Startups in search of the Mexican Google
The next big technology company can be cooking in a young girl's room in Aguascalientes, during a drunken stupor in Santiago, Chile, or a barbecue in Buenos Aires; the one that will change the reality of entire countries, generate new economies or bring benefits for everyone in the world.
According to Alejandro Lomas Torres, the difference between this happening or not is the existence of someone willing to risk money and trust the new entrepreneurs that are emerging throughout the Latin American region.
"If your country is dedicated to being a hotbed of talent for technologists and innovators, you can create companies like Facebook, Google or Apple that generate high-demand and well-paid jobs, you can really change the history of a country.
"Any State can do it, but you have to bet, you're going to lose many years, lose money maybe, but in the long run it's a very important benefit for entrepreneurs, for you as an investor and for entire countries," he says. investor of startups.
His company, Starcups, is focused on finding and capitalizing on those Latin American Google and Facebook that have not yet taken off but, he says, are out there waiting for an angel investor.
Starcups is an incubator and accelerator of companies born in Aguascalientes, from the mind of former market researcher Alejandro Lomas.
Through an annual call, Starcups recruits technology-based startups that are advised for six months to develop their business model. If the project is promising and with the possibility of being scalable, a capital fund is used to inject money.
Starcups then becomes a partner of the new companies. Starcups also works as an accelerator of traditional companies. Established businesses and any branch receive advice on innovation and organizational changes to technology, from restaurants to accounting firms.
With the money from this line of business Starcups finances investments in new technological ventures.
Among the 70 companies that have incubated, in the Starcups portfolio is the Encalientes food delivery service, specialized in small food businesses, or the exclusive private transportation service of Laudrive women, which already bill millions of pesos.
Alejandro decided to enter the world of risk investment after having a marketing agency. Seeing the wave of entrepreneurship based on technology that was approaching in the region, he decided to redirect his business and never saw it back.
"Right now there is a boom in entrepreneurship in Mexico and Latin America as support was created, new incubators were created, large companies and universities started looking for talent, and new investment funds arrived, but we are still in diapers.
"I could not do anything other than this now, even if the government did not push this anyway, it was going to detonate, this kind of project is a megatrend," he says.
The market in which Starcups moves has been termed as "venture capital", and consists of companies and private funds specialized in hunting new talent.
The name of the game is to buy cheap, before the new companies become unicorns, then sell expensive. Investors multiply their money and entrepreneurs gain traction to start their projects.
Due to its potential profits, this market has been very attractive for large and medium investors who are willing to assume the high risks of trusting in a project created and managed mainly by young people.
"For investors, investing in a bank is not a business, at most they will give you a 5 percent return on your investment, if you invest in the stock market (securities) the average return is 11 percent per year, with a measured risk In the venture capital, where the risk is greater, there is a greater return, and your investment can reach up to 350 times, "says Alejandro.
He explains that in the world of investment startups losses are a fact to which investors must get used. There is a series of unwritten rules about the business. First, do not invest more than 10 percent of your assets, so that when failure comes you do not sink into misfortune.
Second, of every 100 projects in which 50 are invested you will lose money; in 20 you will return the same as you inverted; in another 20 cases the yield is two to four times the investment; and there is a small group of less than 5 percent in which your investment can be multiplied 10 to 20 times.
"I think that no investment project gives you this, neither the bank nor the stock exchange, but you have the possibility that the fund has invested in a unicorn and that it gives you 30X calls (30 times your money). you have to understand is that if you put money in startups you will fail sometime because the risk is greater, "he says.
Alejandro cites the case of Jason Calacanis to illustrate his point. Calacanis was one of the first investors to deposit money in a small Californian project called Uber in 2009. The venture earned Calacanis to multiply 300 times the value of its money and become a famous and multi-million angel investor.
"We all want to invest in something like that, and the only way is by looking for projects, diversifying the investment and taking risks," says Alejandro.
The possibility of unprecedented success has not gone unnoticed by the lords of money. The venture capital ecosystem in Mexico is a highly competitive one.
According to an account by the Mexican Private Equity Association, at the end of 2017, there were at least 63 national fund managers in the country and another 50 foreign firms operating, seeking and capitalizing on talent.
With this in mind, Starcups has decided to innovate in this arena. From the second quarter of the year, the company will launch an app so that any entrepreneur can access business advice online.
Similar to the Coursera model, the online virtual education platform, Starcups will offer specialized courses in the development of new businesses, construction of financial models and online coaching with advisors.
On the other hand, the investing public will be able to see through the app the projects interested in receiving investment and from that moment deposit money if it is so decided.
"The idea is to detect more talents in order to invest in them and we believe that the platform will help us a lot, instead of reaching 60, maybe a thousand a year." That more entrepreneurs develop well, that more projects come out better and that the investor can see more and better projects in a simplified way ", explains Alejandro.
The opportunities to find that new Google in Latin America are real, even if it sounds distant, according to Alejandro. While the region is still developing, its problems, cultures, and personalities can be covered by new local companies with local responses, unlike companies of Anglo-Saxon origin.
"China has already shown that it has generated its own market with its own companies that replace Facebook, Amazon, and Google, and the same will happen in Latin America if we understand as Latin Americans our market better than we Americans will have the opportunity to develop. a Google, a platform that understands better the language, culture, and customs and is where the opportunity is.
"There are still many problems in our societies and I believe that Mexicans are already seeing them and are going to solve them in a better or more tropicalized way to Latin America than the Americans, so I do believe that we can generate a very strong Latin American market," he concludes.
The original text of this article was published by the El Sol de Mexico at the following address: https://www.elsoldemexico.com.mx/finanzas/disruptores-starcups-en-busca-del-google-mexicano-2997017.html