Why We Doubled Down on the Darwin AI Team

Darwin AI logo.

I’m thrilled to share that our portfolio company, Darwin AI, has closed a $4.5 million funding round led by Base10 Partners. 🚀 We at Dalus are excited to be participating in the round alongside other previous investors, doubling down on our belief in the team.

Darwin AI is building the future of business operations with AI agents, with a sharp focus on the Spanish and Portuguese-speaking markets in Latam (try them here). The traction is already undeniable: they’ve onboarded more than 300 clients across 20 countries and have surpassed $2 million in annual booked revenues.

Continue reading →

Startup Success: Only 50% Reach Series A Funding

Only 50% of startups make it from Seed to Series A, based on Carta’s data from 12,388 startups (2018–2023). The numbers show a clear trend: most startups that succeed in raising a Series A do so within 4 years. After that, graduation rates plateau.

The data also reveals a notable market shift: success rates declined following the market adjustment in Q3 2021, and it’s still uncertain when—or if—those earlier figures will return.

Carta chart: about 50% of startups that raised a seed round reach Series A, and graduation rates plateau after year 4 (12,388 startups, Q1 2018 to Q3 2023).
Continue reading →

Link


Clip mobile payments in MexicoClip
, the mobile payments company in Mexico, has raised a Series A led by us – Alta Ventures Mexico – and with the important participation of other institutional investors including American Express, Sierra Ventures and others.

TechCrunch has written a nice article about the company and this equity round:

American Express Backs Mexican Fintech Startup Clip As Emerging Markets Warm To Financial Startups

Do’s and don’ts in a startup pitch

After seeing hundreds of pitches from startups I want to present my recommendations on what works and what doesn’t in a pitch. In many cases an entrepreneur has only one opportunity to present to a potential investor and therefore having and executing the right pitch is key to start a dialogue with the investor. I need to disclaim that I am an analytical and rational investor so I like fact-based presentations versus emotional ones. Theatricals in a pitch are not for me. I invest in entrepreneurs, not in actors.

A pitch is a short presentation of a startup by an entrepreneur with duration anywhere from 2 to 15 minutes but typically in the 3-5 minute range (and in many cases strongly enforced by clapping, rings, etc. when time is over). There are longer presentations, but those have a completely different dynamic and normally time restriction is not as challenging. In most instances the purpose is to present the startup to a group of investors for fund raising for the first time. You, the entrepreneur, need to keep what is the purpose of the pitch in your mind as this will dictate what and how you present.

So, what are the do’s? Regarding the what, the content, you need to focus and communicate the key aspects of your startups in a very short time. You shouldn’t waste presentation time in things that are less important or irrelevant for the purposes of your pitch.

There are six things you need to present: what problem you are solving, what is your product (so the solution to the problem that customers are willing to pay for), the size of market and who are your competitors, how is the business going to make money (It has to be a business that make money at some moment in the future!), what you have achieved (your metrics) and who is the team. Any other information you consider relevant is secondary and should be provided only if time allows but never at the expense of the five concepts.

The typical by-the-book order would be as presented above, however you might do strategic order changes depending on the type of startup. If you have a very interesting product, one that the audience will relate to quickly, you can start with the description of the product to create an emotional connection. If you have a very strong team with lots of applicable experience, you can present the team early so to gain credibility for the rest of the pitch. If you have achieved a lot already, say so early on to grab the interest of the audience.

I want to emphasize that presenting your product by explaining what it does, or showing a quick demo or at least showing some screenshots is especially important. I have seen too many entrepreneurs that don’t take the time to explain what their product is and does (what is the functionality rather than a technical description), probably because they assume everybody knows. At least for me, it is very hard to follow the rest of the pitch if I don’t understand what the product is. And if you can’t explain the concept of your product concisely, then you have a problem – how are you going to sell it to your potential customers.

Regarding the how of the pitch, the key is to communicate in a natural and articulated way, showing confidence and passion but without overacting. Your message is much more powerful if it feels natural rather than if it feels heavily rehearsed. The best actors look completely natural; they don’t look to be acting at all. You need to transmit the passion you have for the startup, which for the investor means you believe in what you are doing, want to do what you are doing and will be dedicated fully to it working as hard as you can to succeed.

Some don’ts. I think it will be useful if I describe don’ts; things that you shouldn’t do in a pitch but that I have seen plenty of entrepreneurs doing them.

  • Don’t try to create an emotional connection by mentioning imaginary users/clients by the first name – John is the accountant of company ABC Inc. and has a problem… – It sounds silly and unless you have a unique client, using example first names don’t generate any emotion from the investor.
  • Similar to that, don’t use the word “imagine” to present a situation – “Imagine” that John wants to do “something”, “imagine” John wants to do it late at night, etc. – Again, it sounds silly, and frankly I want concrete situations not “imaginary” ones. The number of entrepreneurs doing this is absurdly high. I don’t know why exactly, but I suspect somebody told them that story telling is very powerful; but only if you have a strong or very interesting story to tell that audience will relate to. If not, it sounds like a bad story and it is better to focus on a factual description.
  • Don’t explain things that the audience already knows – For example, for a European or Latam (as well as other parts of the world) audience dedicate precious minutes to explain that millions of people are fanatical about football/soccer. Just state the facts, maybe give one anecdote, and move on to the next concept in your pitch. The audience already has knowledge that you don’t need to repeat to them.
  • As I said before, don’t over rehearse. This is especially critical if you are presenting in a language that is not your native language. Don’t try to memorize your pitch word by word. It will sound canned and not natural. You must be clear about the concepts you want to say and the vocabulary you need, but present naturally, almost improvising. I can assure you that after doing your pitch more than 10 times; it will come natural to you without the need to memorize it word by word.
  • Don’t talk too fast, even if you feel you need it to say everything you want in the short time available. Talk at medium speed. If you talk too fast, people don’t have the time to process what you are saying; they get the words but not the ideas. This effect is compounded if you are talking in a language that is not native to you and your pronunciation is not the best.
  • Don’t have two or more people presenting at the same time by switching back and forth between them. It generates a lot of distraction from the content of the pitch and doesn’t show that you are a great team, which I suppose is why teams decide to do it that way.
  • Finally and very critical, don’t omit critical information, like discussing the competitive landscape or what are your metrics. If you do, it only raises suspicion that there is something wrong there you don’t want to explain.

Always keep in mind that the pitch is a way to generate interest in your startup from investors. You need to provide a snapshot of critical aspects of your company in a very short period of time, so they can decide to get more information about your startup and a one-to-one dialogue can be initiated. I hope these do’s and don’ts become helpful to you and other entrepreneurs. Comments are welcome.

¿Cuál debe ser el crecimiento de un Startup?

Uno de los principales aspectos que todo inversionista en etapas tempranas busca ver en los startups en los que busca invertir es un crecimiento acelerado . Esto es especialmente importante para negocios digitales B2C (business to consumer) donde normalmente la rentabilidad del negocio esta basada en tener grandes volúmenes de usuarios y/o clientes. Muchos de estos modelos de negocios se basan en generar ingresos pequeños en un gran número de transacciones o en generar tráfico de usuarios que permita monetizar por la venta de publicidad o data.

El crecimiento es una validación de que el producto que ofrece el startup tiene la capacidad de atraer usuarios/clientes. En la medida que estos usuarios repitan su interacción, la base de usuarios/clientes crecerá, idealmente de forma exponencial.

Además el crecimiento es muy relevante para asignar una valuación al startup. Una tasa de crecimiento mayor es un indicador que el negocio puede alcanzar una mayor rentabilidad en el futuro y/o que puede alcanzar rentabilidad en un menor plazo de tiempo.

El problema que vemos en nuestro fondo cuando analizamos muchos proyectos digitales es que, habiendo lanzado su producto, y luego de varios meses (y en algunos casos, años), el startup no alcanza tasas de crecimiento interesantes. Efectivamente todos las semanas y meses capturan nuevos usuarios pero no en número suficiente como para alcanzar un crecimiento exponencial. Vemos casos donde startups tienen menos de 500 usuarios (muchos de ellos amigos y familiares) luego de mas de 6 meses de haber lanzado – claramente no es un crecimiento exitoso. Un hecho que muchos emprendedores minimizan es matemática básica: en la medida que el crecimiento en número de usuarios sea más o menos constante, ese crecimiento como tasa sobre la base de usuarios irá disminuyendo.

Paul Graham, de Y Combinator, dice (en este post) que los emprendimientos en el programa de su aceleradora aspiran a tasas crecimiento de 7% semanal como una referencia de éxito. Tasas superiores son muy buenas, pero inferiores son causas de preocupación.

A mi me cuesta poner un número fijo como receta de éxito, pero es cierto que tasas de crecimiento de 1%-2% semanales (y en algunos casos mensuales) en startups B2C son una clara causa de preocupación. Un 1% de crecimiento semanal, acumula 170% de crecimiento en un año, que de una base inicial baja no representa gran crecimiento. Un 2% semanal, sube el crecimiento anual a 275%, mejor que el anterior, pero todavía lejos de lo que necesita un startup digital para ser exitoso.

Muchos emprendedores reaccionan diciendo que la lentitud en el crecimiento se debe a que no están invirtiendo (gastando) en marketing/publicidad o a qué están en una etapa inicial de la curva de crecimiento, que típicamente se comporta como una curva S.

Respecto a la inversión en marketing es cierto que la misma debe acelerar el crecimiento, pero si un startup no logra tener ningún crecimiento orgánico (aquel que no viene por pagar por clics u otras modalidades) en su etapa mas temprana, es una preocupación sobre el atractivo del producto para sus usuarios. Con una base de usuarios baja, un startup debe ser capaz de crecer de forma acelerada. La inversión en marketing se vuelve crítica cuando la base de usuarios ha crecido.

S-curveLa curva S modela muchos procesos naturales, incluyendo el crecimiento de una empresa. Comienza con un crecimiento lento, luego se acelera en la etapa de expansión o crecimiento y finalmente se estabiliza cuando alcanza su maduración. Sin embargo, es importante entender que es difícil que un startup que no esta alcanzando tasas de crecimiento altas luego de varios meses, vea un cambio en la tendencia a menos que este realizando acciones que puedan generar ese cambio.

startupQuiero mostrar el resultado que ha tenido uno de los startups donde hemos invertido recientemente que muestra lo que un inversionista busca en términos de crecimiento. Este startup tiene una dinámica de mercado (marketplace). En este caso el resultado en crecimiento de usuarios – la demanda – se detona por el crecimiento de la oferta. Ha sido un crecimiento puramente orgánico, sin inversión en marketing. Cada mes la empresa ha agregado oferta, alcanzando niveles altos precisamente en los últimos dos meses. En este caso, mientras la oferta no era lo suficientemente buena, no generaba crecimiento significativo en la demanda. Una vez que cambiaron la tendencia en la oferta, orgánicamente se ha dado el cambio de la tendencia en la demanda – los usuarios.

Mi mensaje final a los emprendedores con proyectos con estas dinámicas, es que tienen que entender muy bien que factores detonan la adquisición de usuarios – que hace el producto atractivo a esos usuarios – y establecer una estrategia para potenciar esos factores. En una situación de bajo crecimiento, es poco probable que alcancen un punto de cambio de la tendencia a un crecimiento acelerado, a menos que estén haciendo cambios en la estrategia. En muchas situaciones “mas de lo mismo” no es una estrategia exitosa.