As a startup, raising money outside of your region can be intimidating. You may think there’s too much competition in a new, foreign market or that it’s too difficult to compete from abroad. However, getting investment in Latin America can be just as challenging, if not more difficult, than raising funds in another country such as the US.
Before pitching to an investor, you’ll need to do a significant amount of research. You must prepare yourself by answering questions that address everything from “Why are you solving this problem?” to “Is your company a fit for the VC fund?”
Here are ten questions startups should prepare to answer before meeting a VC.
Legal cannabis cultivation can bolster Latin America’s economic development. Imagine how that would have sounded even five years ago. With the rise of medical and legal recreational cannabis use worldwide, Latin America and the Caribbean have become targets for international investors looking to develop plantations for export and manufacturing.
For a significant portion of the 80s-2000s, illegal drug trade caused instability, violence, and uncertainty in several countries, including Colombia, Peru, Bolivia, and Mexico. Even though much has changed in places like Colombia, shows like Narcos exacerbate stereotypes about drug violence in the region, souring Latin America’s reputation in the eyes of investors worldwide.
Since 2013, however, the attitude toward drugs across the region has evolved. Uruguay led a movement that resulted in widespread decriminalization of cannabis, and in some places, the legalization of the drug for medical or recreational use. Colombia, arguably one of the countries that has suffered the most at the hands of drug-related violence, began to regulate legalized cannabis for export in 2017, becoming one of the region’s leaders in legal production.
Over the past few years, I’ve interviewed nearly 100 entrepreneurs on my podcast Crossing Borders about their experiences doing business in and across Latin America.
I always ask them to offer their advice to aspiring entrepreneurs, and one topic that comes up often is how they create a team that drives their companies to succeed. It takes time and effort to find the right people who fit your company culture and can meet a startup’s needs.
So I decided to round up the best advice on finding, building, and maintaining a successful startup team from these entrepreneurs. Check out their advice below.
1. Hire people who fit your company culture
Komal Dadlani, the founder of Chilean science education startup Lab4U, says that when they were starting out they made the mistake of hiring “senior executives” that were not ready to sell a scrappy startup product. As a result, she found herself handling most of the sales, and paying a high price for experienced workers who weren’t meeting the company’s needs and weren’t a great fit for the company culture.
Instead, she advises not to be dazzled by years of experience. In an early-stage startup with a small team, every person needs to pull their weight. It’s important to look for people who are a good cultural fit, and who are willing to do any task – big or small – to get the job done.
Immigrants make up 15% of the US workforce, but they also make up one-quarter of the country’s entrepreneurs. Currently, up to 40% of new companies in the US have at least one immigrant founder. Immigrant-founded companies receive higher percentages of VC funding, according to this HBR report.
While similar statistics are not widely available for Latin America, there are some interesting numbers that stand out. For instance, there are close to one million US citizens residing in Mexico. The success of programs like Start-Up Chile and Parallel 18 speak to the positive impact that immigration can bring to a startup ecosystem. Living in a new country exposes potential entrepreneurs to new problems that they might have never faced back home, sparking ideas for new businesses. Immigrants may also bring unique skill sets and perspectives that allow them to create more innovative solutions to local issues.
I’ve also noticed that living or studying abroad for a period can produce a similar effect. Many of the top entrepreneurs I’ve seen in Latin America left home to study in the US or UK, only to return to their home country, or another part of LatAm, with an entirely new perspective on their local problems.