Venture Capital in Latin America, Specially in Colombia

The Venture Capital industry is going places this year. Latam's VC market grew to 2 Billion USD last year according to the Latin American Venture Capital Association (LAVCA), with mayor players interested specially in Colombia: Y Combinator and Andresseen Horowitz invested in a Colombian Startup this year, Rockstart opened shop here as well, and major European, Asian, and Israeli funds are shopping around.

Latin-american Investment Opportunities

I had the pleasure of moderating the Venture Capital Panel in the 1st Latin-American Investment Congress (Congreso Latinoamericano de Inversión) at Universidad de los Andes on December 3rd this year. At the panel we discussed various issues regarding the present and future of VC with Patricia Saenz, MD at Mountain Nazca, Felipe Santamaría, MD at Rockstart Colombia, and David R. Sanchez, MD at Ikon Venture Capital Fund.

We talked about the past, present, and future of Venture Capital in this continent, discussing selection criteria and dealflow, pipeline and opportunities, advice and warnings for entrepreneurs and investors alike.

My main takeaways for investors and startups are as follows:

Investors

1. Venture capital investment is a long-term, high-risk, high-return, professional business.

Venture capital investment differs form other asset types, and specially from its mother category: Private Equity. Venture capital is nuanced with it's specific jargon, valuation methodologies, due diligence techniques, and investment stages. It has its own negotiation, legal, and financial standards. Potential investors interested in being part of the venture capital world must consider these conditions and manage them accordingly, either search for education opportunities in this area or choose professional investor agencies or funds to manage this risk for them.

2. The best way to invest is through professional agencies or platforms.

Startups

1. Don't focus on convincing investors of giving your startup money, focus on helping clients fall in love with your value proposition and then offer investors the opportunity of being part of your startup.

Entrepreneurs usually think the only thing missing to have success with their startup is money. Most of the times that is the only thing that is NOT missing (yet). Not having access to resources can indeed be fatal but there are low cost ways to prove your business model and earn sufficient enough traction (revenue or traffic) to attract investors and receive sufficient resources to grow as fast and safely as possible.

2. When you are ready to ask for investment, go for smart money not just money. Bring investors in that can offer you connections, guidance, knowledge, and experience.

Investors become partners in your startup and as so, you must select them as cautiously as you would your friends, life partners, and religion. Money by itself sounds good but is definitely not useful at all if it comes with tricky clauses or it comes from the wrong people.

I encourage all of you to learn more about Venture capital by following this blog. Hope the advice helps!

#entrepreneurship #venturecapital #English