Claudio Barahona, Alaya Capital | How Corporate Venture Capital Works and How to Raise a Seed Round [Ep. 11]

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More and more corporates are getting proactively involved with startups in Latin America and intend to invest in them. However, the reality is that the corporate venture capital industry is still very small in the region.

To talk about this and other topics, in the 11th episode of the Startupeable Podcast, we invited Claudio Barahona, someone very experienced in corporate venture capital. Claudio also joined Alaya Capital as Managing Partner, a Chilean-Argentine venture capital fund. His portfolio includes Betterfly, Moova, and 123 Seguro. Alaya is one of the few Latin American funds specialized in the Seed stage. It invests around 500 thousand dollars per round.

What You Can Learn Today

  • Corporate Venture Capital and when to seek it
  • Common mistakes when raising a first round from a VC fund
  • Recommendations for a good pitch deck

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From Gaming to Startups

  • [1:46] - How did Claudio arrive at the world of startups?
    • E-sports venture, gaming E-commerce
    • Experience at the Ministry of Economy of Chile and Wayra Chile
  • [4:41] - Gaming as a pioneering on-line industry

Introduction to Corporate Venture Capital

  • [7:21] - What is Corporate Venture Capital? How does it differ from traditional Venture Capital?
    • Experience at Teléfonica Wayra
    • Venture Capital as a financial game
    • CVC: good investment + startup fit - company vision
  • [11:20] - Why should or should not a corporation start a CVC strategy?
    • Need in order to survive in the long term
    • Innovation: R&D, M&A, CVC
    • Corporate Venture Capital as a strategy
  • [15:50] - Why are corporations in Latin America taking so long with CVC?
    • Status of CVC in the world and in Latin America
    • What does implementing CVC in a company imply and what does it not?
    • Consequences of not starting a CVC strategy
    • Cases of Corporate Venture Capital in Latin America

State of Seed Capital in Latin America

  • [23:31] - “Missing Middle” of Venture Capital in Latin America
    • Differences between countries in the situation of VC
    • Mexico as an attractive market for Latin American startups
    • Alaya Capital investment thesis
    • Why do VC funds in Mexico not invest in the seed stage?
    • Bridge-to-A rounds
  • [32:24] - What mistakes do entrepreneurs make when designing and executing their first institutional round?
    • Entrepreneurs’ focus on financing
    • View of the VC as a strategic partner
    • Need for profitability
    • VC ≠ pitch contest
  • [35:42] - What is the sweet spot of traction that a startup needs for Alaya Capital?
    • Growth rates, sales, and product market-fit
    • Full-time team that is complementary to one another, with an expansion vision
    • Startups at the “money-making machine” stage
  • [38:00] - What would Claudio like to see more often in startups’ Pitch Decks?
    • Importance of the purpose of the company and its founders
    • More focus on unit economics than on the product
  • [41:34] - Purpose as a startup’s engine

When Startups Should Raise Corporate Venture Capital

  • [43:03] - When should you seek investment from a corporate?
    • Advanced stages, from pre-A to series A
    • Alignment with purpose and sector
    • Win-win relationship between startup and corporate
    • Time dedicated to the corporate

Tweet Round

  • [47:20] -
    • Verticals/trends in which Claudio would like to see more entrepreneurs: cybersecurity
    • Recommended books: The Advantage, by Patrick Lencioni
    • Change in the world of startups in Latin America: Hispanic America as a single market
    • Investors: Marcos Galperin, of Mercado Libre, and Nathan Lustig, of Magma Partners

Episode Mentions

You can find Claudio on Twitter and LinkedIn

Reports of Corporate Venturing & Open Innovation Latam: https://corporateventuringlatam.com/

Recommended books: The Advantage, by Patrick Lencioni

Investors: Marcos Galperin, of Mercado Libre, and Nathan Lustig, of Magma Partners

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