In the midst of one of the greatest economic crises our planet has ever faced, securing investment is no easy task, and startups are confronted with two scenarios: the first is the one most affected by the crisis, unable to access the credit offered by the government, many promising startups found themselves lost and without capital to sustain their businesses. And the second scenario is the opportunities that startups in certain sectors have found in the crisis. Many markets have good prospects for starting a business by offering services that meet the new demands brought about by the pandemic. According to a survey by Inside Venture Capital Brazil, investment in Brazilian startups in January 2021 exceeded US$ 630 million, representing 18% of the total invested in 2020. Within this context, we want to present the ideas of an expert who will discuss how startups can seek and negotiate with investors to invest in a new idea or sustain their businesses. “First and foremost, the choice of team members should be based on what each can contribute, not on friendships. This ensures that people will act in the best way for the success of the venture without having fingers to point when problems arise along the way. As for scaling the product or service, this also relates to the team and resources,” says consultant and lawyer, Emanuel Pessoa.
Emanuel, what are the major difficulties faced by startups in the current scenario?
The difficulties remain the same as always: assembling a good team, scaling the product or service, and obtaining the necessary resources until reaching financial equilibrium.
How should these companies overcome these challenges?
First and foremost, the choice of team members should be based on what each can contribute, not on friendships. This ensures that people will act in the best way for the success of the venture without having fingers to point when problems arise along the way. As for scaling the product or service, this also relates to the team and resources, forming a virtuous circle. A competent and well-managed team is more likely to obtain the resources needed to develop and scale the product or service, as investors would trust in their ability to do so.
After overcoming these challenges comes the acceleration phase. How should these startups accelerate this process?
Acceleration occurs when the startup has already fine-tuned its product or service, developing it in a scalable manner, which further requires investments in sales, advertising, and legal certainty
How can innovation shape the path of these companies?
By definition, startups deal with innovation, which can be limited to procedures, for example. However, the more innovative the product or service, or the procedure used to achieve them, the easier it is to scale.
Os investimentos nessas startups estão a todo vapor mesmo com todas as incertezas?
Yes, because the profitability of investments in the financial market has plummeted, so startups end up being a good destination for investments given the potential for high returns in a diversification strategy.
How can companies seek out these investments?
They should seek out venture capital firms and funds, which can be challenging in the beginning due to a lack of market knowledge, which becomes essential to integrate into the ecosystem through coworking spaces, accelerators, and events.
Once this capital is secured, how should it be used?
Primarily to scale the product or service.
Will this capital also be important for attracting new customers?
Undoubtedly, it should be used mainly for scaling, which involves customer acquisition. If used for other purposes, investors will tend to demand a higher return or greater participation in the startup.
What is crucial in negotiating with potential investors?
Demonstrating that there is an effective path to follow, that is, there is a well-thought-out business plan with a cohesive team that has direction. Even though plans can be changed, without them, there are unlikely to be investors willing to take the risk.
What are the characteristics of startups evaluated by these investors?
The quality of the team, the legal certainty of the business, the scalability potential, and the commitment to the project.
Source: https://panoramamercantil.com.br/emanuel-pessoa-as-dificuldades-sao-as-mesmas-de-sempre/
