Turning startups into viable businesses

Everyone asks us for more details on how Aceleradora works. The project was not public yet because of a simple reason: we were still in beta until last month, so we needed an adjustment period (a little longer than we expected) before going public.

The fast version of this post is here:

The Aceleradora team works to catalyze the development of startups and technology entrepreneurs. Our goal with the new phase, starting in 2010, is to expand the project to other states. To do that, we need the financial support of VCs and the workforce of entrepreneurs and technology professionals. See the slides below, and get in touch if you want to participate.

Now allow us to elaborate a little more.

Aceleradora is essentially an attempt to combat what tech entrepreneurs call the “financist paradigm” of Brazilian VCs, and at the same time resolve what VCs call the “tech paradigm” found when talking to entrepreneurs. They’re in quotes since they’re generalizations, and not necessarily correspond to the essential truth… Because it goes like this:

• Seed funds, angel investors, and angel funds usually set their own goals to pour their money into startups, but still have problems finding viable startups in Brazil. The VCs complain that entrepreneurs focus less than they should in the business aspects, that they are not good managers, or that they choose businesses that are not sufficient for a financial return.
• Entrepreneurs, on their turn, come up with ideas all the time – from the simplest ones to world-changing brouhaha – but often complain that investors do not want to help early-stage ideas, since “they’re only interested in immediate financial returns” (words repeated by many).

Due to that generalization, VCs can’t invest because the market is immature, and brilliant entrepreneurs give up on great ideas because they lack investment. They don’t speak the same language (will they ever?)

Those two cyclical problems happen because we are still watching the first steps of the tech seed market in Brazil. Not all startups are prepared to be funded, but very few Brazilians VCs are interested in investing to develop the market. Yes, some VCs have supporting initiatives going, but this is rarely found. There is no solid program to empower tech startups more effectively, allowing them to work towards more viable solutions.

Is it better to invest on treasury funds, sit tight and wait until the market matures?

We need to invest in the entrepreneurs who can deliver sustainable businesses in the future. The good news is that they’re already here: several groups produce smoking-hot apps and successful products in several regions, creating innovative solutions with market potential … but they are scattered and disconnected. We need to integrate these people together, and allow them to help each other.

[ The cost of opportunity ]

Either Brazilian VCs invest now in the development of the entrepreneurs who are already implementing their ideas, or the same VCs will face a sudden and significant increase in their opportunity cost. Yes, their funds are yielding interest in their bank accounts, but are not creating value (which is their original purpose). A rising tide of entrepreneurs is struggling, but not generating tangible results as fast as they could. One needs to improve the synergy between these two sides of the spectrum.

But why would a VC invest any money (small or big) in training entrepreneurs, without the certainty of return on investment? Because the amount needed is very small, and someone needs to do this – or the Brazilian tech market will take decades to reach a maturity that it is possible to achieve right now. It is a matter of deciding who will walk the first step.

It has never been so easy to create a tech startup. There is a giant window of opportunity open to Brazil. Our team at Aceleradora has helped startups before, and our method has brought concrete results… Now we need help to reach more startups.

If you are a VC – Brazilian or foreign – and is interested in supporting this project, all you need to do is to comment below.