3. Venture
funding
works
like
gears.
A
typical
startup
goes
through
several
rounds
of
funding,
and
at
each
round
you
want
to
take
just
enough
money
to
reach
the
speed
where
you
can
shi>
into
the
next
gear.
Few
startups
get
Funding
quite
right.
Many
are
underfunded.
A
few
are
overfunded,
which
is
like
trying
to
start
driving
in
third
gear.
I
think
it
would
help
founders
to
understand
funding
beEer—not
just
the
mechanics
of
it,
but
what
investors
are
thinking.
It
is
like
bringing
2
worlds
together,
2
different
cultures.
Therefore
it
also
would
help
investors
if
they
had
gone
through
a
real
startup
venture
before.
This
is
what
you
should
be
seeking
when
talking
to
Incubators,
Accelerators
and
Angel
Investors.
They
not
only
should
provide
funding
but
also
the
necessary
business
experIse
as
well
as
the
experience
of
building
a
startup
company.
Follow-‐on
funding
in
general
is
coming
from
Venture-‐Capital,
supported
by
industry
including
large
MulI
NaIonals.
MulImillionaire
Mike
Markkula
was
the
Angel
Investor
for
Apple,
who
provided
the
essenIal
business
experIse
and
funding
of
$250,000
during
the
incorporaIon
of
Apple.
3
4. Chile
has
recognized
the
importance
of
entrepreneurship
for
the
future
of
its
economy,
the
country
and
the
people
in
the
country.
Many
valuable
programs
have
resulted
in
a
significant
increase
in
entrepreneurship.
Startup
Chile
is
recognized
widely
above
the
boarders
of
LaIn
America
and
is
aEracIng
Startups
from
the
US
and
Europe.
However
most
of
them
are
leaving
again
given
the
lack
of
follow-‐on
investment
or
local
market
opportunity.
The
startup
ecosystem
is
expanding.
Over
40
incubators
and
accelerators
are
established,
most
of
them
supported
by
CORFO.
Angel
investment,
while
sIll
in
its
infancy,
is
growing
with
3
acIve
Networks
established.
IdenIfying
the
gap
of
follow-‐
on
investments,
CORFO
just
launched
a
program
to
support
the
building
of
Early
Stage
technology
funds.
In
addiIon
the
government
is
working
on
regulaIng
Crowdfunding
supported
by
internaIonal
experIse
–
while
the
first
plaorm
is
acIve
already
and
a
2nd
will
be
launched
soon.
However,
local
industry
and
family
offices
need
to
step-‐up
and
parIcipate
acIvely
with
money
and
experience
to
build
a
solid
Venture
Capital
environment
to
enable
Entrepreneurship
as
a
key
engine
for
Chile´s
future
economy.
Local
Entrepreneurs
on
the
other
hand,
need
to
be
more
prepared
for
the
challenges
in
venturing
a
startup.
While
invenIng
a
product
is
important,
proving
it
in
the
market
is
the
first
criIcal
step.
Nobody
pays
for
a
good
idea,
nobody
invests
just
in
a
good
idea.
The
valuaIon
of
a
company
at
prototype
stage
is
the
most
disputed
topic
between
entrepreneurs
and
investors.
Successful
Entreprenerus
bring
InnovaIon
spirit,
live
and
breath
their
target
markets,
are
open
for
and
regularly
seeking
coaching
and
mentoring,
have
only
the
best
people
surrounding
them,
understand
that
funding
is
not
for
free.
4
5. Investor
strategy:
As
indicated
in
my
previous
speech,
having
a
solid
investor
strategy
is
important
to
understand
which
investors
you
want
to
target.
E.g.
if
your
venture
is
targeIng
the
food
and
agriculture
market
in
Chile,
you
might
not
only
be
able
to
raise
public
funding
through
related
Incubators
like
Austral
Incuba,
but
at
later
stage
be
able
to
raise
smart
money
with
the
strong
local
industry.
Your
funding
strategy
is
purely
focused
on
Chile
with
a
solid
industry
in
your
back.
To
the
contrary
Life
Science
which
has
not
only
a
very
limited
local
target
market
as
well
as
no
major
local
industry
player,
nor
any
internaIonal
player.
Both,
food
and
Life
Science,
have
preEy
strict
regulatory
hurdles,
however
in
the
example
you
would
have
to
overcome
in
case
(1)
regulatory
hurdles
in
Chile,
while
in
case
(2)
regulatory
hurdles
minimum
in
the
US
and
Europe.
The
related
cost,
the
expectaIons
of
investors
and
the
compeIIve
environment
is
hugely
different.
Depending
on
the
stage
of
your
venture
you
are
looking
for:
(1)
Fools,
Friends
and
Family,
(2)
an
incubator
supported
by
CORFO
funds
or
other
public
funding
(3)
Angel
investment
and/or
(4)
Family
offices
(5)
Venture
capital,
(6)
Smart
money
or
IPO.
If
everything
would
be
perfect,
this
would
be
the
perfect
funding
process.
Now
we
all
know,
the
world
is
not
perfect
and
beside
(1)
and
(2),
which
is
preEy
predictable
in
Chile,
all
other
opIons
are
scarce
given
that
the
investment
environment
for
technology
ventures,
and
even
more
for
science
technology
ventures,
is
in
its
infancy.
Even
more
it
is
important
that
you
have
a
solid
investor
strategy
so
you
know
what
type
of
investment
you
need
and
who
to
target.
In
addiIon
it
is
very
criIcal
to
understand
the
expectaIons
of
investors
(private,
professional
or
insItuIonal)
as
they
are
very
different
to
FFF
and
public
funding.
Angel
Investment:
An
Angel
Investor
(or
Business
Angel)
is
per
definiIon
a
(wealthy)
5
6. Angel
Investment:
An
Angel
Investor
(or
Business
Angel)
is
per
definiIon
a
(wealthy)
individual
who
supports
a
entrepreneurship
venture
in
an
early
stage
(seed
stage)
and
contributes
with
his
know-‐how
and
network
to
help
the
startup
to
succeed.
As
indicated
before,
Apple
was
supported
by
an
Angel
Investor
who
contributed
financially,
however
as
important
he
closed
criIcal
gaps
with
his
vast
Business
ExperIse.
In
Chile,
you
find
very
liEle
of
such
Angel
Investors.
However,
recognizing
this
gap,
the
government
supported
the
building
of
Angel
Investor
networks
and
currently
there
are
5
established
networks
…
even
though
in
2015
only
3
of
them
where
able
to
raise
money
from
their
network
of
“Angel”
Investors
–
the
networks
are
acIve.
Fact
is
that
in
2014,
more
than
30
project
were
supported
with
in
total
more
than
US
$2.1
mn
and
in
2016
we
expect
an
increased
acIvity
again.
So
the
quesIon
comes,
what
you
should
be
prepared
for:
1. Each
Networkh
as
a
different
structure
and
focus
which
you
need
to
understand
prior
to
choosing
and
presenIng;
2.
Equity
expectaIons
in
average
are
between
15%
and
25%,
dependent
on
the
valuaIon
and
policies
of
the
investors;
3.
Returns
of
average
of
25%
per
year;
4.
A
scalable
project,
best
with
global
scalability
but
min
in
LaTam;
5.
A
solid
founding
team
-‐
a
single
founder
is
always
looked
criIcally
at
as
well
as
when
founders
are
brothers/family
members;
6.
a
solid
board
of
advisors
and
mentors
who
are
involved
and
experts
in
those
areas,
where
the
entrepreneurs
have
gaps;
7.
a
solid
business
plan
with
a
track
record
of
execuIon
6
7. Early
Stage
Technology
Funds
(widely
known
as
3:1
fund):
In
Sep
of
2015,
CORFO
launched
a
new
iniIaIve
to
increase
availability
of
so
called
“follow-‐on”
funding.
Funding,
which
supports
the
entrepreneurship
ecosystem
following
the
strong
seed
investment
availability.
The
government
recognized,
that
many
startups
are
either
leaving
the
country
or
dying
because
of
lack
of
funds.
Since
the
launch
of
this
iniIaIve
1
fund
was
approved
and
many
others
are
in
the
process
to
either
apply
or
sIll
raising
money.
Some
of
the
angel
networks
are
also
working
to
establish
such
fund
to
support
the
angel
investment
with
co-‐funding.
It
is
to
early
to
give
guidance
on
such,
however
the
expectaIons
will
be
minimum
on
the
level
of
the
angel
networks
plus
that
it
is
expected
that
some
of
those
funds
will
focus
on
specific
markets/technologies.
We
need
to
stay
tuned.
7
8. Venture
Capital:
Venture
capital
funds
invest
in
companies
in
exchange
for
equity
in
the
companies
they
invest
in,
which
usually
have
a
novel
technology
or
business
model
in
high
technology
industries,
such
as
Biotechnology
and
IT.
The
typical
venture
capital
investment
occurs
a>er
a
Seed
Funding
round
as
the
first
round
of
insItuIonal
capital
to
fund
growth
(also
referred
to
as
round
A)
in
the
interest
of
generaIng
a
return
through
an
eventual
exit
event,
such
as
an
IPO
or
sale
of
the
company.
I
want
to
reinforce
this
statement:
The
goal
of
a
VC
is
to
either
go
public
with
the
company
or
sell
it
–
you
as
an
Entrepreneur
need
to
understand
the
consequence
of
such
acIon!
The
VC
industry
in
Chile
is
very
small
and
for
Life
Science
currently
very
limited.
The
key
Life
Science
VC
firms
are
Austral
Capital
and
Aurus
Capital,
both
currently
fully
invested
and
not
taking
on
new
investments.
There
are
a
few
smaller
players
doing
some
more
selected
individual
investments,
however
without
the
focus,
knowledge
and
network
to
help
the
global
expansion
of
your
business.
Therefore,
your
strategy
needs
to
consider
follow-‐on
investments
from
the
Angel
Networks,
Family
offices,
Crowd
funding
and
hopefully
in
the
future
the
Early
Stage
funds
to
prepare
yourself
and
your
business
for
an
internaIonal
investor.
8
9. Equity
crowdfunding
is
a
mechanism
that
enables
broad
groups
of
investors
to
fund
startup
companies
and
small
businesses
in
return
for
equity.
Investors
give
money
to
a
business
and
receive
ownership
of
a
small
piece
of
that
business.
If
the
business
succeeds,
then
its
value
goes
up,
as
well
as
the
value
of
a
share
in
that
business—the
converse
is
also
true.
Coverage
of
equity
crowdfunding
indicates
that
its
potenIal
is
greatest
with
startup
businesses
that
are
seeking
smaller
investments
to
achieve
establishment,
while
follow-‐on
funding
(required
for
subsequent
growth)
may
come
from
other
sources.
Crowd
Funding
is
specifically
to
be
considered
as
an
interesIng
opIon
to
raise
funds,
when
your
product/soluIon
meets
the
interest
and/or
emoIon
of
a
broad
group
of
people
in
the
community
and
offers
even
inexperienced
investors
a
secure
plaorm
to
start
with
small
investments.
It
can
also
be
used
to
address
a
very
specific
community,
like
e.g.
a
defined
paIent
and/or
medical
expert
group.
However,
on
a
global
basis,
Crowdfunding
has
been
playing
only
a
small
role
in
LifeScience
while
already
taking
a
big
space
in
other
technologies.
In
Chile
some
Pioneers
have
entered
the
market,
despite
the
fact,
that
no
regulaIons
have
been
in
place.
The
government
is
in
the
regulaIon
process
with
the
support
of
experts
and
the
local
players.
Following
we
will
here
some
examples
of
Crowdfunding
in
Chile.
9
