The audio and video are in Spanish. These notes are a translation.
If you are raising capital, the best thing you can do to increase your odds of success is to expand your universe of investors toward the United States.
Today I spoke with Andrés Barreto, Managing Director of Techstars’ Miami office, one of the most important accelerators in the world. Before Techstars, Andrés founded multiple companies and has been an angel investor in more than 50 startups, such as Ayenda, Playvox, and Hunty, which have been on the podcast.
Andrés told us about the investor landscape in the US: what their appetite is for investing in seed-stage startups from Latin America, how to get in touch with them, and the cultural differences when dealing with a US investor versus a Latin American one. Finally, we talked about Andrés’s “Jedi tricks” for creating FOMO, speed, and trust with investors when raising capital.
Youtube Timestamps*
[1:51] - Andrés Barreto’s Story
- How did Andrés get into the fascinating world of startups?
- As an angel investor and now a director at Techstars, Andrés has invested in hundreds of companies at their earliest stages. What are the main reasons he has seen that lead a founder to make that decision and take the leap? Does Andrés see common patterns?
- Does Andrés believe there are better ways to prepare to start a company and make the transition? Or does it really not matter?
[11:13] - How to Raise Capital in the US
- Raising capital is a numbers game: you have to go to 99 funds for the 100th to say yes. The problem is that in Latin America there are still few funds, 30 if you are lucky, especially at the seed stage. How does Andrés see the current appetite for investing in seed-stage startups in the US? And how would he summarize the paradigm shift between 2021 and 2022, and today?
- There are 2 groups of funds in the US that invest in startups from Latin America:
- The large funds that have people focused almost exclusively on the region, such as Andreessen Horowitz, Lightspeed, and QED, and that travel to meet founders
- US-based funds that have an appetite for Latin America, but you have to come visit them in person
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Does Andrés agree? How would he describe the landscape of United States funds that invest in Latin American startups, and what are the most effective ways to connect with them?
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How important is the cold email for raising investment, and what mistakes or good practices does Andrés see in founders?
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Would Andrés say there are important considerations to keep in mind when dealing with US funds that might not be as relevant when dealing with Latin American funds?
[27:53] - Jedi Tricks
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Andrés has “Jedi tricks” for increasing the success of a fundraise, and the main ones are 1) creating scarcity, 2) creating momentum, and 3) the data room.
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What does Andrés mean by a sense of scarcity and momentum, and how do you create them in your investment round?
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What does Andrés mean by calendar density, and how do you prioritize which fund to meet with first?
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How does Andrés see the strategy of SAFEs with staggered valuations?
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Does Andrés recommend any criterion for prioritizing the order in which to contact investors? Perhaps contacting Latin American funds first and then US funds?
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Andrés usually recommends that “if you are seeking pre-seed investment, the founder should prepare a data room as if it were a Series A. And if it is seed, as if it were a Series B.” What is the logic of this “over” preparation? Does Andrés recommend it to all startups, or is it a strategy to cover that trust gap with US investors?
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What advice does he give those founders who execute well and sell well, but cannot generate enough interest from investors? (Sometimes it seems their biggest mistake was not being in Silicon Valley)
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Speaking of execution, Andrés talks a lot about speed of execution. How does he measure it when he evaluates a startup for Techstars? What does a startup with speed of execution look like?
[45:34] - Rapid-Fire Questions
- If he had to start a company from scratch, what is the main piece of advice Andrés would give himself?
- What has been the most influential book on Andrés’s path through the world of startups?
- Changes Andrés would like to see in Latin America’s startup ecosystem
Episode Mentions
You can find Andrés on LinkedIn
Recommended book: Venture Deals by Brad Feld and Never Split the Difference by Chris Voss
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Follow Enzo Cavalie on X: @enzocavalie.