In the dynamic world of startups, seasoned professionals play a vital role in nurturing and supporting young entrepreneurs, enabling them to transform their ideas into successful ventures.

One such individual is Andres Campo, an angel investor and co-founder of Pygma. Pygma is an accelerator for pre-seed tech startups in Latin America, launching in Europe later this year.

In this interview, we’ll dive into:

• The liaison between an accelerator and startup investing.
• The three significant elements that matter in early-stage investing.
• The biggest challenges founders face when raising funds.
• What does a successful accelerator program have?
• Common challenges in European and Latin American entrepreneurship journey.

We invited Andres to discuss early-stage startups, accelerators, and their role in the stages of startup building. By sharing his insights and experiences, we want to demystify the fundraising process and equip aspiring entrepreneurs with the knowledge needed to embark on a successful entrepreneurial journey.

Who is Andres Campo?

Andres has an extensive academic background and a passion for guiding early-stage founders. He has dedicated nearly five years of his professional life to fostering the growth of promising companies. Andres’ expertise lies in coaching, consulting on product and innovation, and design – which captivate his interest and drive his commitment to helping entrepreneurs thrive.

A recent addition to his portfolio is his incursion into angel investing, where he believes founders can flourish. He advocates for angel investors as the preferred source of early-stage financial support.

The Power Dynamics Between Founders and Investors

Andres believes that although both parties inherently desire collaboration, finding common ground can be challenging. According to him, angel investors actively seek out exceptional founders, while founders seek supportive angels.

However, connecting the two is often a difficult task. Historically, angels and investors heavily relied on introductions and warm connections within their networks. Unfortunately, this approach creates limitations, leaving many founders needing access to potential investors.

“Angels are looking for great founders. Founders are looking for great angels.

It’s challenging to get both of them connected. They rely on people in their network for warm introductions. So, a large group of founders won’t be able to reach out to investors."

Consequently, this dynamic disrupts the equilibrium of incentives, as investors become harder to reach and, when approached, highly sought after. Such shifts in power can inadvertently impede the ideal relationship between founders and investors.

“As investors, we are the ones that should be looking and connecting with promising founders. However, there are limited opportunities unless others introduce you to some of them.

I find this dynamic challenging because we both need each other, and there are still many barriers and blockers.”

The Evolution of The Dynamic

Andres believes the pandemic profoundly affected this dynamic, benefiting the founder-investor relationship immensely. Traditionally, building trust and fostering connections between angels, investors, and founders relied on face-to-face meetings, casual coffee chats, and dinners.

However, the pandemic necessitated a shift towards remote work and virtual meetings. This transformation enabled investors to meet with a significantly more significant number of founders, leading to increased deal flow.

“We are meeting twice as many people as before, which leads to a more curated and fruitful deal flow.

The negative part, sometimes, it’s about getting a good sense of who you are talking to, especially when the process is online.”

The 3 Things That Matter in Early-Stage Investing

Founders. Unique Insights. A Good Market Opportunity.

These are the three elements mentioned by Andreas during our discussion as having a lasting impact on early-stage startups getting funded.

Founders.

Andres emphasized the significance of the founding team as the primary consideration. A strong founding team can adapt, pivot, and build something better if a team has a less-than-ideal product or operates in a challenging market.

Conversely, a fantastic product in a growing market becomes more challenging to evaluate if the team lacks experience or struggles to execute effectively. The founding team's capabilities and expertise are fundamental in determining the potential success of an early-stage venture.

“The founding team is probably 70% of my investment decision.

If there is a good founding team with a crappy product or a crappy market, they can always pivot. But, if you have a fantastic product, in a growing market, with a questionable team, it becomes more challenging to make a decision.”

Insights.

The second factor Campo highlighted is the presence of data or unique insights. He emphasized the importance of teams that have acquired valuable knowledge or possess a distinctive perspective on the problem they aim to solve.

“Has the team learned something unique about the problem they are working on? Do they have a unique perspective or an exciting signal to pursue?

Answering these questions gives me a hint if founders have a solid vision to follow and can execute it.”

Market.

Lastly, Andres underscored the significance of the market itself. An attractive market must be sizable, addressing a problem that impacts many people.

Whether on a regional or global scale, the market's potential for growth and widespread relevance are vital considerations for early-stage investors.

“As an accelerator, and I think it also applies to angel investors, we don’t always work with teams with a finished product. We also work with many early-stage startups where people are still trying to figure it out.

The element that comes to the surface in many situations is the market. It has to be a big regional or global problem for us to be interested in.”

The 3 Main Challenges of Startup Funding

Andres identified the lack of professionalization among entrepreneurs as a major obstacle. Unlike traditional professions, where one can acquire formal education or training, entrepreneurship requires a different skill set that cannot be obtained solely through business school.

“You cannot go to school to become an entrepreneur.

You can take five years of business school, but it’s not going to do anything with a month of building a company.”

Another significant challenge Andres highlighted is the need for founders to cultivate confidence. Many entrepreneurs struggle with self-belief, which can hinder their ability to execute swiftly and effectively.

“We work with several founders, and their confidence is not the highest. So, one of the biggest challenges for founders is building creative confidence.

If a founder is not motivated enough, it won’t execute as quickly and performant as its true potential.”

What a Successful Accelerator Looks Like?

Andres believes the key to finding the right accelerator lies in identifying the best fit for your needs. It can vary depending on factors such as the target market, local or global, and the stage of your startup.

For instance, a local accelerator might be the best choice to establish a solid local market presence. On the other hand, if you aim to build a global product and expand into international markets like Latin America or Asia, joining an accelerator with a global network could be more suitable.

“Every accelerator is like a great university, where they teach you precisely what you need to know.

However, there is no one-size-fits-all answer, as every accelerator has a different approach and methodology."

Latin America vs. Europe

Andres Campo discussed the differences between Europe and Latin America as startup hubs. He explained that the initial decision to focus on Latin America was represented by its fast-growing venture capital landscape, which was experiencing significant growth at the time.

Being from Latin America himself and having a team predominantly located in the region, it made strategic sense to establish a presence there. However, with time, Andres and his team noted that Europe has proven to be a resilient region in terms of investment. While other regions experienced a slowdown, Europe maintained a consistent level of investment.

This realization led to the decision to expand into Europe, with the launch of Pigma Europe planned for later this year.

“The same problems founders have in Latin America are those of founders in Europe.

Additionally, Europe maintained its position, especially during economic downturns.

It is fascinating as other regions are taking a step back, and one of the reasons I think it’s the best momentum to launch Pygma in Europe. So, I expect to hear from us by the end of 2023.”

Your key takeaways:

• The dynamics between founders and investors can be challenging due to difficulty finding common ground and limited networks for connections.
• The pandemic has positively impacted the relationship between founders and investors by allowing for increased virtual meetings and expanded deal flow, but challenges remain in building solid relationships and confidence.
• In early-stage investing, the three key factors that matter are the founding team, unique insights or learnings, and market size.
• Startup funding faces challenges due to a need for more professionalization among entrepreneurs, particularly in fundraising, and the need for founders to build confidence.
• A successful accelerator fits the specific needs of the startup, whether local or global and measures success by the ability of founders to raise funds.

Resources mentioned in the discussion:

Connect with Andres:

• LinkedIn
• Twitter
• Pygma