Full access to Entrepreneur for $5
Subscribe

The need for Silicon Valley as a geographical point decreased: Andrés Barreto

The managing director of the TechStars accelerator explains why investors around the world are looking to Latin talent.

By
This article was translated from our Spanish edition. Opinions expressed by Entrepreneur contributors are their own.

The moment for Latin American entrepreneurship has arrived. There is no other region in the world that is experiencing a clearer boiling point than the Latin American startup ecosystem, since in recent months several unicorns have been created - companies that reach a valuation of more than one billion dollars-, mainly in Mexico, Colombia, Argentina, Chile and Brazil .

Cortesía TechStars

This is because world investors are turning their gaze to Latino talent and that, for better or for worse, the pandemic has shaken many things that we believed to be true. One of them is working with seed accelerators (entities or companies that promote startups in exchange for participation in the business) from all over the world that are injecting capital into local entrepreneurs.

To give us an idea, according to data from the Association for Private Capital Investment in Latin America (LAVCA), in the last six years, investments in venture capital grew 673% in Latin America.

To learn a little more about how accelerators and investors are seeing the opportunities of the Latin American entrepreneurial ecosystem, we interviewed Andrés Barreto, entrepreneur, speaker and managing director of Techstars . This accelerator invests in ventures of all kinds in their earliest stages. Typically injects $ 120,000 and has more than 50 programs around the world. Since 2007 they have supported more than 2,500 companies.

Editor's Note: The interview has been edited for clarity.

ENTREPRENEUR IN SPANISH (EN): Andrés, taking into account Kavak, Trendenube, NuBank, -all these startups that are reaching the degree of unicorn this year-, how do you see the Latin American entrepreneurial ecosystem at the moment?

ANDRÉS BARRETO (AB): I have been part of the entrepreneurial ecosystem in Latin America since 2008 and only in 2021 are we seeing the examples that you mention. The interesting thing is that most of its investors are from outside the region, which shows that the Latin American market is not only its talent but also attractive to invest from outside.

Before that we had local investors and we also had examples of companies whose market was global, but which operated from Latin America. But now we have that more and more investors from the United States and Asia are turning to the region to support more entrepreneurs.

EN : What do you think is happening with the Latin American entrepreneur? Do you think we have already reached another level of maturity?

AB : I believe that the Latin American entrepreneur has always had a maturity, even a resilience that one does not see in developed markets, such as the United States, because before it was almost impossible to carry out investment rounds. Typically we heard that businesses were financed only with friends and family and angel investors, but it was difficult to access contacts with greater capital.

I think what has matured is the ecosystem that now investors are seeing opportunities in the region and if they are putting money. What is happening this year is that these ventures that started 7 years ago reached a point where capital from much larger funds entered that before did not arrive because they were very small companies.

However, another very big opportunity also arose with the pandemic: Before, an entrepreneur from Latin America had to travel to Silicon Valley, have contacts there and invest time, knowledge and capital in raising money from there . Now a call by Zoom is enough. Geographic barriers are breaking down, for both entrepreneurs and investors. The need for "Silicon Valley" as a geographic point decreased. Access to the opportunity was made easier, within reach of a video call. Finally, we see that with the nature of remote work, an entrepreneur in Miami, Boston, Guadalajara, Medellín or Córdoba has the same access to the commercial market and capital to create products that are born global from day one.

EN: Andrés, you usually talk about other geographical points besides San Francisco as starting points for Latino entrepreneurship. What would you say to those who continue to bet only on the American hub to raise capital?

AB: To the entrepreneurs who are now looking for capital, I say: They are not geographically limited . If they can raise capital in Mexico, Colombia, Chile or Argentina it is almost the same because the presentations are made by videoconferences.

In the United States, there are 900 funds that we call microfunds that manage less than 200 million dollars, that is, they are the ones that sign the small checks that will help Latino startups to get started. Those are the ones who are turning to see the opportunities in Latin America.

For example, TechStars and other accelerators are opening the doors for entrepreneurs to participate in their programs and receive that investment without having to physically relocate, because in many cases it is not necessary and in others it is simply not possible.

EN: It still seems that many Latino entrepreneurs make basic mistakes when pitching or doing their due diligence . As an accelerator, what areas of opportunity have you detected in entrepreneurs in the region?

AB: We work hard to help entrepreneurs make their capital raising efficient. We train our entrepreneurs to generate momentum ; to generate a lot of interest from investors towards your startup in a compressed time.

The trick is to gather all the meetings with the investors in the same week or in a very short space of time. That creates pressure for that nagging question investors ask of "How much have you raised in your round?" or "Who else is interested?" You may not have anyone at that time, - even if it is your first meeting -, but you can tell them “Now I don't have a leader for this round, but I have 30 meetings scheduled this week and we are going to make a decision about which investors to go to. to accept in this survey by the end of the month ” .

EN: You have a commitment to finance a thousand CEOs by 2026. Why that number and that date?

AB: We not only want them to be a thousand, but also to be diverse CEOs. If we are going through a time of digital and economic transformation globally, we have the opportunity to create an innovative industry that does not make the same mistakes of the first four or five decades of Silicon Valley. That is, having only white men leading investment, companies, boards of directors, or software developers. It was an industry that became very exclusive, but now that everything is changing and there is a boom in the economies in Latin America, it is time to make it inclusive and this time have participation of gender diversity, ethnicity, sexual orientation. Why not make a more inclusive digital industrial revolution?

And we set the date 2026 to have a period of five years to achieve it, but I believe that we will achieve it sooner.

EN: If you could ask for something for the Latin American region, what would it be?

AB: I want to see that more companies led by women continue to increase that money raised. There are those who assert that only 2% of the capital goes to companies led by women or minorities and that has to change. Why each program has its own goal TechStars to encourage women and minority and often minority women.

I want to see that continue to grow.

EN: Please give us 3 tips to get closer to an accelerator like TechStars.

AB: The first is that beyond the idea, the important thing is to have a good team . Having a very strong and diverse founding group, not only in skills but also in gender and ethnicity. Also this team has identified a clear problem . With these two points resolved, you must now demonstrate execution: what can you do to solve this problem.

The Techstars Boulder Accelerator was founded in 2007 as an acceleration program and has since helped 160 companies grow their business to the next level. It offers a network of contacts and mentors with significant global experience in business creation and scaling. In his program, entrepreneurs perform two-year work in the three months that it lasts.

You can apply for the new edition of TechStars Boulder until October 6. Find more information here .