P18 Ventures: a USD75K follow on fund for parallel18 alumni

This post was written by our Director of Operations, Lucas Arzola

One of the main challenges that all startups face is having enough money to keep the business going. Since most startups are not able to generate revenue from day one, bringing outside capital into the company before initial funding from founders, friends, and family runs out becomes arguably the most important part of the CEO’s job.

But raising funding is not only about survival and keeping the lights on. Startups should also consider fundraising as a strategy to go beyond stable growth and shift their focus into accelerating their progress to achieve exponential gains faster.

To support startups in navigating the challenge of fundraising and get them ready to raise money (after helping them figure out if they should fundraise at all!), the parallel18 curriculum has included since its inception the following elements:

• Mentor sessions on fundraising — The second part of our 5-month acceleration curriculum is focused on training our startups on how to raise capital and pitch to investors.
• Investors as mentors — Over 40% of the 130+ mentors currently in the program are or have been startup investors, which puts them in position to provide relevant advice on fundraising to our companies.
• Investor Immersion — 2-day sprint in which the parallel18 startups get matched with invited investors from outside of Puerto Rico so they can pitch their companies for investment. This is where the action happens!
• Demo Day — Public showcase of the startups’ accomplishments and investment asks to investors and the local business community.

We have also been undertaking and even more aggressive initiative since the beginning of the program to to foster local investment activity and economic development in Puerto Rico: P18 Ventures.

This parallel18 subprogram provides a follow up phase to the program’s experience, and comprises of an investment fund that aims to support 3 graduating startups from each cohort. We select companies that have succeeded in raising private capital, shown outstanding performance and accelerated growth during parallel18, have established operations in Puerto Rico, and commit to generating local full time employment (the ideal scenario for every company we support).

P18 Ventures funds are invested on a matching basis with respect to funding from private investors secured by the companies, with a typical investment of seventy five thousand dollars ($75,000). Because we want to especially incentivize Puerto Rico based investors to fund our startups, we match the capital invested by them dollar for dollar (which means that a $75K investment from a local investor is all a parallel18 startup needs to compete for the full $75K match from P18 Ventures).

Beyond directly stimulating the local investment community, there are other valuable benefits that P18 Ventures brings to the local innovation ecosystem. First, it enables Puerto Rico to retain startups graduated from parallel18 that commit to develop their company in the island, generating economic activity and employment as a consequence. Second, by having more of these companies operating locally, they are more likely to continue gaining local clients and bring new technologies to local industries, increasing the competitiveness of the Puerto Rico private and public organizations they do business with. Furthermore, when these companies continue to engage with international markets from the island, they bring new capital from abroad and place Puerto Rico in the map as a hub for global innovation.

In just over 2 years, investments in 7 startups graduated from parallel18 have been made for a total of six hundred seventy five thousand dollars ($525,000). This amount joins a total of two million five hundred sixty thousand dollars ($2,560,000) in the investment rounds we funded for these companies, making the capital injection for P18 Ventures a co-investment with angel investors based in Puerto Rico (including Act 20/22 individuals), local well-known corporations, and investment funds from the United States and Latin America.

This is unprecedented! The opportunity for Puerto Rico based individuals and corporations to leverage investments from experienced international investors in globally focused startups scaling from Puerto Rico right here in the island is now constantly available because of parallel18 and the P18 Ventures initiative. Not to mention the opportunity for parallel18 to participate from the accelerated growth of startups that it is already supporting, with the possibility of eventually obtaining a financial return of investment that could bring new funding to the program.

As of today, some of the best parallel18 success stories include local alumni startups and P18 Ventures investees Burea and Brands Of, which continue to gain significant commercial traction, increase their headcount with local talent, and are now scaling from Puerto Rico to markets in Latin America. Another important milestone for P18 Ventures occurred when Timokids relocated its headquarters to Puerto Rico from Brazil because of our investment and the relevant opportunities they continue to find in the island. Additionally, a trio of Argentinian companies — Cinemad, Be Better Hotels, and Quiena — have now established local operations with international reach thanks to their positive experience in the program and the investment from P18 Ventures.

P18 Ventures will continue operating within parallel18 to fulfill its mission of fostering retention of attracted and developed entrepreneurial talent, educating the local community about best practices related to investment in high-growth startups, and generating direct economic impact in Puerto Rico.

Our ultimate goal is to establish a culture of startup investment in Puerto Rico. If you are an investor from any part of the world with the ability and interest for investing in our startups, or if you have capital and would like to understand how you can get involved in evaluating our companies for investment, I invite you to reach out to me at [email protected].

Let’s talk! #investingrowth