Public and private investment shared the stage with banking and alternative financing in a session focused on analysing aspects related to capital injection options for startups. The Round Table was held at EAE’s Madrid Campus, with the participation of Carolina Rodríguez, the Director of Promotion of the General Secretariat of Enisa for innovative entrepreneurship (Ministry of Industry, Trade and Tourism), Elena García, the Director of BStartup10 at Banco Sabadell, Elena Benavides, the Investment Director at Gala Ventures, and Jesús Alonso Gallo, professional, entrepreneur and would-be investor.
Chaired by Rocío Álvarez-Ossorio, the Director of EAE Investor, began with an initial introduction of the speakers and a comment from Jesús Alonso: “To be an entrepreneur is to dream, and entrepreneurs should take part in the world of investment to develop a different point of view”. The EAE mentor has invested in 24 business ventures since 2012 and emphasized the importance of the people in the teams and their capacity to withstand, fall and get back up again.
At Bstartup Banco Sabadell, they support the entrepreneurial universe by accompanying projects and helping them grow with the help of their professionals specializing in startups. “We invest in up to 10 startups each year, with 100 thousand euros in the seed phase and provide support on aspects related to marketing, sales, the team and other need”, explained Elena García. The banking institution also has the Sabadell Venture Capital fund and its own digital laboratory at which it develops corporate investors and launches its own ventures. The Gala Ventures investment funds invests in the early stages of projects that have been running for up to five years, specializing in certain sectors: fintech, insurance and companies with a social impact (environment, education and healthcare).
Specializing in participatory loans with public funds (and long-terms risks), Enisa has created a line of financing known as Young Entrepreneurs, offering financial terms similar to private loans. “We strive to complement the investment financing that already exists on the market and focus on economically sustainable businesses and viable innovative projects with growth potential”, explained Carolina Rodríguez, before listing the general requirements for accessing their financial support and how they operate: “the only guarantor is the business project and the team. Our financing is trust-based because we place a lot of importance on what is behind the projects”.
The importance of customers and teams
Jesús Alonso emphasized that the best source of financing for startups is their customers. Therefore, the most important factor in the relations between entrepreneurs and investors is that there are bold entrepreneurs who are 100% involved in their projects, including the financing aspects. As well as the crucial role of customers, without whom there would be no business, the EAE Lab mentor underlined the importance of people. “I don’t believe in teams that don’t have the essential competences to build whatever they are going to create”. The Director of Promotion at Enisa explained how they evaluate the people involved in the project. “There is no such thing as an ideal team, but there are elements that increase the level of confidence to see the subjective side of the project”.
Elena Benavides, from the Gala Ventures investment fund, discussed key indicators such as the profiles of the people who have managed to establish their team and achieve “100% professional involvement in the project in the early stages of entrepreneurship”. Rocío Álvarez-Ossorio emphasized the capacity for persuasion and passion for the golden circle. “They have to be driven by a passion to be an entrepreneur, with their sole purpose in life being to involve and persuade others”, The Director of the EAE Lab incubator then added that “on your own, your get there faster, but with a team you’ll go further”.
Metrics, investor profile and agreements
Establishing valuable metrics is a key factor in attracting investors to projects. However, Elena Benavides explained that evaluating a marketplace is not the same as an SAAS because “metrics very much depend on the sector”. Elena García added that there is no such thing as a magical KPI and we have to distinguish between financing and investment. “The most important thing is the contribution you make with your capital stock and the money invested in the project”. When providing guidance with respect to financing, at Banco Sabadell, they evaluate more than just metrics because they use other variables such as multidisciplinary teams, traction, scalability and potential for success.
At Gala Ventures, they monitor the projects closely, becoming a travel companion for the journey. “We are in very direct contact with the companies that we invest in. We are not involved in making decisions, but we foster a good relationship with the entrepreneurs and give our opinion”. In this respect, the founder of restaurantes.com gave an overview of his career accelerating the development of startups in the initial stages and his involvement in an alternative investment project.
To finish off, the discussion panel focused on partners’ agreements and importance of drafting this document that binds all the members of the project. Elena Benavides recommended contacting a lawyer specializing in the field. “When you make your partners’ agreement, make sure you are clear who you are dealing with. The important thing is not to close rounds of financing, but rather having customers. You have to be a professional with the power to generate business, not just raise capital”. Carolina Rodríguez advised the participants to get informed and contact other projects that the investor has been involved in. The legal expert Rocío Álvarez-Ossorio highlighted the higher failure rate among startups without a prior agreement between the partners and the importance of agreeing channels for compromising between them all, establishing clear rules of play right from the beginning.
Jesús Alonso Gallo gave the participants an overview of his new mentoring project, moaimentoring.com, outlining aspects of his alternative investment career, spreading his contagious energy with a clear message: “I am optimistic because there are lots of options for investing in newly created companies that use a technological component, such as the internet, which is the ideal breeding ground for getting the best return on your investment”.