startupi

I was at the mentoring event put on by Desafio Brasil 2009 (meaning Challenge Brazil), at FGV in São Paulo, September 4 and 5. It brought together investors and entrepreneurs and I noted down a series of tips from the experts.

Some think the secret to success lies in the product idea, others say it’s all about the business plan. To help turn your dreams into the reality of your own business, there are angel investors, who like to make money helping new entrepreneurs get started with their businesses. In the United States there are thousands of angel investors and hundreds of venture capital clubs.

In Brazil there are four known associations of angel investors. What do they do? What do they want? If it were just about lending money, they would bet on the stock exchange. And you, what do you want? Below you’ll find some tips on ways for a startup to get along with investors.

Event focused on experience, and showed best practices for those seeking investors

The Mentoring sessions from Challenge: Brazil 2009, sponsored by Intel and by the law offices of Derraik Advogados, brought together angel investors from four Brazilian states, entrepreneurs who had participated in the Challenge in the past, and participants from the startup competition. The program took place on Friday and Saturday, September 4 and 5, in the auditorium of the Getúlio Vargas Foundation in São Paulo.

In the words of Cláudio Furtado, professor at GV, “what we hear here should be recorded and listened to again every day; it’s content you cannot teach even in a four year course. It is the result of various successful experiences.” Furthermore, he added: “The investor may be an angel, but he likes money. Anyone wanting investment for a startup needs to be focused on being rich, not being king - a king just likes to rule.”

Gian Carlo Martinelli, coordinator of the Challenge: Brazil for GVCepe and also an entrepreneur, summed up the spirit of the competition and the role of the angel investor: “put your money into people, not into businesses or ideas. At this event, we are looking for excellent investments, but also for excellent entrepreneurs.” Check out the words of those who have the money and knowledge to make the best entrepreneurs successful:

• Ernesto Weber, Gávea Angels: “angel investor is an expression born on Broadway. But the angel investor doesn’t just provide financial support; more importantly he provides human capital, networking and expertise. The association is about investors not investments. There isn’t a fund that invests, there are individual investors who invest. We are investing in the jockey, not the horse. Our angels want to have a reasonable level of participation, at least 30%; to have a voice, but never control, because the company depends on the entrepreneur. If wanted to participate only a little, we’d invest in the stock market to have liquidity;”

• Fábio Belotti, São Paulo Angels: “we seek quality projects, but not just to help them out. We don’t just want you to succeed in this Challenge, but to end up with a quality project. We offer management and money and the entrepreneur needs to evaluate whether this is what he needs and wants. You have to be willing to take in the knowledge of the investors; if you can’t, then this isn’t the right path for you;”

• Camilo Telles, Bahia Angels: “the recipient of an investment also needs to evaluate and choose the investor, because they will need to rely on the investor for some eight years.  Sales expertise is very important, but people often only discuss management. We as investors identify the people in each team that have the most favorable profile, and then one can learn everything related. We look for operational/technical expertise and the charisma to bring things together. We have investors for projects in IT and engineering, and are seeking  ones in chemistry and biotechnology;”

• Marcel Cazado, Floripa Angels: “In the USA it is quite common for angels to remain in business management while associating themselves with an investment fund. If they get involved in incubators, the probability of success increases. Points of reference, such as Silicon Valley, were born in medium to small cities. That’s where people go to start businesses, there or areas with educational institutions. In the past they only had tourism in Silicon Valley. Floripa is still known as a great resort city, but revenue from business is four times that from tourism. There’s a beautiful environment, and plenty of people thinking business;”

• Ricardo Arantes, Intel Capital: “I don’t think there is a default profile for a person to be an entrepreneur. Negative characteristics would be inertia, and not being open to criticism. The entrepreneur has to see signals in the market, listen to others and be agile in maneuvering. We look for innovation in various formats: technology, processes, business models. We bet on people. The review process is a process of getting to know people. Allied with this is management. Management has to keep trying until they find what works, grows, and rises up. Compared with the USA, Brazilians think small;”

Rodrigo Menezes, Derraik Advogados: “the investor wants to guard against the person who created the project selling it elsewhere later. The creator of the project also has to evaluate how long to be committed to the angel. The two sides need and want to value and protect their own assets. Some basic observations: 1) know how to choose well the partners you want to work with; 2) put everything on paper from the beginning; 3) do not fight; 4) a problem with an employee is a big deal.”

Presentation Skills - Mentoring, Challenge: Brazil 2009

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The next stage of Challenge: Brazil will take place in October. Check out the participating companies.