Lifeselfmastery's podcast I Startups I Venture Capital
00:07:59 · Rohit Malhotra, Marcus Dantus
[00:07:59] S1: Yeah. Yeah, you're absolutely right about AI. There's just so many tools which are coming up and you need to figure out which is going to work and which is not. But you know when you launched Wayra Mexico for Telefonica what did you learn about getting a large corporation to actually work with startups? [00:08:21] S2: Well, look, in beginning when I started with them, I thought it was an amazing idea, you know, corporate venture capital, a big company that, you know, created little companies that it could eventually either absorb or work with, give... Provide them a huge marketing and commercial arm, etcetera. But it does have its negative side. And the negative side is that, you know, corporations move a lot slower than startups. So, you know, the process, for example, to buy a laptop in Telefonica could take four to six months. And in four to six months, a startup could die. So, you know, trying to match those two different timeframes and schedules wasn't easy. And that was probably the biggest problem that I had with Wayra. [00:09:21] S1: Got it. And you've been running Startup Mexico since 2013. So how has the Mexican founder changed in last, you know, thirteen or fourteen years and what still hasn't changed that might frustrate you?
00:09:37 · Marcus Dantus
[00:09:37] S2: So look, in 2012 Mexico created the Mexican Institute of Entrepreneurship nationally. Yeah. And that's provided a lot of support and, you know, money and, you know, it really created the entrepreneurial ecosystem. So between 2012 and 2018, the Mexican ecosystem grew. You know, we started getting a lot of incubators. You know, we went from zero to about 500 incubators in the country, some accelerators. We went, just to give you an idea, from three funds in 2008 to over 150 funds by the end of the decade, the end of the next decade. So I believe that the ecosystem was truly born in that era. We were missing a very important component in the ecosystem, which is success stories, in part because it was such a young ecosystem. Today, it has changed completely. You know, the entrepreneurial institute disappeared in 2018 with a change of government. There is absolutely no support for entrepreneurs whatsoever nationwide. So a lot of incubators have actually died. Many funds have not continued. I think entrepreneurship is still growing. I think that the culture, the entrepreneurial culture is something that's spread out and that's very important. And we also have a positive side because now we have a lot of unicorns that were created in Mexico. So now we have the success stories. So if you ask me where I find it now, I think that as an entrepreneur, as an investor, as an incubator, we are a little bit in a state of confusion. Why, if we were so successful in creating this ecosystem, why aren't we feeding it currently? So I think we still have an opportunity to, you know, take advantage of what was created, but I think we need to move and we need to move fast.
00:12:26 · Rohit Malhotra
[00:12:26] S1: Got it, interesting. And, you know, before the call you talked about Ruta Excel where, you know, you've moved on to this new initiative where you're focusing on traditional SMBs rather than venture backed startups you know so what led you into you know this sort of change where you've moved from Mexico to Ruta Excel?
00:12:54 · Marcus Dantus
[00:12:54] S2: Okay, as an investor, what I can tell you is that there's... I like a balanced, you know, portfolio because at the end of the day, a startup, especially a technological startup, is mostly binary. You either make it or you don't make it. Okay. And most of them don't, but the ones that do probably will return the money that... Or or or or make you money. And and that's interesting. But it's a big risk. Yeah. On the other side, you have traditional SMBs. Traditional SMBs are not binary. They may not grow, of course, as fast and provide the returns that a startup could provide. But most of them won't die. They'll continue operating and perhaps a financial exit could be dividends. So I've always tried to balance, you know, my investment portfolio in those two categories, you know, alongside real estate and other stuff. Now, what I have noticed is a couple of things. First of all, and everybody knows this, SMBs are the heart of an economy, especially in developing countries. For example, in Mexico, 98 of SMEs are micro businesses or super small businesses. And what I noticed is that this is a forgotten side of the economy. Nobody's investing in these businesses. Nobody's professionalizing them. Nobody's helping them, you know, take advantage of all the tools that are currently available for them, which I consider, you know, the great equalizer, you know, allowing us very small company to use tools that a corporation uses in order to really compete. So at some point, I wanted to create a fund that actually invested in these boring companies, if you will. And and and, you know, I started giving a lot of keynotes. And in every keynote, I started being approached by people that would give me their products. And I would start noticing that their products are amazing, but they don't have a online store or online presence. They... Nobody knows them. And and they're missing a lot of elements in order to really grow the companies. And this is how Ruta Excel was born, trying to focus on this specific problem that I think repeats all over Latin America and even in the Hispanic U. S. And in Spain. That's our focus.
00:16:02 · Rohit Malhotra
[00:16:02] S1: Very interesting. And, you know, you've been part of Shark Tank and you've been investing. So, you know after fourteen seasons and you know you would have listened to close to 5,000 plus pitches, what can you tell about a founder in the first sixty seconds whether you want investment with them or not?
00:16:20 · Marcus Dantus
[00:16:20] S2: Well, look, of course, the founding team is the most important part and the entrepreneur. So if... I look for three things usually. I look for, you know, something that solves a problem or, you know, a necessity that is real, that the solution is differentiated, that it has, you know, competitive advantages, innovation, And of course, the founding team. Now on the founding team, I look for several things. I... Of course, the ethical side and, you know, understanding that we are for the same things. I look for, you know, if I like them or not because at the end of the day, you know, venture capital is like a marriage. You wanna stay married for a little while at least. Even though you know it's gonna end up in divorce eventually, but but so so to like them, I I like to see the team. I I want to see a multidisciplinary team that complements each other, that that has a clear leadership, that, you know, is is is, you know, rowing towards the same goal at the end of the day. So I want them to be open to suggestions and to hear what people tell them, to really listen because look, when you invest in a company, especially in the early stages, I think that the most important thing that you can provide them is contacts or experience or knowledge of the industry more than the money. So if they're not going to take advantage of that, I think it's not a good prospect. And the last thing I think is very important is that they are focused on the business. Many times we got pitched something that was amazing. The numbers look great. The business look great, but the entrepreneur had all the businesses. And if he's not going to focus on one, then I don't think it's a good idea.