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Venture  funding  works  like  gears.  A  typical  startup  goes  through  several  rounds  of  funding,  and  at  each  round  you  want  to  take  just  enough  money  to  reach  the  speed  where  you  can  shi>  into  the  next  gear.  Few  startups  get  Funding  quite  right.  Many  are  underfunded.  A  few  are  overfunded,  which  is  like  trying  to  start  driving  in  third  gear.    I  think  it  would  help  founders  to  understand  funding  beEer—not  just  the  mechanics  of  it,  but  what  investors  are  thinking.  It  is  like  bringing  2  worlds  together,  2  different  cultures.  Therefore  it  also  would  help  investors  if  they  had  gone  through  a  real  startup  venture  before.  This  is  what  you  should  be  seeking  when  talking  to  Incubators,  Accelerators  and  Angel  Investors.  They  not  only  should  provide  funding  but  also  the  necessary  business  experIse  as  well  as  the  experience  of  building  a  startup  company.  Follow-­‐on  funding  in  general  is  coming  from  Venture-­‐Capital,  supported  by  industry  including  large  MulI  NaIonals.    MulImillionaire  Mike  Markkula  was  the  Angel  Investor  for  Apple,  who  provided  the  essenIal  business  experIse  and  funding  of  $250,000  during  the  incorporaIon  of  Apple.      

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Chile  has  recognized  the  importance  of  entrepreneurship  for  the  future  of  its  economy,  the  country  and  the  people  in  the  country.  Many  valuable  programs  have  resulted  in  a  significant  increase  in  entrepreneurship.  Startup  Chile  is  recognized  widely  above  the  boarders  of  LaIn  America  and  is  aEracIng  Startups  from  the  US  and  Europe.  However  most  of  them  are  leaving  again  given  the  lack  of  follow-­‐on  investment  or  local  market  opportunity.    The  startup  ecosystem  is  expanding.  Over  40  incubators  and  accelerators  are  established,  most  of  them  supported  by  CORFO.  Angel  investment,  while  sIll  in  its  infancy,  is  growing  with  3  acIve  Networks  established.  IdenIfying  the  gap  of  follow-­‐on  investments,  CORFO  just  launched  a  program  to  support  the  building  of  Early  Stage  technology  funds.  In  addiIon  the  government  is  working  on  regulaIng  Crowdfunding  supported  by  internaIonal  experIse  –  while  the  first  pla\orm  is  acIve  already  and  a  2nd  will  be  launched  soon.  However,  local  industry  and  family  offices  need  to  step-­‐up  and  parIcipate  acIvely  with  money  and  experience  to  build  a  solid  Venture  Capital  environment  to  enable  Entrepreneurship  as  a  key  engine  for  Chile´s  future  economy.    Local  Entrepreneurs  on  the  other  hand,  need  to  be  more  prepared  for  the  challenges  in  venturing  a  startup.  While  invenIng  a  product  is  important,  proving  it  in  the  market  is  the  first  criIcal  step.  Nobody  pays  for  a  good  idea,  nobody  invests  just  in  a  good  idea.  The  valuaIon  of  a  company  at  prototype  stage  is  the  most  disputed  topic  between  entrepreneurs  and  investors.  Successful  Entreprenerus  bring  InnovaIon  spirit,  live  and  breath  their  target  markets,  are  open  for  and  regularly  seeking  coaching  and  mentoring,  have  only  the  best  people  surrounding  them,  understand  that  funding  is  not  for  free.    

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Investor  strategy:  As  indicated  in  my  previous  speech,  having  a  solid  investor  strategy  is  important  to  understand  which  investors  you  want  to  target.  E.g.  if  your  venture  is  targeIng  the  food  and  agriculture  market  in  Chile,  you  might  not  only  be  able  to  raise  public  funding  through  related  Incubators  like  Austral  Incuba,  but  at  later  stage  be  able  to  raise  smart  money  with  the  strong  local  industry.  Your  funding  strategy  is  purely  focused  on  Chile  with  a  solid  industry  in  your  back.    To  the  contrary  Life  Science  which  has  not  only  a  very  limited  local  target  market  as  well  as  no  major  local  industry  player,  nor  any  internaIonal  player.    Both,  food  and  Life  Science,  have  preEy  strict  regulatory  hurdles,  however  in  the  example  you  would  have  to  overcome  in  case  (1)  regulatory  hurdles  in  Chile,  while  in  case  (2)  regulatory  hurdles  minimum  in  the  US  and  Europe.  The  related  cost,  the  expectaIons  of  investors  and  the  compeIIve  environment  is  hugely  different.    Depending  on  the  stage  of  your  venture  you  are  looking  for:  (1)  Fools,  Friends  and  Family,  (2)  an  incubator  supported  by  CORFO  funds  or  other  public  funding  (3)  Angel  investment  and/or  (4)  Family  offices  (5)  Venture  capital,  (6)  Smart  money  or  IPO.  If  everything  would  be  perfect,  this  would  be  the  perfect  funding  process.  Now  we  all  know,  the  world  is  not  perfect  and  beside  (1)  and  (2),  which  is  preEy  predictable  in  Chile,  all  other  opIons  are  scarce  given  that  the  investment  environment  for  technology  ventures,  and  even  more  for  science  technology  ventures,  is  in  its  infancy.  Even  more  it  is  important  that  you  have  a  solid  investor  strategy  so  you  know  what  type  of  investment  you  need  and  who  to  target.  In  addiIon  it  is  very  criIcal  to  understand  the  expectaIons  of  investors  (private,  professional  or  insItuIonal)  as  they  are  very  different  to  FFF  and  public  funding.      Angel  Investment:  An  Angel  Investor  (or  Business  Angel)  is  per  definiIon  a  (wealthy)    

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Angel  Investment:  An  Angel  Investor  (or  Business  Angel)  is  per  definiIon  a  (wealthy)  individual  who  supports  a  entrepreneurship  venture  in  an  early  stage  (seed  stage)  and  contributes  with  his  know-­‐how  and  network  to  help  the  startup  to  succeed.  As  indicated  before,  Apple  was  supported  by  an  Angel  Investor  who  contributed  financially,  however  as  important  he  closed  criIcal  gaps  with  his  vast  Business  ExperIse.  In  Chile,  you  find  very  liEle  of  such  Angel  Investors.  However,  recognizing  this  gap,  the  government  supported  the  building  of  Angel  Investor  networks  and  currently  there  are  5  established  networks  …  even  though  in  2015  only  3  of  them  where  able  to  raise  money  from  their  network  of  “Angel”  Investors  –  the  networks  are  acIve.  Fact  is  that  in  2014,  more  than  30  project  were  supported  with  in  total  more  than  US$2.1  mn  and  in  2016  we  expect  an  increased  acIvity  again.  So  the  quesIon  comes,  what  you  should  be  prepared  for:  1.  Each  Networkh  as  a  different  structure  and  focus  which  you  need  to  understand  

prior  to  choosing  and  presenIng;  2.  Equity  expectaIons  in  average  are  between  15%  and  25%,  dependent  on  the  valuaIon  and  policies  of  the  investors;  3.  Returns  of  average  of  25%  per  year;  4.  A  scalable  project,  best  with  global  scalability  but  min  in  LaTam;  5.  A  solid  founding  team  -­‐  a  single  founder  is  always  looked  criIcally  at  as  well  as  when  founders  are  brothers/family  members;  6.  a  solid  board  of  advisors  and  mentors  who  are  involved  and  experts  in  those  areas,  where  the  entrepreneurs  have  gaps;  7.  a  solid  business  plan  with  a  track  record  of  execuIon  

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Early  Stage  Technology  Funds  (widely  known  as  3:1  fund):  In  Sep  of  2015,  CORFO  launched  a  new  iniIaIve  to  increase  availability  of  so  called  “follow-­‐on”  funding.  Funding,  which  supports  the  entrepreneurship  ecosystem  following  the  strong  seed  investment  availability.  The  government  recognized,  that  many  startups  are  either  leaving  the  country  or  dying  because  of  lack  of  funds.  Since  the  launch  of  this  iniIaIve  1  fund  was  approved  and  many  others  are  in  the  process  to  either  apply  or  sIll  raising  money.  Some  of  the  angel  networks  are  also  working  to  establish  such  fund  to  support  the  angel  investment  with  co-­‐funding.  It  is  to  early  to  give  guidance  on  such,  however  the  expectaIons  will  be  minimum  on  the  level  of  the  angel  networks  plus  that  it  is  expected  that  some  of  those  funds  will  focus  on  specific  markets/technologies.  We  need  to  stay  tuned.    

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Venture  Capital:  Venture  capital  funds  invest  in  companies  in  exchange  for  equity  in  the  companies  they  invest  in,  which  usually  have  a  novel  technology  or  business  model  in  high  technology  industries,  such  as  Biotechnology  and  IT.  The  typical  venture  capital  investment  occurs  a>er  a  Seed  Funding  round  as  the  first  round  of  insItuIonal  capital  to  fund  growth  (also  referred  to  as  round  A)  in  the  interest  of  generaIng  a  return  through  an  eventual  exit  event,  such  as  an  IPO  or  sale  of  the  company.  I  want  to  reinforce  this  statement:  The  goal  of  a  VC  is  to  either  go  public  with  the  company  or  sell  it  –  you  as  an  Entrepreneur  need  to  understand  the  consequence  of  such  acIon!    The  VC  industry  in  Chile  is  very  small  and  for  Life  Science  currently  very  limited.  The  key  Life  Science  VC  firms  are  Austral  Capital  and  Aurus  Capital,  both  currently  fully  invested  and  not  taking  on  new  investments.  There  are  a  few  smaller  players  doing  some  more  selected  individual  investments,  however  without  the  focus,  knowledge  and  network  to  help  the  global  expansion  of  your  business.  Therefore,  your  strategy  needs  to  consider  follow-­‐on  investments  from  the  Angel  Networks,  Family  offices,  Crowd  funding  and  hopefully  in  the  future  the  Early  Stage  funds  to  prepare  yourself  and  your  business  for  an  internaIonal  investor.    

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Equity  crowdfunding  is  a  mechanism  that  enables  broad  groups  of  investors  to  fund  startup  companies  and  small  businesses  in  return  for  equity.  Investors  give  money  to  a  business  and  receive  ownership  of  a  small  piece  of  that  business.  If  the  business  succeeds,  then  its  value  goes  up,  as  well  as  the  value  of  a  share  in  that  business—the  converse  is  also  true.  Coverage  of  equity  crowdfunding  indicates  that  its  potenIal  is  greatest  with  startup  businesses  that  are  seeking  smaller  investments  to  achieve  establishment,  while  follow-­‐on  funding  (required  for  subsequent  growth)  may  come  from  other  sources.    Crowd  Funding  is  specifically  to  be  considered  as  an  interesIng  opIon  to  raise  funds,  when  your  product/soluIon  meets  the  interest  and/or  emoIon  of  a  broad  group  of  people  in  the  community  and  offers  even  inexperienced  investors  a  secure  pla\orm  to  start  with  small  investments.  It  can  also  be  used  to  address  a  very  specific  community,  like  e.g.  a  defined  paIent  and/or  medical  expert  group.  However,  on  a  global  basis,  Crowdfunding  has  been  playing  only  a  small  role  in  LifeScience  while  already  taking  a  big  space  in  other  technologies.    In  Chile  some  Pioneers  have  entered  the  market,  despite  the  fact,  that  no  regulaIons  have  been  in  place.  The  government  is  in  the  regulaIon  process  with  the  support  of  experts  and  the  local  players.  Following  we  will  here  some  examples  of  Crowdfunding  in  Chile.    

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