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1Mby1M Virtual Accelerator Investor Forum: With Jose Deustua of UTEC Ventures (Part 4)

Posted on Friday, Jul 19th 2019

Sramana Mitra: How much of your portfolio has this follow-on funding?

Jose Deustua: All of them have raised funds.

Sramana Mitra: All of them have received funding from what source? What is the primary source? 

Jose Deustua: Mainly angel investors. In Latin America, one of the biggest challenges is the lack of funding. It’s different in the US where you can raise the first round with $1.5 million. Here in Latin America, first round is usually a seed round between $200,000 and $500,000. Then if you progress, you can raise a bigger round. The round after the acceleration will be around $200,000.

Sramana Mitra: The angel investors who are investing in these companies, are they from the technology industry or are they from different industries?

Jose Deustua: Different industries. They come from the financial sector, family offices, and some from the tech sector. We’re trying to build an ecosystem. We’re trying to create these virtual cycles of investments. To do that, we need more exits. 

Sramana Mitra: That cycle hasn’t completed yet. That kind of money hasn’t come in yet. 

Jose Deustua: Yes. That happens to most countries in Latin America with the exception of Brazil and Argentina.

Sramana Mitra: These 26 companies, what sectors are they from? What trends are you seeing that are reflected in these 26?

Jose Deustua: There are three main trends. One is FinTech. Financial resources is also one of the biggest challenges in Latin America. Then AgriTech. Most of the countries in Latin America have a very strong agricultural sector. Then the third trend is mainly B2C services-related startups.

Sramana Mitra: How many startups do you think are operating in Peru today?

Jose Deustua: I will say more than a thousand startups in Peru. Probably around a hundred are investment ready. 

Sramana Mitra: How many do you think have significant revenue? Let’s say a million in revenue.

Jose Deustua: I don’t have the numbers, but not many. We have very good support from the government. We have a very strong community; still small but strong. We are investing a lot in talent.

UTEC is a new university. We have been around for only six years. We have focused on engineering talent. Since the beginning, we have thought about investing in startups as a way to support entrepreneurial talent in Peru.

Sramana Mitra: Very good. In One Million by One Million, we love to see new geographies coming up and starting to get some traction. I personally am deeply involved at the beginning of the Indian startup ecosystem. We have a very big penetration in India.

Now we’re seeing companies coming from everywhere, including Africa. It’s really fascinating talking to people and seeing companies from all over the world. I wish you all the best. 

Jose Deustua: It’s very interesting because we are a part of a program called MIT REAP. We had the opportunity to share experiences with other ecosystems from Canada, Australia, Africa, and Europe. It’s very interesting to see the difference in stages and also learning from the ones that are more developed.

Overall, the Latin American countries have been lagging behind these opportunities. This is changing now. Right now, Softbank have just created a $5 billion fund to invest only in Latin America. They have invested $2 billion in the last eight months.

We are a huge market. These will allow a lot of opportunities to create new startups.

Sramana Mitra: Absolutely. Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Jose Deustua of UTEC Ventures
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