When a company reaches a valuation of more than 1,000 million dollars, it is a validation, a sign that it is growing and is solving the problem on which it is focused, said Karla Berman, Director of Operations at SoftBank, at Inter.Mx Expansión Summit 2022.
“For everyone in the entrepreneurial ecosystem in Mexico and Latin America, it is great news that there are companies that already reach this valuation for many reasons. First, it attracts more investment sources that compete to obtain the best deals,” said Berman.
Today there is talk of more entrepreneurs who dare to undertake. Nowadays being an entrepreneur is a topic of general interest, added Berman.
In this sense, Vincent Speranza, general director of Endeavor, pointed out that having a dozen Unicorns in two years is a validation that Mexico is fertile ground for high-impact entrepreneurship, which triggers economic, social and cultural growth. Mexico had been late, Uruguay had its first unicorn before Mexico.
Now there is the infrastructure that did not exist before to be able to be an entrepreneur, there is human talent and there are many needs. “When you put these three parts together, that is where society is permeated to give them better services and a better quality of life,” added Jimena Pardo, partner of ALLVP, panelist at the Inter.Mx Expansión Summit 2022.
What changes for a company when it becomes a unicorn?
Being a Unicorn creates extreme pressure around the entrepreneur and increases complexity. As an ecosystem, and as a society, we must not only help there to be more, but also, when they are there, how to keep their feet on the ground, said the Endeavor manager.
When we talk about the valuation of Unicorn, several things change both internally and externally. Externally, it is the exposure that the company has both to the media and to talent, it is necessary to be more careful in the movements to be exposed to the public eye. Internally, the demands rise, processes must be improved and a lot of structure must be added to take the next step and raise more rounds of private investors, explained Alfonso de los Ríos, co-founder and CEO of Nowports.
Is the arrival of unicorns in Mexico going to stop?
There is no brake on the arrival of Unicorns, we come from two or three spectacular years. There is more activity, but with more caution, the idea of growth at any cost has been abandoned and there is more reasoning behind the investments, Speranza said. Entrepreneurship is not over, there is still a lot of room to continue creating value for markets and consumers. “The only thing coming is a rebalancing of how the resource is distributed,” he said.
The way in which capital is raised has changed, now it must be very clear what is going to be done with it, how margins are going to be improved in the long term, not in the next 10 months but in the next 10 years, and there are greater demand in the creation of work teams. Now the process takes longer, said Alfonso de los Ríos, Co-founder and CEO of Nowports.
Pardo pointed out that there are certain characteristics that the funds look for in entrepreneurs: 1) that they be brilliant, passionate and rare; 2) who are competent to start a business and know their industry; 3) they are ambitious; and 4) the capacity for leadership and conviction to move the company forward.
Today there are many more sources of financing for any type of company, only that “not all funds are good for all companies and not all companies are good for all funds”, said the Director of Operations of SoftBank.
“Receiving investment is nothing more than beautiful, it comes with a series of obligations, restrictions and surveillance and things that not all entrepreneurs want to do. As long as the venture is high-impact and high-return, you will find financing.”
Diversity, a pending issue
The concept of ESG and diversity will be at the center of the agendas of the entrepreneurial ecosystem. On the issue of diversity not only as a gender, but also as a division of academic horizons and geographies. Regarding the issue of ESG, it is the medium-term commitment to build companies that succeed, that are profitable, that continue to build rising valuations, that gain a piece of the market and that are conscientious and consistent companies, said Vincent Speranza.
Entrepreneurship led by women continues to be low, “we need allies that show the lack of women in companies and ecosystems. What we need is for these allies to be everywhere, including large corporations,” added Jimena Pardo.
The issue of mixed teams is growing and, experts say, that if you see a greater number of managers in positions of influence.
The longer-term issue is that of academic and geographical origin, there we have an education problem in Mexico, which does not stimulate creativity, entrepreneurship, language issues, where there is a significant gap. All of these conditions are important to building a company that can last, said Vincent Speranza.
Today there is no fund and no company funded by Venture Capital that does not have issues of diversity and ESG on its agenda, Karla Berman pointed out.
Entrepreneurs of the future
“We want entrepreneurs to be “missionaries not mercenaries”, who really want to transform their sector, their industry and the status quo, because this is what ensures the long-term vision. In addition, they have leadership capacity, ambition healthy to succeed, ability to group people who complement it and create a multiplier effect”, specified the director of Endeavor.
The funds have a fiduciary duty to multiply the money of their investors, for which “we must look for the ventures that blow it up and that make us multiples of many “x”. We are going to demand that they have the ambition to be a Centaur , because that way we can give the returns that our investors ask of us”, commented the ALLVP Partner.
For Berman, there is a lack of entrepreneurs who want to solve real problems “that are not super attractive and companies that solve native problems that only occur in our countries,” commented Karla Berman.
