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What is Venture Capital

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December 5, 2022

Have you ever wondered what a Venture Capital is? How does a VC work? Samaipata investment team tells you first hand.

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1. Source Startups

VC investors are hunters. Sourcing is a 24/7 job, they are constantly in the look for investment opportunities. They attend events, speak to their network of founders, business angels and investors, navigate through endless databases... it never stops. So, if you are a founder of a tech startup looking for funding, send us your deck, we are looking to hear learn more!

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2. Analyze the business

VCs go deep into a business before deciding whether to invest or not. The data available to consider very much depends on the stage of the business (the earlier the less information) but the bulk of the analysis focuses on three main pillars: team (this is the most important point), market (market size, competition) and the business (current state and trends of the KPIs and financials).

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3. Invest in startups

Venture Capital funds invest in startups in exchange for an equity stake. Depending on the size of the round, a VC firm can be the sole investor or co-invest with other tech investors. Note that VCs like us analyze thousands of companies a year and only invest in a handful of them.

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4. Portfolio management

Different Venture Capital firms have different policies on whether taking a board seat or not (it obviously also depends on their stake in the company). More and more, there are VC funds - also known as smart money - that do not only provide funds but also bring to the table their relevant business know-how and their network to help grow the business. See here for more on how Samaipata adds value to our startups.

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5. Make returns for LPs

Ultimately, VC firms need to return money for their investors, known as LPs (Limited Partners). Venture Capital funds make money when they have an “exit”, i.e. one of their companies gets acquired or goes public (IPO) and they sell their stake, ideally for many times what they paid for it. Note that in a typical fund, the returns come from 20% of the investments, i.e. in a portfolio of 10 companies, 2 will be winners.

Now you know what we do, so if you are an entrepreneur looking for funding for your startup, send us your deck.

Accelerating the Spanish entrepreneurial system

Ecosystem is quite a buzzword in the world of entrepreneurship and innovation. While I find it cringey, it does capture the reality of functional entrepreneurial hubs. These are definitely systems, where interconnectivity between different nodes is critical for individual and collective success. In this article we touch upon closely related drivers of interconnectivity - founder mafias, exits and stock options - in the context of the Spanish entrepreneurial system.

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The Founders Q&A

As we strive for transparency at Samaipata, we want to shed some light on our investment thesis and on some of the key questions entrepreneurs often ask us. If the answers laid out below fit with what you’re looking for from a potential VC investor, we would like to hear from you! We review all opportunities sent to us.

Market Perspectives

AI is shaking up the software market, for the better

The software industry will have to bring the power of AI to the broader economy and face a collective innovators dilemma in doing so. Traditional SaaS solutions were originally designed to simplify specific tasks within job descriptions and boost overall productivity. They serve as tools that augment human work but ultimately require a workforce to operate them.

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The Hive Summit 2024: Samaipata Founders' Retreat

Every year at Samaipata, we host our Founders' Retreat—The Hive Summit—under our Founders’ Success Platform, "The Hive." Celebrating its second edition this year in sunny Mallorca, the Summit brought together the founders of our portfolio companies, operating partners, and some of Samaipata's close friends. This retreat is designed to strengthen the bonds within our community, fostering meaningful connections and facilitating collaboration among all attendees.