Manolo Atala, Fairplay | Founding in a Market Flooded With Capital, and Choosing Your Investors [Ep. 47]

The audio and video are in Spanish. These notes are a translation.

The startups market in Latin America is hotter than ever. Week after week we hear news about new funding rounds, and total investment in startups in our region has reached historic figures. To talk about these and other topics, we invited Manolo Atala, who has plenty of experience on both sides of the table, as a founder and as a startup investor. Manolo is also cofounder and CEO of Fairplay, a technology platform that gives e-commerce companies access to capital.

Manolo helps us answer questions such as: is this abundance of capital always better? What opportunities does it bring for founders, and what risks should they watch for? And how do you choose between investors who offer you the best valuation and others with more operating experience and market knowledge?

Before Fairplay, Manolo was a partner at Mountain Nazca, and Director for Mexico at Cornershop and Groupon. He is also an active angel investor, and his impressive portfolio includes companies such as Kavak, Jüsto, Cornershop, and Clara.

What You Can Learn Today

Opportunities in the E-commerce sector in Latin America
Recommendations for facing the abundance of capital as a founder
Recommendations for choosing investors

If you like the podcast, the easiest way to help us is by leaving a review with ⭐⭐⭐⭐⭐ on Apple Podcasts. It takes less than 1 minute and helps us convince the hardest guests to land, such as David Vélez, CEO and founder of Nubank, whom we would love to interview.

Youtube Timestamps*

Fairplay & E-Commerce in Latin America

[1:42] - How did Manolo get into the world of startups?
Time at Yahoo! and Groupon
[3:05] - What is Fairplay?
- A technology platform that provides capital to e-commerce companies to accelerate their growth
- Investment in inventory, marketing, and logistics
- Fairplay Insights, a data intelligence platform
[4:18] - Competitive landscape, existing models, and what makes Fairplay disruptive
- The appearance of more models around SME lending
- Access to capital as a Latin American problem and an opportunity for fintech
- Room for several players
[6:02] - Advantages of focusing on a single vertical, e-commerce
- Specialization in the sector
- Deep knowledge of the needs and the subcategories of the vertical
[7:25] - Fairplay’s advantages over its competitors
- Visibility into every channel and its data
- Broader underwriting that is more friendly for the user
[10:23] - In which e-commerce verticals or trends does Manolo see opportunities to start a startup?
- Saturation in some verticals, but not across the whole sector
- Verticals or categories not yet tapped: dietary supplements, cosmetics, sex toys
- Building infrastructure for e-commerce
[13:36] - Potential for D2C e-commerce
- Founders focused on products with great scaling potential vs products that are too niche

Starting a Company in Today’s Market

[15:42] - What does it mean to start a company today, when the market and investment in startups are at historic highs?
- A parallel between Latin America and Africa
- Speed in raising investment because of Fear Of Missing Out (FOMO)
- Irrational valuations and their consequences for investors and founders
[19:08] - How should a founder think about raising capital in this context? What opportunities should they take advantage of, and what risks should they watch for?
- Perspective from having seen the main Mexican funds being born
- Underestimating local funds vs international funds
- Each investor brings a different kind of value
- The importance of a combo of investors who complement each other
- The case of Fairplay and its investors QED investors and Nazca
[22:03] - How do you compete for talent in a market where so many startups are well funded?
- A constant search for the best talent
- Irrational salaries because of the financing
- A progressive market adjustment
- The importance of culture, vision, and methodology for growing
- Longer hiring processes
- Starting to look at talent outside the startup ecosystem
- First-time founders and the case of Nowports and Meru

How to Choose Your Investors, Based on Experience at Fairplay and as an Investor

[27:25] - Why is it important to choose your investors well?
- Storytelling, conviction, and vision at the pre-product and pre-revenue stage
- Choosing investors well vs the need for capital
- The investor’s interest in going deep on the investment opportunity
- The importance of seeking references on investors
- The value it adds to the investor over the long term
[32:07] - What characteristics should a founder look for in their investors?
- Identifying what type of fund your company needs
- The investor’s ability to follow you over time
- Sector-specialized funds vs generalist funds
- Considering the right stage for including specific investors
- Fit between the team and the investors
[36:01] - What has Manolo looked for in his investors for the Series A that was different from when they raised their seed round?
- Seed round: 100% storytelling, focus on existing trends and traction
- Series A: one of the hardest, a mix of storytelling and Product-Market Fit metrics that support scalability
- Series B: a strong focus on metrics and growth
- Understanding which metrics affect the valuation
- Knowing at what moment you should raise capital
- Avoiding talk of valuation until you know whether there is fit
[40:18] - Advice for founders when evaluating an investment offer
- Thinking about what the path alongside the fund will be like
- Considering the consequences of a down round
- Focusing on references from the portfolio and other funds
[44:05] - Recommendations for getting the most value out of each investor
- Understanding who inside the fund can add value in different areas
- The case of Fairplay and the relationship with each member of QED Investors
- Implications of the number of investors on the cap table

Tweet Round

[48:42] -
- Recommended books: The Hard Thing About Hard Things, by Ben Horowitz, and Shoe Dog: A Memoir, by Phil Knight
- Changes in the Latin American startup ecosystem: the irrationality of certain decisions and the sense of duty to investors and employees, as well as the vision of growing at any cost
- Founders to interview: Ricardo Weder, of Jüsto, Alfonso de los Ríos, of Nowports, and Manuel Rodriguez, of Meru

Episode Mentions

You can find Manolo on LinkedIn and Twitter

Founders to interview: Ricardo Weder, of Jüsto, Alfonso de los Ríos, of Nowports, and Manuel Rodriguez, of Meru

Discover More from the Startupeable Podcast

Listen to every episode at startupeable.com/podcast.

Subscribe to the newsletter to hear when a new one comes out.

Follow Enzo Cavalie on X: @enzocavalie.