www.catalizadora.io

Catalizadora Ventures

Problem Statement - the Why

• A lot of the existing startup ecosystem has certain assumptions and pattern matching that works for some but excludes others because they don’t fit the box. Examples include:
  • “Before I invest, show me you can raise 100k from your inner circle.” This makes sense as social proof and an easy way to de-risk for the investor because if you can’t convince your family and friends, why should an investor? However, friends and family might be willing but not able to invest. Particularly for first generation immigrants or minority founders.
  • Risking a 100M company for a 100B company only makes sense when you have an existing baseline of financial security.
• The current VC model is not entrepreneur focussed in that most companies are 1 of 1000 in a portfolio. The incentive is to chase higher exits or fail because it only takes 1 unicorn to make up for the losses of the others. This creates the constant treadmill of burn until your next raise at a higher valuation, which requires constant (sometimes unsustainable) growth.

Goals of this fund - the What

• to help a new class of entrepreneurs create companies that should exist, for minority women that would not otherwise exist
• focus on helping latina founders, but anything that impacts minority women directly or indirectly
• create entreneurial community for minority women
• create companies that we believe should exist

Examples of Anti-Patterns

• current VC paradigm creating unsustainable growth and exit pressures; e.g. rapid hiring, firing founders for exit

Non-Goals

• We do not need 1B+ markets
• We do not need to chase 100x unicorn upside.
• Cashflowing business preferred
• Do not need an exit in 10 years.

Catalizadora Ventures - the how, when, where

• support our entrepreneurs
  • funding
  • support
    • build ecosystem of entrepeneurs
    • startup advising and office hours
    • marketing/growth, design, legal, tax, etc
• criteria
  • should be minority women entrepreneur
  • usage of tech? (would we invest in a local restaurant or real estate developer? not our wheel house but can still help the community…)
  • marketcap? 10-100M min? definitely lower. still need some outcomes. this is not philanthropy. this is not social justice. this is business. we want to see successful, self-sustaining, profitable businesses. if you are solving someones valuable problems, you should get paid. there is nothing wrong with that.
  • would not be funded by the conventional VC ecosystem; if they fund it, we don’t, simply because our money can be used elsewhere. (makes it easy for existing VC ecosystem to avoid conflicts of interest by giving first-right-of-refusal, also provides valuable false negative data to VC ecosystem)
  • cashflowing preferred. this de-risks the investment in terms of product market fit, and financial sustainability. We don’t know if the next round will come, and avoids unsustainable growth incentives. it is also a worst case exit strategy. generally, this starts off as a side hustle and entrepreneurs are looking for a cushion to go full time. as the fund grows, we can take bigger bets on more uncertain payouts over time but for now we need our capital to grow steadily.
• you should be solving a problem that you know exists. generally this will be a problem related to your community.
• raise capital from other aligned investors
  • lots of existing minority wealth that has no where to go (e.g. tons of real estate wealth). if you are not in the sillicon valley circles, you don’t have access to good VC funds. and there is already a bias in who makes it to these circles.
  • lots of new crypto money looking to rebalance but still have significant appetite for risk.

Investment Criteria

• focus on data and customer experience
• solves a community problem they have first hand knowledge of
• focus scalability

Open Questions

• how big would the check sizes be?
• what’s the timeline/exit strategy?
• what are the legal logistics? SAFEs kinda assume future rounds.
• what does the ecosystem and support network look like?
• how do we make this a multi-generational thing? meaning the veteran entrepreneur who has failed 4-5 times is helping the new ones.
• How much is this supporting entrepreneurs vs making a profit?

Long-Term Goals or a Vision of Success

• Eventually, other investors are willing to invest with us by following a similar charter or sending their funds to us to invest as we can provide a compelling return and a great mission.
• Our ecosystem of target entrepreneurs and support is unmatched. We are the place to go for the first check.
• Minority women know and believe they can be entrepreneurs if they want to.
• This model is seen as a valid, if not more compelling, alternative to the existing VC model.
• We see new generations of entrepreneurs and companies that don’t fit the existing mold.
• Wealth is created and distributed (directly and indirectly) to those who typically are not getting it. And while, this won’t solve income inequality, it will be a step in the right direction.
• A return to the promise of the American Dream for immigrants. (?, tangentially related.)