Our Managing Partner, Diego Noriega, participated in episode 103 of the Startupeable podcast in a one-on-one with Enzo Cavalie.
The interview revolved around the following main themes:
- Diego’s first steps in the entrepreneurial ecosystem
- The role that mentoring plays in the growth of entrepreneurs
- How to raise VC capital in the pre-seed stage
- The importance of the team and role distribution within a startup.
In addition, Diego spoke about Newtopia VC’s mission in Latin America and their daily work accompanying the more than 55 startups that make up our portfolio.
– How did you get into the fascinating world of startups?
I grew up in Santiago del Estero, in the interior of Argentina, which is a fairly traditional and somewhat conservative place with little private initiative. I saw my parents want to start in the health industry but they couldn’t.
I have always played team sports, mainly rugby, and I discovered that I loved building teams. The combination of these cultural, sports, and social factors, and having traveled to the United States to finish school at the age of 17, were essential in helping me see Argentina and LATAM from an outside perspective, with all their sorrows and frustrations, as well as their natural wealth and talent.
We have talented and creative people, we love to socialize, and we enjoy fixing problems and dealing with challenges. I finished my degree as a public accountant and immediately started an MBA program. At the same time, I was starting a business, which was a bit of a challenge. I got married and had a daughter, which was the perfect combination to make things even more challenging at 25 years old.
Today, 23 years later, I have co-founded 23 companies and we are investing in and supporting 55 startups with Newtopia.
– Why do you consider mentoring important and what role has it played in your career?
Mentoring has been crucial for me and the companies I work with. I have weekly mentorship sessions with the 55 startups in the Newtopia portfolio. However, I first experienced the value of mentoring through a 14-hour bus ride from Santiago del Estero to Buenos Aires for a 1-hour mentoring session. This experience taught me the value of mentoring, not just for me, but also for my company and teams.
Endeavor was also instrumental in my development, providing both mentoring and support to make my models more scalable and sustainable, and ultimately have a greater impact. I believe mentoring is critical to reduce the high failure rate of startups in the region, which is the highest in the world at 95%.
– What common mistakes do you think there are in mentoring?
In general terms, I think the main errors are:
- Not preparing for mentoring.
- Set many goals.
- Using too much session time in introducing the problem, not being direct.
- Do not download the mentorships and put them in writing, or review the notes for the next mentorship.
– What is Newtopia’s investment thesis, and what opportunities have you found as an investor?
Joining this project was very revealing for me. I had made some angel investments before, but I didn’t enjoy it as much because I felt that something was missing. Newtopia was created as a tool that Latin America needed, specifically for investment in the pre-seed stage where the risk is 100% and the return is 0.
As venture capitalists, we take on the most risk. Why do we do it? Because we want to accompany and generate impact. In the pre-seed stage, we invest in the team since many times there is no product yet. Therefore, the complementarity of the teams is a fundamental value. At this stage, it is important to demonstrate the value that the team brings when pitching to investors.
This lowers the risk and makes the investor believe that this team has an opportunity and is different compared to other companies that are competing or will compete in the future.
– What are the points on which you recommend entrepreneurs who are raising capital for the first time to focus?
It is very important to talk about the work that involves raising capital from VC. It is not easy at all.
The most important factor is dedication, consistency, communication with mentors and investors, and knowing how to ask for help. You have to think that before getting an investment, the entrepreneur is looking to build trust, and only when it is generated will everything else happen.
I don’t think there are second chances, that’s why each member of the team has to know very well what they do, why they are there, and what interests them. In addition, it is very important to know who to talk to within each fund. There are different people and profiles, and knowing how to choose them is essential.
– How can an entrepreneur develop this fundamental ability to communicate?
Undertaking is very difficult, and I believe that one of the tools we have to connect with the market, talent, and investors is content. The more an entrepreneur speaks from knowledge and the more transparent they are, the more likely they are to become a leader in their industry. Today, LinkedIn provides a lot of organic reach, so it is key to know the customer and generate content.
Communication is a gift, but it can also be trained. Entrepreneurs have to choose one path or the other: either we become protagonists, generate value in the industry, and take on the world, or we don’t.
– In an interview you gave a few years ago, you mentioned that the advice for raising capital in Latin America often works for Silicon Valley but not for the region, which can create false expectations and even frustration for entrepreneurs. Do you still hold the same opinion?
A Although the context has changed, I still hold it. I think you have to understand the game in Latin America and be aware thatthe Venture Capital path is not for all entrepreneurs, but for a few.
You have to have your feet on the ground, be humble, be austere, and keep in mind that the money obtained in an investment was lent to execute it.There is no need to celebrate having an investment, it is an immense responsibility.
– In transitioning from being an entrepreneur to an investor, has your way of thinking about the pros and cons of raising capital evolved?
It hasn’t changed too much. I think that the vast majority of entrepreneurs are at a stage where they do not need to be funded through VC, but rather they should be funded through clients. The more money comes from your clients, the more investable you will be by private investors and banks.
Bootstrapping is an austere mentality; it is thinking about how to create a sustainable company with a sustainable business model over time, which lowers risk by being focused on delivering value to all stakeholders.
At Newtopia, we look for entrepreneurs who have a gigantic vision of a market with an unresolved problem, and who can execute it because they have the experience and potential to do so, and build trust. And above all, they are humble because if they can’t learn, they won’t progress.
It is very important to be aligned with the whole team and know how to execute brilliantly. I don’t think you have to raise a lot of capital if you don’t have the seasoning to be more reliable.
Before the end of the episode, Diego underwent a series of «quick questions» where he highlighted that, if today he had to start from scratch «I would connect more with the market, and I would not push products that the market does not need”. And he stressed the importance of trusting not so much in one’s own ideas but in the market.
At Newtopia we are excited to continue spreading entrepreneurial energy in order to transform Latin America. For this reason, we support early stage startups with tech DNA. If after reading our Manifest, you consider that you check all of the boxes, do not hesitate applying to Newtopia!