Brazil is already the fourth largest digital economy in the world. We lead several rankings of the main apps used by people on a daily basis, we have the third largest number of unicorns of the world, we represent 50% of venture capital activity in Latin America and are, in general, only behind the United States, China and Israel.
It is normal for two to three rounds of significant investment to occur each week in the Brazilian ecosystem. This promising context leads many startups thinking about the need to attract investments, even if this premise is not true.
How can I know whether or not I am at the right time to raise a round of investment for my startup? It would be impossible to establish a standard to automatically classify startups, but some recommendations and good practices that are observed are:
- You already have a team of founders with complementary skills needed to scale the business;
- The product is already live, interacting with customers, collecting feedbacks and constantly improving;
- The business is transacting financial values or users are using the product, liking it, returning and recommending it to more people;
- Month after month, there is already growth in the main financial, marketing and product indicators, for a consecutive semester you see that there is traction;
- The time has come when your network of contacts has become saturated and you need new strategic introductions;
- Challenges and dilemmas began to arise, and you have no idea which path to take (and having a mentor could help).
If you identify with most of these questions, it may be that actually raising a round has a lot of value for your startup. But care must be taken to avoid excesses, after all, too much capital can bias good results or camouflage challenges and errors.
The amount to be raised for your startup and the shareholding percentage to be negotiated will depend greatly on the moment of the startup, its maturity as a business and the type of investment chosen, such as accelerator, angel investment, seed capital, venture capital It is venture debt. The amount will basically need to be your capital need for the next 18 months, the average time in which Brazilian startups open funding rounds. This way, understanding which modality is best and the real reasons why you need to raise a round are points that will make you use these resources in a better way.
