora y motivacional sobre la “nueva revolución del emprendimiento” recordando que “liderar el cambio es la tarea más difícil” pero es lo que hace evolucionar el mundo.
  • El discurso de apertura del segundo día por Juan de Dios Carvajal, gerente de emprendimiento CORFO, quien subrayó los desafíos de emprender e innovar para Chile.
  • Los discursos apasionados e inspiradores de Horacio Melo, Director Ejecutivo de StartUp Chile y Julián Ugarte, Director Ejecutivo de SociaLab.
  • Un panel de expertos sobre sustentabilidad, introducido por el keynote del experto John Rosser. Compartieron sus visiones y consejos para integrar la sustentabilidad en sus emprendimientos el Dr. Pedro Vera Castillo, Vanessa Kolodziej, Thomas Kimber y Daniela Jara.
  • Charlas que inspiraron a la audiencia a emprender por José Ignacio Oñate (coach y CEO/Fundador de PRO+SPIRIT), Christian Reyes (fundador de +People), Roberto Ibáñez, (Fundador de Touch) y Francisco Saez (Fundador de Nixter).
  • Un concurso de pitch universitario con representación de la Universidad de Chile, la Universidad Adolfo Ibáñez, la Universidad de Concepción, la Universidad de Antofagasta, la Universidad Católica de Valparaíso y la Universidad San Sebastián. ¡Enhorabuena a los ganadores, tres estudiantes de ingeniería comercial de la Universidad Adolfo Ibáñez, con el proyecto SlidePick!

 

Los organizadores Planet Expat, Fundacity y la Facultad de Economía y Negocio de la Universidad de Chile quieren agradecer por su colaboración a Startup Chile, Touch, SociaLab, ASECH e ImaginaChile; y por su generosidad, a los patrocinadores del evento: Amazon Web Services, Coca-Cola, Santiago Streaming, Qonf, UrbanStation y Redbull.

De estos dos días memorables, se destacaron nuevas ideas y recomendaciones reunidas en un libro blanco. Los organizadores del evento Sophie Vurpillot (cofundadora de Planet Expat) y Miklos Grof (fundador de Fundacity) serán los embajadores de Chile durante el World Entrepreneurship Forum y traerán la voz del país hasta Singapur los próximos 31 Octubre-2 Noviembre de 2013.

Ojala esta edición del JWEF Santiago sea la primera de una larga serie de eventos exitosos inspirando a los jóvenes a cambiar el mundo y a impactar positivamente Chile.

jwef

Fundraising and Startups in Chile Part 2

….following on from Part 1… Internationally, Chile’s tech scene is thought to mainly consist of Startup Chile. However, I discovered there is more to Chilecon Valley than meets the eye. Arriving in Chile, I was bewildered at the multitude of incubators, accelerators, co-works and tech events that this relatively small country has to offer. Almost every university now has an incubator or accelerator. Co-works are sprouting across Santiago. There are several tech events every week in Chile. 5 years ago tech Chile virtually did not exist. The high growth rate in the ecosystem can be seen and felt even over the short time I lived in Santiago. The environment has been expanding massively.

The ecosystem is not without its problems though. There is a lack of angel and VC money to followup the incubator seed cash. Thus startups usually use capital to flock to the US and establish and fundraise there. Failure often means they join the so-called Latin American Zombies.

Angel funding in Chile is scarce but not absent. There are two prominent angel groups Southern Angels and Chile Global Angels. Their members are moderately active. Chile Global Angels, with 27 members, has screened 400+ startups, funded 13 startups and allocated $1.8m over 4 years. By Silicon Valley standards this is miniscule. What the ecosystem needs is more entrepreneur turned investors that have successful exists behind them. This requires time but Chile is heading in the right direction and must, as prominent startup guru Brad Feld preaches, take a 20-year view from today.

Venture Capital is its infancy and heavily reliant on Corfo support. There are roughly 4 active VCs. One of the most active VC, Aurus, has made roughly 10 deals and the fund size is 30m. The reasons for this is probably the lack of institutional investment into this asset class. This is hard to change in the short run as capital is controlled by a wealthy subset of Chileans and they are conservative since their wealth derives from traditional assets such as commodities and real estate. On this front one can observe moderate change as the younger generation from these families is drawn by the trendiness of the startup world and even the Old Guard is showing interest.

Probably the greatest allure of Chile is its stable and strong economy that is growing in a steady and organized manner. Corruption levels are amongst the lowest in LatAm and the government and lobbies such as ASECH, are improving the business and legal environment removing the layers of bureaucracy that typically make starting up a painful process in LatAm. Recent victories include free incorporation and ability to incorporate your business in 1 day.

Whilst Chile is no cheap place to live it is significantly cheaper than US or European tech hubs and tech labor costs are significantly lower. Engineering talent can cost as little as $1,500 per month. In San Francisco, it can cost a minimum of $6,000 per month to hire an engineer if you can even find one at all. However, the downside is that Chileans are less likely to know what a startup is and are usually highly risk averse. Thus it will take a lot more effort to recruit a quality team.

So is it all hunky dory? Looking closer at the fundamentals that this young and vibrant ecosystem is built on, one soon discovers that there is a single prominent fertilizer nurturing this rainforest. Corfo – the government body, which is mandated with promoting entrepreneurship and innovation in Chile. Corfo for the time being is the life support that all noteworthy incubators, accelerates, VC and events rely on. At present, absent this, the ecosystem would likely fall to pieces like a deck of cards. The upcoming election in Chile is causing some unease regarding the continuity of the program which was implemented by the current ruling party.

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Another issue is the lack of smart money. Whilst Corfo cash is fantastic it is not yet accompanied by professional mentoring. Incubators and accelerators manage the funds on behalf of Corfo. However some say that they do little but select and allocate third party capital. This is falsely creating influential ‘investors personalities’ in the community that lack a significant investor or entrepreneurial track record. The lack of sufficient skin in the game is not sustainable and Corfo is aiming to change that over the next few years.

Chile is doing a great job at attracting fresh talent into the country and laying the foundations for what could be a flourishing and sustainable global tech hub. My advice: one should consider Chile as a place to start-up.

Fundraising and Startups in Chile Part 1

ChileChile, a secluded country that until recently was rarely a topic of discussion especially in the digital tech world, is now attracting a lot of global media attention for its efforts to modernize and become the regions tech hub.

I migrated to Chile to explore what opportunities this young but promising ecosystem had to offer. I reasoned that there are likely to be more opportunities for an entrepreneur in a startup ecosystem that is still in its infancy in a country that is off most people’s radar. This proved to be true. In 10 moths, I met an amazing technical co-founder and we founded Fundacity, raised $170,000, were sponsored by the government for a 5 week mentorship program in Silicon Valley, became a financial advisor to successful Argentine startup Taggify, co-organized one of the first Startup Weekends in Chile, co-organizing the first Junior World Entrepreneurship in Chile and this journey took me on business trips across 4 continents. This, for someone so new to this industry, would not have been possible anywhere else.

Chile’s most prominent initiative is undoubtedly Start-Up Chile. Start-Up Chile is indeed, in my opinion, a success story. $40k non-equity non-loan grants for 100 promising startups handpicked by Silicon Valley experts has attracted the attention of the global tech community and notable news reporters including CNN, Economist and Tech Crunch over the last 2 years. Applications to Start-Up Chile have surged from 300 applications to 1500 from 50+ countries over the past 2 years. The quality of the startups has also followed suit.

20120904-start-up-chile-logo

Support for Startup Chile is not unanimous. Critiques point out that an overwhelming majority leaves Chile after the 6-month program. Whilst this is true it ignores the impact these international innovators make when in Chile. Startup Chile requests that each of its incubatees earn “RVA Points” (Return Value Agenda) which is a mechanism for entrepreneurs to give back by spending time spreading their knowledge in the community through organizing events, workshops, presentations, hackathons and forming communities and groups. Start-Up Chile is artificially creating an ecosystem that is inspiring, enabling and educating Chileans about Start-Ups and bringing this concept closer to home. Chilean entrepreneur Diego Izquierdo, co-founder of Fundacity, told me,

We all thought a startup is only something you can do if you are in the USA.

Fact: this is not the case. Fact: more Chileans today than previously are launching startupsPart 2 to follow

The JWEF for the first time in Chile!

Since February I have been helping organize the Junior World Entrepreneurship in Chile. This will be the first year this event is also represented here and I am really excited about that. I am amazed to see how quickly and steadily Chile is growing as a tech hub in the region. More and more international tech events are being hosted here such as Startup Weekend, Angel Hack and Lean Startup workshops and now the JWEF. CHi CHi Le! :D

Below is the press release of the JWEF that I would like to share with you guys. Hope to see many of you there.

JWEF

El Junior World Entrepreneurship Forum: ¡el Foro Mundial de Emprendimiento Juvenil llega a Chile por primera vez!

Santiago, Chile – Por primera vez, Chile acogerá el Junior World Entrepreneurship Forum, un encuentro de envergadura mundial que conecta a emprendedores y estudiantes con el objetivo de consolidar el posicionamiento del país como un atractivo polo de emprendimiento a nivel internacional.

Este evento es la versión junior del World Entrepreneurship Forum, un foro global y exclusivo que favorece el emprendimiento y reune a todos los actores claves del ecosistema emprendedor. Desde su creación en 2008, el World Entrepreneurship Forum representó más de 75 países creando así una comunidad poderosa a nivel internacional. Con más de 150 artículos de prensa en 35 países en 2012 – Forbes, The Times of India, etc. – el World Entrepreneurship Forum ganó un reconocimiento y una famainternacional definiéndolo como un evento excepcional e único.

Ya representado por 18 paises del mundo con más de 10.000 estudiantes, el Junior World Entrepreneurship Forum permiterá aumentar la presencia de los emprendedores chilenos a nivel mundial, y promover y fomentar el emprendimiento juvenil en Chile. También permitirá a Chile traer su visión e ideas nuevas durante la 6ta edición del World Entrepeneurship Forum que tendrá lugar en Singapur los 31de octubre/02 de noviembre.

Gracias a un esfuerzo conjunto de dos Start-Ups internacionales – Planet Expat y Fundacity – y con el apoyo de Start-Up Chile y ASECH, este evento tendrá lugar en la Universidad de Chile en Santiago los próximos 27 & 28 de septiembre. A traves de una serie de actividades – talleres, charlas y concurso de pitch entre varias universidades – estudiantes y jovenes emprendedores tendrán la oportunidad unica de intercambiar, compartir conocimientos y generar ideas nuevas alrededor de un tema común: Navegar el cambio para un crecimiento sustentable.

Dentro de los 20 oradores que van a marcar presencia en el evento: Nicolas Shea (fundador de Start-Up Chile & CEO de Cumplo), Juan de Dios de Carvajal (Gerente de Emprendimiento de Corfo), Dr. Pedro Vera Castillo (Director Programa EMPRENDO, Universidad de Concepción y Presidente de EmprendeSUR), Horacio Melo (Director Ejecutivo de Start-Up Chile).

įCuandó?: Los 27 y 28 de septiembre de 2013
įDónde?: En la Universidad de Chile, Santiago
įQué?: El Junior World Entrepreneurship Forum
Detalles en: http://junior.world-entrepreneurship-forum.com/jwef-events/santiago-de-chile-2013-
edition/
Contacto para la prensa: Sophie Vurpillot, sophie@planetexpat.org

Briefer

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It is my pleasure to bring another Fundacity Inside Startups Interview with Jardson Araújo, founder of Briefer <<http://www.fundacity.com/startup?id=216>>. Briefer is a tool enabling the parties involved to collaborate on a creative project and store important information more efficiently, and easily.

How does Briefer help the start-up community?

Briefer is a mobile CRM, Customer Relationship Management, an application for drafting and designing creative briefings. With this service, we aim to maximize the ability to assist a seem-less collaboration in a creative project. We intend to help people work more collectively, in order to increase productivity and decrease the amount of misconceptions with briefings poorly designed by organizing, then storing the information.

Briefer thinks of a solution that could be applied to store important information for the project, so that this information could be accessed and used to help designers and clients during the development process of any startup.

Who is behind Briefer?

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Founder

In addition to Briefer, I have two other projects in the concept phase focused on business and entertainment. I have participated in many interactive projects and e-commerce projects, including mobile applications focused on education and health. I developed sites about bands and entertainment, including projects for social companies.

About my team

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In 3 years I worked at 2 companies, in addition to the most recent project, Briefer. In one of the companies I worked with my partners Max, David, Gustavo, Manuel and Yuri, and the other with Geovani and Márcio. We developed interactive projects that worked to achieve our company’s goals.

What is the hardest part about the fundraising process and how could it be made easier?

Our project is in the bootstrapping phase. In this step, I believe the hardest part to attract investments is to let the right people know about this project and above all convey the vision and prospect of Briefer. We hope to attract smart money. Not just cash, but great ideas and advice. People that ask the right questions and make us think.

What is Briefer’s current fundraising status?

We are currently bootstrapping. We entered into several start-up competitions, such as the Start-Up Chile, FounderFuel, i / o Ventures and others in F6S and Angel List. We are also applying to Startup Chile through Younoodle.

What is the process for Briefer’s development?

We are completing the last stages of Briefer’s interface; then we will move to the stage of prototyping and testing within companies in real projects. After that, we will analyze the results and improve what is necessary to introduce them to other companies and professionals in order to arouse the interest for the tool. Only then when Briefer is tested and accepted positively by ideal investors, we will make the service publicly available.

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