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Journey to investment-ready keynote - Dominican Republic

Thank you, everyone for being here tonight to join in this conversation.


We share a goal: How can we engage, support and connect more and more entrepreneurs with the partners and capital they need in today’s market. And build big, successful businesses. And wealth in families and communities that changes lives.



Over the past five years, my colleagues and I in the leadership of Wild Accelerator have been working to grow investment in our own regional market, specifically for those who previously have not had exposure to the education, relationships and capital it takes.


Our region is in the middle of the country, right in between the go-go coastal investment areas in the East - NY, Boston, Miami and in the West – California, Seattle.


We’re in what they call “the flyover States.”


But we have our advantages, too. Strong logistics market, proximity to major markets in every direction. If you want to cross to anywhere, you have to come through us. That’s why the major American shippers, UPS and FedEx are in our Region.


Also, as my colleague on the panel, Natalia, says, We’re nice humans. We work hard.


But maybe our biggest advantage when we started out those five years ago is that our entrepreneurial market was only working for a privileged few. And not at all for the rest of us.


We had to find a different playbook.


We’re part of a growing movement in the US to engage, support and fund underrepresented founders, attract outside investors and also grow new investors in the region.

Similarities to DR Market

Early in that journey, in July 2019, a few of us had the opportunity to come here and meet with officials, investors and founders to learn about the startup ecosystem.


Then and now, we’ve noted that the dynamics of the underrepresented startup market in the U.S., has some striking similarities to the experiences here.


And I wanted to explore some of those elements for discussion this evening.


Underrepresented Market in the US


First to define what we mean by the underrepresented market in the US.: People of Color, Women, LGBTQIA+, 1st Gen Immigrants, People in Low-Income Households, People with Disabilities.


The language is fluid as some people feel the term “underrepresented” has a negative connotation, better replaced by more positive terms – “undeniable” unrelenting…


There’s also “DEI Investments” which is used in some of the data I’m showing today, Diversity, Equity and Inclusion.


“Underserved” is a good term in the sense that it can be understood as “not fully served” by all of the education, resources, and relationships that are needed to nurture a robust startup ecosystem.


The Underrepresented Market is Characterized by Underinvestment


Back in 2019, studies of representation in the VC world were a wake up call for many:

(publicly available VC-backed deals over the last five years and over 10,000 founders found conducted jointly by RateMyInvestor and DiversityVC)


· 77.1% of founders were white

· 1% of venture-backed founders were Black

· Women-funded startups received only 9% of investments

· Latino founders made up 1.8 % of those receiving funding

· Middle Easterners totaled 2.8 %

· Asians were the second most-backed group, making up 17.7 % of venture-backed founders.


Hence the need for this “movement” like ours to raise awareness and find support and solutions.


This intervening period was, of course, the Covid pandemic. It was also a time of racial and civil unrest in the US, and one of the more visible incidents was in our own city of Louisville, the killing of Breonna Taylor by the police and the months of protest in the aftermath.


Speaking for myself, this brought incredible urgency to our efforts, and woke many funders, nonprofit and for profit, to the cause of support underrepresented companies and communities.


Is it a movement? I’m going to say yes.


Here’s a newer study, published in Nov 2022:


We see that the number of funds stating that they can/will invest in “DEI Investments” is catching on – 43%.


While still only about 2% has been allocated to startups with diverse leaders.


DiversityVC, the source of both of these studies, has been around for five years with the aim of building a more diverse and inclusive VC ecosystem across the world, and this data came from $31 billion held by 200 venture capital funds in the U.S.


We’ll hear much more from Lorine about the money out there for underrepresented founders, from some real name brands, and a cadre of emerging managers.


But in terms of the data…


What is The Disconnect?

If the money is out there, if the aspiration is there, why aren’t we seeing it in funding underrepresented founders in larger amounts?


In a related study, also from DiversityVC done during June – September, 2022, based on responses from 213 VCs:


1. It’s About the Size of the Fund. DEI funds were about $57 million in AUM on average, compared to $354 million for non-DEI funds.

2. It’s about the Stage of the Investments. The majority of funds surveyed employed a multistage strategy, but DEI funds were much more likely to focus on the earliest stages of investment (pre-seed and seed), and so total funds are much less. The Series B, C and D investment amounts would logically dwarf those in the earlier stages.

3. The Rounds are also smaller. The DEI funds represented in the survey also participated in smaller rounds: $10.8 million on average, versus $21.4 million for the rest of the funds.


That’s the data but we have to ask…


Does Leadership Matter in the Investing Firms?


Has the leadership of the largest, most active funds changed in the past few years? DiversityVC compared 2018 with 2020:

But diverse leadership is creeping up.

On average, 31% of GPs are women per VC — meaning the average fund will have approximately a third of its general partnership made up of women.


On average, 14% of GPs are underrepresented minorities per VC — meaning, the average fund will have approximately 14% of its general partnership made up of underrepresented minorities.


Conclusion from the US market Venture Capital Market


These averages nationwide aren’t moving a ton, but we are seeing some momentum on these issues in our Region. It’s partly because we are ignoring all of this and working day by day to lift up diverse leadership and companies, and attract outside capital.


I’m told there are similarities to this market: Certain people have access, better opportunities by having friends or family members in a big business or in the government.


And those people who have special access tend to get the capital.

And the media reinforces those norms. If you just rely on mainstream media, you would come to believe --- hey, if I’m great and my idea is great, that’s all that really counts. Right?



Yes, for Elon Musk! Not for the rest of us.


I’m sorry, of course I had to put Elon Musk in my presentation about getting investment as the perfect example of what DOESN’T happen for the rest of us.


The rest of us have to be smarter.


We have to be more ready if we are going on this journey.


First Ask, Should I Be Raising, How Much? Who will fund me and why?


I meet founders regularly that have “bootstrapped” their startup, meaning they’ve built it with their own funds and sometimes money from “friends and family,” who have experienced a measure of success, but are wondering if they should pursue outside capital for further growth.


“If other businesses are raising outside capital successfully, shouldn’t I be?” they ask.


It’s also confusing because the media loves writing stories about founders that get funded. These stories rarely include information about the high bar set by most investors for funding.




Whether you should raise capital and what kind depends on a couple of different factors:


  • What kind of business do you have? Lifestyle vs. scalable

  • What kind of traction do you have?

    • Do you have demonstrated demand that gives an investor confidence that more money will translate directly into more growth?

    • Are you capturing data to prove this?

  • Stage of business: Pilot/beta, early stage, late early stage, early growth stage, growth stage?

  • What “round” are you in: Bootstrap, friends and family, angel investors, debt and/or seed investors, venture capital?


Note on the chart, equity crowdfunding which I know is not approved here, yet, but it’s been an important contributor to our investment landscape, so it’s something for the government and the embassy to consider working on going forward.


Market Trends in Raising Capital


The chart is complicated, and I wish someone had taught me all of this at the beginning of my journey.


But, do you necessarily have to raise capital? No.


NerdWallet, which IPO’ed in Nov 2021, and proved it’s “unicorn” status, highlights these potentially surprising statistics to show you the true nature of what raising capital for startups really looks like (Feb 2020)


Startups in General have various different sources of capital


1. 77% of small businesses rely on personal savings for their initial funds


2. A third of small businesses start with less than $5,000 (Kabbage).


3. But, the average small business requires about $10,000 of startup capital. (Wells Fargo Small Business Index)


4. Only one half of 1% of startups raise venture capital, tell the press that! (Entrepreneur)


5. Average business Lines of Credit: $22,000, While banks are the more traditional line of credit lenders non-bank, online lenders now offer smaller lines of credit that are much more accessible, like Quickbooks/Intuit.


I’m emphasizing this because most of us that work in the ecosystem spend a whole lot of time with founders that don’t raise capital and do a whole lot of good along the way.

Also, for many companies, capital of all kinds can be found through strategic partnerships, like taking investment or other types of financing from a key client or supplier. That would be like a local cosmetics company with products for Caribbean skin taking investment from their manufacturer/packaging partner.


2022 Average Seed Round: $2.2M via Susa Ventures 2012 Average Seed Round: $700,000 via CB Insights

2022 Median Company Age, Seed Round: 3 Years 2012 Median Company Age, Seed Round: 1 Year

…of the startups that raised Seed Rounds, 1% reached unicorn status of $1B+ valuation via CB Insights

Startups with two co-founders, rather than one, raise 30% more capital via Inc. Magazine


But if you do want and need to raise venture capital things are changing a bit:


1. Seed Rounds are Larger. The average seed round is $2.2 million. (Susa Ventures)

Compare this to 10 years ago, this was $700,000 (CB Insights).


2. But you business has to be more mature than in the past. The median company running a seed funding round is 3 years old. (Susa Ventures)


A decade ago, the median age hovered just over a 1 year.


So though venture capital funding is still growing, VC firms are taking fewer risks on brand new startups and are offering more money to a smaller proportion of more mature startups.


3. Of startups that raised seed rounds, 1% reached unicorn status of $1B+ valuation.


CB Insights studied a cohort of 1,119 startups that raised seed rounds over 10 years and found that just 12 exited with a $1 billion-plus exit valuation [6].


4. Startups with two co-founders rather than one raise 30% more capital. (Inc.) an indication of balance and well-roundedness that investors like to see.


Thinking Big Enough


Many startups don’t have the knowledge or experience to imagine how to make their business big enough to attract capital.


We learned in meetings here this week that we share this another major barrier for startups.

Your colleagues called it “thinking like an island.”


A potential solution to help founders think bigger is to help them understand the “scalable revenue models” of successful startups, initially just as a way to break through the cultural barrier of thinking small/local.

Are you like Amazon where you sell other peoples’ products and take a commission (MarkUp model, and then Marketplace and SaaS added)?


Are you like Duolingo where you promote a freemium technology platform and reserve special features for those paying you monthly or yearly. (B2C - Subscription model)?


Understanding your model is important because it serves as a roadmap, not only on how to make money, but also how to get big, and how big you can get.


We could do a whole talk on this but it’s intriguing for all parts of the ecosystem, especially the educational institutions to think about how to teach this thinking.


This is part of the ecosystem efforts that could be coming from the government and from the work of the embassy, to bring this knowledge not just to founders and university student but even to your youth in the schools.


How Do You Know When You Are There with the Revenue Model?


If your product or service is not selling surprisingly well, you haven’t found your revenue model yet. If user referrals have not kicked it virally, you haven’t found it yet. You’re not there yet.


As underserved founders and markets, we don’t have the luxury of getting lots of money for good ideas. We have to show revenue. We have to show traction.


Michael Mota from AlterEstate, one of your real estate tech startups told us yesterday, “people told us just to launch and figure it out later.” He said that was a disservice to the company’s journey to find the right product market/fit and a clear, proven revenue model.

One coach/mentor in our ecosystem back home says, “If you client will not essentially die if they don’t have your product, you haven’t found it yet.”


In truth, it wouldn’t matter if there were more written about the reality of all of this because founders would ignore it anyway.


I know because I ignored it myself.


We created a beautiful app that would help every single person improve their individual financial picture and their financial legacy for their family.


People would love to have a better financial picture but they will not do or pay anything to get it. And when we switched the business model to sell to employers who would give it to them for free, they still wouldn’t use it.


I had to find a strategic acquirer where this functionality was part of a product that more people used, i.e., early wage access.

It worked but, still to this day, people are not “dying” for financial wellness apps.


But this we already knew. Founders are believers. They are optimists. They have a hard time hearing “no,” which is one of the reasons that many of them ultimately succeed, even if it takes a few startups to get there.

What Does Investment-Ready Look Like?


For the venture capital startup founder, the type of investment we are talking about after the “bootstrapping” period and after the “friends and family” round would be pre-seed or seed round. In these rounds, the business is fully formed and starting to grow.


That founder is ready for the Journey to Investment Ready. We created it to break down the comprehensive requirements founders must meet to help investors and partners say "yes" to new investment.

What does that look like?


Many of us have stayed in an Airbnb, but did you know it was a top example of an investment-ready company when it first got funded, and certainly is one of the top still today?


Now a $72 billion public company, Airbnb is known for having one of the best pitch decks of all time going back to 2009 when it raised its first outside capital.

There’s a huge market in the U.S. around making a great pitch deck through clarity, simplicity and great graphics, but what made Airbnb’s pitch great was how simply, authentically and accurately it captured the strength of the business itself.


The Journey to Investment-Ready identifies fifteen (15) elements that determine investment-readiness across these four topics:

  • Is this a compelling business?

  • Can you capture a share of the market opportunity?

  • Does the business model work?

  • Is the investment offering designed to work?

Part I – Is this a compelling business?


  • Problem, is it clear and powerful?

  • Solution, Is it compelling

  • Crystal clear simple picture of how the business works and why it solves the problem? What does “win” look like, why do clients crucially need us.

  • Competitive landscape and differentiators

  • Total Addressable Market (TAM), your specific market opportunity and attainable market share


Part II –Can you capture a share of the market opportunity?

  • Product/market fit

  • Validation, client acquisition and retention

  • Go To Market Strategy, omni-channel strategies

  • Co-founders and culture


Part III – Does the business model work?

  • Revenue model, how recognizable is it and how fully are you implementing it

  • Resource requirements and margins, especially team, talent development and retention, strategies and processes

  • Traction/Achievements – is it strong enough

Part IV – Is the investment offering designed to work?

  • Capital needs, use of funds

  • Structuring of investment offering that meets the needs and interest of the investor

  • What roles can the investor play

  • How are you supporting the close

Accelerators are structured to run through the process from idea stage through pitch stage to investors. But you can get through an accelerator and still not be ready to be funded.


The very best accelerators push founders to get all the way to investment-ready. Urban legend has it that the mentor assigned to the Airbnb founders in Y Combinator (a premier accelerator) advised them to go to their hosts and help, hands on, improve their postings and develop business.


In many ways, you have to demonstrate you are ready to operate at the next level to get funded at your current level. Increasingly funders are assessing founders’ milestones as intently as their plans and projections. Do you clearly understand what you need to do to show that invested money will/is demonstrating tangible progress?


Airbnb announced that Brian Chesky, founder and CEO, is living in Airbnbs full time right now to sharpen his company’s strategy and results.


My takeaway from that is that to stay competitive, he’s back at the drawing board fine tuning it all again.



It’s A Shared Journey


As the data shows, few businesses are able to nail all of the elements of investment-readiness. Those that do still need to find a funder who is excited about your business. The rule of thumb is that it takes 100 pitches to get 1 investor.


That’s why it is critical for founders to be able to plug into and access the benefits of a robust startup market or what we refer to as a strong ecosystem in the US.


This calls on the startup ecosystem builders, investors, government officials and civil society leaders not only to provide training and education for founders, but to connect and foster the entire ecosystem to increase investment and business success.

It takes time. We are seeing that in the US, but the more the ecosystem improves itself, the more investment is growing.


In this way, the Journey to Investment-Ready is a shared journey.



Is All This Possible? Is the Market Ready for More Underserved Founder and Market Investment?


Yes, it’s possible. If founders have the education, the exposure, the mobility, the social proof, the mentors, the business knowledge, then investors can see them.


Let’s keep making it happen together.


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