09/28/2016 11h23

Digital entrepreneurship: who can invest in my startup? Check out our interview with Carlos Kokron, from Qualcomm

Kokron is Qualcomm’s Vice President and Managing Director of Qualcomm Ventures for Latin America, and one of the speakers of SP Conecta

Investe São Paulo

Qualcomm Ventures is the investment arm of Qualcomm, a world leader in mobile technology with headquarters in Silicon Valley. The Vice President of Qualcomm and Managing Director of Qualcomm Ventures for Latin America, Carlos Kokron, explains how startups in the sector can be more successful and have access to investors like him, seeking creative and cost effective solutions.

He was one of the speakers of SP Conecta, an event held free-of-charge which brought together large part of the ecosystem of support to startups in the state of São Paulo, at the headquarters of Investe São Paulo, on August 30.

Check out the full interview with Kokron on the subject:

Investe SP: What are the sources of investment available to startups in the market today?
Carlos Kokron: The company that needs investment has to be at a level where it can use the funds without diluting them too much. There are different investors for the different stages of a project. When investors make a high investment into a very young company, they end up buying almost all of it, which is also not good.

Usually, at the beginning, the person ends up using their own capital reserves, borrowing from their parents, friends. Then, with a little more maturity, they manage to have access to a typical investor, which we call angel investor. These investors usually fill out a check with their own money of R$ 300,000 or R$ 700,000 to help the company to continue developing its products, channels, etc.

After this stage, they enter a round in which there may be an institutional investor, which is the company that has paid professionals to manage funds and invest in projects that provide good return. These investors make a higher investment right in the first round, and are called series A investors: Approximately R$ 3 to 8 million. After that, it evolves over time, reaching series B investors, etc.

What is important for entrepreneurs is to understand what type of investment they can get at each stage. Loans, for example, usually do not make sense, because companies at this stage have no asset apart from their own idea, knowledge and preparation. And it can hardly be used as a collateral.

ISP: What type of project is among Qualcomm’s investments?
CK: We invest in later stage companies, which have gone through the family’s money and angel investors, and are now seeking investments of approximately R$ 3 to 5 million. We also invest in more advanced stages, such as Series B or C. After the investment, we continue monitoring and providing support to the evolution of the company, both in financial and management matters.

Companies such as Qualcomm invest in startups that have high growth potential. That is, if everything goes well, they double or triple every year in the early years and have everything to become large companies.

ISP: What is the advantage for Qualcomm to invest in startups?
CK: Usually, we invest in companies that enrich our solutions, or are based on what we have developed. And if they are successful, they increase the market for our products or technologies.

This ends up forming a virtuous circle. For example: a smartphone today has approximately 20 sensors – camera, gyroscope, accelerometer, microphone, etc. Companies that are developing solutions that take advantage of these sensors allow their solutions to be better valued – and thus, more people will want to have access to that technology and buy a more recent smartphone. That is, it tends to increase the demand for devices.

Therefore, investing in companies with the potential to be successful increases our market and facilitates the introduction of new technologies.

ISP: How do you evaluate the importance of an event such as SP Conecta to encourage entrepreneurship and foster synergy between the players within the ecosystem?
CK: Digital entrepreneurship has evolved a lot in recent years, but there’s always room for improvement. The more we get to transmit the message, explain how it works, approach an investor, the more we increase the offers of investment opportunities both for those who invest and those who develop an idea.

And events such as SP Conecta help to create a robust and interconnected ecosystem, where investors and successful solutions make the wheel turn in the right direction. I see this event as another venue, another opportunity to empower these entrepreneurs.

ISP: What are the limitations for making further investments in startups in Brazil?
CK: The more entrepreneurs are prepared to talk to investors, attract them, etc., the better. Sometimes, it is not just the development of the company that is at stake, but the preparation of the entrepreneur. The entrepreneur needs to know the market (dynamics, players, etc.) and have a clear strategy.

Investors often end up being willing to invest earlier when they feel that the entrepreneur is prepared, believing in an opportunity for improvement.

ISP: What advice would you give for entrepreneurs of startups to show their proposal to investors?
CK: The most important is to develop a good pitch, that is how we call the first presentation, where the entrepreneurs talk about their opportunity and their business to the investors. Today, the internet has many features that teach how to do this. It has to be clear and concise: few slides, ten at most. Describe the problem to be solved, its size, explain why the solution offered is different, how it will make money, the results already achieved, etc.

ISP: What characteristics are essential in a successful entrepreneur?
CK: Being resilient – entrepreneurs will always hear many “NOs”, but they need to believe and be passionate about their idea. Strength and energy are also characteristics that we typically associate with entrepreneurs. Knowing how to listen: being consistent and believe in themselves is important, but it is necessary to be open to feedback and inputs.

About SP Conecta

Held on August 30, the first SP Conecta brought together most of the ecosystem of support to startups in the State of São Paulo at the headquarters of Investe SP.

The idea was to create new connections between entrepreneurs, incubators, accelerators, academics, associations and governments to accelerate the development of startups from São Paulo. In addition, the intention was to bring startups closer to large companies and innovative corporations.