Camila Farani and Bruno Santana share recommendations based on their personal experiences to help you, the entrepreneur, attract investors.
In September, the Talk with Investors event took place, featuring Camila Farani from Shark Tank Brazil, Bruno Santana, director at Aqua Capital, and Marcel Martins, founder and leader of TM3 Capital, in a conversation with Moacir Vieira, founder of Grupo Value, on how to attract investors.
During the conversation, which aimed to evaluate the current opportunities and risks, Camila and Bruno shared advice and guidance for partners seeking investors based on their personal experiences.
If you’re an entrepreneur looking to receive the best guidance on attracting investors from Brazil’s top specialists, keep reading!
How to Attract Investors: Camila Farani
Shark Tank Brazil is not an angel investment program; rather, it aims to attract investors in general. It is a TV program where companies from all sectors participate—not necessarily from the new economy. In the conversation, Camila Farani explains what makes her decide to invest in a business/startup.
Having come from the real economy for 20 years and focused on startups for the last 10, Camila says she has a broad perspective on all types of companies. But what’s the differentiator that makes her invest in something? Is it just about signing up for the program and preparing a nice pitch, or is there more to it? She explains her T Theory, which consists of: team, tech, trenches, and market size.
- Team: The level of complementarity of the team. Who are the people involved; have they failed before; have they had experience in the “real world”? If not, how do they behave? What is the team management, recruitment, and selection process like?
- Tech: The technology behind the product. How was it priced, what are the aspects, what algorithms are being used, and how defensible is it?
- Trenches: The “trenches.” How defensible is this product against new entrants in the market, and how does the entrepreneur behave under pressure?
- Market Size: An analysis of the available market size and the share the person wants to capture. Also, what is the exit possibility?
These are the broader criteria when attracting investors, but there are also more intrinsic parts, such as minimum revenue. The recommendation is: for a startup or an innovative business, compared to traditional businesses, it is essential to focus on growing more and more.
It’s about eliminating conservative thinking and realizing where the audience’s focus is—follow the money. Digital transformation could be one of the solutions, as even before the pandemic, companies were already moving to digital, and now more than ever.
Is “Riding the Wave” Worth It?
As mentioned earlier, digital transformation could be a solution for your company, but it’s not always the case. Camila does not recommend following a trend or a “hype” without any prior planning, just to capitalize on the current buzz.
Launching a product/service or investing in the digital space simply to “ride the wave” is risky, as eventually, that wave will subside. Camila advises investing only in products/services that were already part of the strategic plan and were accelerated because of the pandemic.
She even shares a personal example: A school that was 50% online and 50% in-person, and used the moment to completely migrate to the digital space.
How to Attract Investors: Bruno Santana
Bruno Santana, director at Aqua Capital, talks about a common question from entrepreneurs seeking to attract investors: When is the best time to bring in an investor? Is it in times of difficulty, when you need help but the valuation will be affected? Or when the company is in its best moment, with growing revenues?
Bruno shares his perspective from Aqua Capital, where they invest in companies that are more mature, cash-generating, and have a certain level of revenue. After analyzing hundreds of cases annually, he points out two situations:
- When the company is doing well and has a good outlook and business plans for the future, they either aren’t interested in talking or set an unrealistic valuation.
- When the company is in distress and looking to accelerate, it is usually a company that doesn’t make sense, lacks longevity, and has no clear ambitions for the future.
When Does Investment Happen?
For Aqua Capital, which usually invests by acquiring equity, the best time is when the founding partner recognizes the extreme importance of the business. This is known as skin in the game, where the company is a significant part of the founder’s personal wealth, and there is a desire to grow by attracting investors.
There is no doubt that the ideal time is when the founder has already demonstrated growth, has adequate margins, and can show a track record. This means they have a history of delivering results, not just telling stories.
Bruno also adds that investors lose interest when they see a company reach a plateau after a period of strong growth because without continued growth, there’s no motivation to invest further. Therefore, the company should already be showing growth, with potential for further expansion with the investment.
