I asked Cristobal Perdomo to join me on this episode of crossing borders to talk about venture capital in Latin America. Cristobal is one of the founders of Jaguar Ventures, a Latin American based VC firm.
After getting an MBA and consulting for a couple of large companies in Brazil, he realized that the VC world was largely ignoring the rest of LatAm, so he set about to expand funding opportunities for startups in Argentina and Mexico. He shares advice for managing a business in multiple countries, investing in startups across the region and tips for managing teams across borders.
Una version de este post aparece en español con el titulo Lo Que Debes Saber Antes de Invertir en Startups. También fue una charla (video).
As startups and tech investing has gone mainstream with things like AngelList, Shark Tank, The Social Network, the proliferation of accelerators and incubators, and the celebritization of founders and VCs, more money has flowed into the industry.
Most non professional investors interested in startups are starting to dabble in early stage companies as angel investors. Friends often send me deals they’re think about investing in, asking for advice.
Here’s a concrete example of a typical question from a successful entrepreneur friend looking to invest:
I am starting to look at some investments in startups that have proven initial product-market fit and revenue traction with positive gross margins. I have found some great opportunities [and] I am only targeting businesses that meet my personal criteria. My biggest concern is how I should evaluate the businesses from a valuation perspective. Is there any guide suggested on this?
I personally am finding companies that claim to have a higher valuation than my own company which has greater revenues and faster growth rates, etc. So, that puts off a bit of an alarm in my head but I realize it’s normal in the VC world. I don’t really know how to value a VC backed start up.
I decided to share my answer: (more…)