Unlike the passive role of the conventional investor, the co-investor we seek will not only be able to monitor the progress of the business, but also to contribute with his/her expertise, as a counselor.
This model offers an extra security for the investment, allowing entrepreneurs to contribute for the advance of new businesses that will raise Brazil to new levels in science and technology.
From this combination, Paradoxa was born. Our aim is to boost the entrepreneurial experience in Brazil, relying on our know-how on generating winning companies and attracting co-investors to begin an age of innovation in a fast-developing country.
Currently, we have 16 businessmen with large experience on starting companies from scratch. People with marketing skills, solid network and notorious technical and scientific knowledge – key features to turn good ideas into innovative products.
The criteria we use to select co-investors take into account at least one of the following features:
1) Investors with significant experience in starting companies from scratch. This ability is not always taken into consideration, but a closer look at the high mortality rate of startups will show just how important it is as a defining factor of success.
2) Investors with significant marketing skills, an expressive network and a reputation that can really add value to a business.
3) Investors with notorious scientific and technological knowledge, enough to guarantee that good ideas will turn into innovative offers – or, on the other hand, to dismiss initiatives that, as original as they can be, lack relevance to a business.
Before defining how much they will invest, our co-investors pass through an evaluation in order to discover what are the contributions that they could bring to the ventures in terms of support, networking and coaching. After, we discuss the investments. The investment has the nature of a club deal, where the opportunities are discussed until a go no go decision. Which club member can choose in enter in one, ten or no deal. The club administration pays to investor in the end. The Paradoxa’s aim is not to achieve an comfort zone with administration fees. Paradoxa is a potential co-investor in the same business that are present to club members. Paradoxa does not receive any investment or operate as a fund. It accelerates a co-investment process where the decision of entering is always of the money’s owner. In the end, Paradoxa receives a percentage of profits that its help to generate. Unsuccessful businesses do not pays Paradoxa.
Paradoxa will create an net with 20 or 30 individuals investors. We consider that we should have 70-100 opportunities, extract from 300-400 business, to present to the club. In the first analysis, we estimate that only 30-50 startups will gain attention from the club members. This opportunities will pass through due diligence, viability analysis and so on. During this process, 15-25 will receive proposals. We estimate that only 8-12 will end in business. This is not an aggressive number, but it should not be underestimated.
After investment, Paradoxa has an important role to support the entrepreneur in order to increase security and grow velocity. This is the stage of value creation and, unfortunately, where we see an high rate of startups death. That is the reason for Paradoxa to believe in the importance of the co-investors help and knowledge. Although some startups may not grow, the others could represent an expressive gain for the club members.
