‘Fireoffs at startups had been a mistake by the funds’, says Kepler, from Bossanova

‘Fireoffs at startups had been a mistake by the funds’, says Kepler, from Bossanova

Traditionally, the strategy of startups is to raise investment rounds and burn cash in aggressive expansion – until they receive the next, usually larger, check. In recent months, however, the scenario has changed. With capital shortages caused by rising global interest rates, investors fled the risk and left startup founders without the funding needed to grow. This resulted in business cuts to balance expenses and secure cash during the period. “The mistake is not the entrepreneur, but the funds, which promised new rounds, but are now no longer investing”, says João Kepler, founder of Bossanova Investimentos, one of the main sources of checks for startups in the country. In the first half of 2022, there were 85 contributions (up from 78 in the first six months of last year), according to the Distrito innovation platform.

To Estadão/Broadcast, Kepler spoke about the timing for startups in terms of investment and Bossanova’s plans to keep growing. Read the main excerpts below:

What explains the increase in investments in Bossanova startups in a year marked by retraction?

We decided to accelerate investments because we had cash. More than that, we have many investors looking for us. So why not accelerate? The secret is opportunity. We give back to society what, back then, as an entrepreneur, I didn’t have. Bossanova wants to distribute the money better so that more companies can capture and succeed. So that, up front, we multiply the amount invested.

With the current scenario, was there a drop in the unit value of these checks?

From ‘series A’ startups back, where Bossanova operates, we are increasing checks, not decreasing. There is more investment opportunity. We were always very down to earth. We’ve never done a stretched valuation based on fintech fashion, for example. The investor who invests after Bossanova knows that the previous round was very adjusted, based on what the entrepreneur will need in 15 months. So we didn’t have any startups that had to downgrade. We gained a lot from this scenario and, therefore, we increased the checks.

According to Distrito, Bossanova was the one that invested the most in early-stage startups. Does the manager intend to continue this strategy?

We intend to continue on what is our main thesis, which is angel checks or pre-seeds. Seed is something new. And we have a very good output: there are 75 ‘exits’. Our strategy means getting out before everyone else. And it’s important to be known as a check leader. Because the best deals come to us. There is much more capital out there than projects to invest in. In Brazil, it’s the opposite. So I need access to the best projects before anyone else.

In this more complex scenario of 2022, the fashion is to be ‘rational’ in investments. So what is the ideal startup these days?

I believe in break even, which is the balance point between a company’s income and expenses. How much capacity does a startup have to return to break even if it stops receiving investment? If it stops receiving investment, does the startup die? No? So, it’s a company to invest in.

Are layoffs a solution in this crisis?

What happened is that the funds promised money if the entrepreneurs accelerated the startup’s growth. The mistake was not the entrepreneur, but the funds, which promised to make new rounds, but are no longer investing, forcing the founders with cash management. Now is the time to find the good entrepreneurs, because this crisis is a very important tidy brake.

So, the layoffs crisis is not the management of entrepreneurs?

Not. The funds asked to accelerate. They put wood on the fire.

How does this affect our innovation ecosystem?

Many startups will become traditional companies to survive. A startup does not distribute dividends, does not pay high fees and reinvests everything it earns. They will have to make a profit and include the partner-investor in the social contract.

Does Bossanova care to look for ‘unicorns’?

It’s an American dream, you know? Today, I don’t care about unicorns. Having a billion-dollar company is the result of a job well done. As it is today, it will be harder to have unicorns without the big rounds of investment the way they were done in 2021.

What has been said in the market is that we had many startups that should not have become unicorns. Do you agree?

Hope not. Going forward, I hope the evaluations are all very well adjusted. But really, I don’t know if it matters. It’s not relevant. It’s not because Bossanova doesn’t have one (unicorn in the portfolio). It is not our thesis.

Estadão Content

Related post

Down rounds: Traders lower the worth of startups, however some have already rotated.  As?

Down rounds: Traders lower the worth of startups, however…

The moment is such a signal of disrepute in Silicon Valley that private companies and investors are coming up with inventive…
New CVM decision permits buyers to entry funds that had been beforehand restricted

New CVM decision permits buyers to entry funds that…

Last Friday (23), the Securities and Exchange Commission (CVM) published Resolution No. 175, which presents new guidelines for investment funds. The…
Startup uShark, Crypto Crowdfunding, Allocates $4.3 Million to Startups

Startup uShark, Crypto Crowdfunding, Allocates $4.3 Million to Startups

Created by Brazilian Geraldo Marques, the platform connects startups and investors through the sale of cryptoassets backed by equity interest; first…

Leave a Reply

Your email address will not be published. Required fields are marked *