What actions can entrepreneurs take to not only raise money to finance their enterprise but as importantly-help Latin American investors to see beyond the financial rewards of investing in just their company-and finance other ventures in their community?
By achieving this outcome entrepreneurs not only secure their future, but they impact the DNA of domestic capital to invest the cash required to 'Scale Up' start-up communities. While it's challenging to startup a start-up community, it's even more difficult to build the legs required for entrepreneurial communities to achieve sustainability.
It was these subjects which I spoke to on Day #2, APEC conference on Global Startups in Lima, Peru. Topics presented include:
Reasons why the Silicon Valley way of business model creation & venture capital translates poorly to emerging markets-& the way forward for entrepreneurs
Risks 'bought' by investors in Latin America & the creation of business models which satisfy their requirements for investment
Engineering the design of venture funds to finance grand challenges and national priorities in energy, water and food as examples
It's essential that entrepreneurs create business models which customers demand. But you must think beyond just customers and 'shape' your business models to the behavior of local capital to risk too. Until investors understand and 'buy' the risk in start-ups & early stage SMEs, too little capital will flow to entrepreneurial communities in Latin America vs. the amounts available for investment.
Too often I see entrepreneurs attempting to 'shape' investors' behavior to risk as their strategy to raise capital, but such actions rarely succeed. Rejected at home, many label domestic capital as too conservative and they hop on the next airplane to Silicon Valley. A few raise money but most fail, and return facing an unknown future. Yet this belief which drove founders to the USA-that domestic money is too risk adverse for venture stage companies-is false and misguided.
View solutions to raise L. American money here (PDF). For those fluent in Spanish, you can view my presentation as a video with a Spanish translation voice-over.
This event was hosted by the Ministry of Production, Government of Peru. I thank Vice Minister Francisco Grippa and his trusted colleague, Enrique Aldave, Director of General Directorate of Innovation, Technology Transfer & Business Services for their invitation.
Event attendees included representatives from APEC member countries & staffers from multiple branches of the Government of Peru, Peruvian entrepreneurs, investors (+ investing organizations), universities, the media and entrepreneurial support organizations. There was even good numbers of entrepreneurs attending from Chile, Columbia, Malaysia, the Philippines, Mexico and Korea.
Be well and be lucky.
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