Category: Magma Infrastructure

Google Cloud and Magma Partners Case Study: Cross-Border Collaboration Using GSuite

As we have grown, our team has become larger and more distributed. For monthly all-hands meetings, our nine-person team comes online from the US, Mexico, Colombia, and Chile, and we depend on Google Cloud for these collaborations.

We were pleased to be featured in a recent Google Cloud case study about how we use the entire G Suite to meet with hundreds of entrepreneurs and investors across Latin America and Asia every year. These tools allow us to centralize information for our distributed team, coordinate meetings, collate critical data, and help startups make the connections they need to grow. 

“The vast majority of startups in Latam do not fail for lack of money but lack of contacts and experienced people who constantly provide feedback, which has been fostered by G Suite,” said Managing Partner, Nathan Lustig. 

G Suite provides us with the infrastructure we need to support over 53 startups in nine countries across the region. To learn more about our Google Cloud case study, click here.

Magma Partners’ Term Sheet Review (free for all startups)

In eight years of working in the Latin American startup ecosystem, we’ve seen a lot of term sheets. A term sheet is the document that defines the relationship between a startup and its investors, including potentially-confusing legal clauses surrounding valuation, preferred stock, vesting, and investment instruments. Despite the best of intentions, VCs often provide startups with term sheets that do not properly align incentives for a successful investment relationship.

In the worst of cases, we’ve seen term sheets that are abusive or exploitative to the entrepreneur, or deals that look more like private equity than venture capital. These issues generally arise from lack of experience, rather than bad will, but they can kill a startup before the deal is even signed.

Financing can be a sensitive topic, but transparency is always the best policy. Entrepreneurs shouldn’t feel they have to analyze their term sheets in a vacuum. Magma Partners is dedicated to developing a healthy startup ecosystem in Latin America. We will review any term sheet you have, at any stage, and give you feedback for free.

What is a term sheet?

A term sheet is a blueprint for your future relationship with your investor. If you think of your relationship with VC as a marriage, a term sheet is your premarital agreement.

What does a term sheet include?

As Brad Feld and Jason Mendelson said in their book Venture Deals (our top recommended VC book), every term sheet consists of two kinds of terms: economic terms that decide the return investors will get in a liquidity event, and control terms that allow investors to exercise control over a business or veto certain decisions the company can make.

What can potentially go wrong?

Couples can split up. So do VC and founders. And getting the term sheet wrong may lead you to lose control over your own startup if things go sour with your VC. Yet many entrepreneurs don’t focus on the term sheet because they lack fundraising experience, guidance from seasoned mentors, or a reliable lawyer who understands the needs of a startup.

Leveraging our experience to support entrepreneurs

Magma Partners has seen hundreds of term sheets from Latin America, the US and China since we got started in 2014. We have often reviewed term sheets for entrepreneurs outside of our portfolio to support the ecosystem. We can recognize a term sheet that exploits entrepreneurs and establish unfair terms for the VC. We’ve seen entrepreneurs make mistakes that are totally avoidable. We have decided to offer our experience to help entrepreneurs build better companies and better relationships with venture capitalists.

Why are we doing this?

Our mission is to help startups grow to their full potential, but we can’t possibly invest in every single startup. Instead, we are giving back by trying to build a transparent startup ecosystem. We cannot achieve this goal without advocating for healthy relationships between investors and startups. Our term sheet review will help startups avoid investment traps so investors’ and startups’ interests are aligned from the start. We believe in paying it forward and this is one way we do it.

Questions about your term sheet?

Please send us a message through this form with any questions you have about your term sheets. We will happy to provide you feedback that we think best represents your interest.

 

Magma Media: Content Marketing, PR, Growth for Startups

Most startups, even the ones in our portfolio, don’t do a great job on social media, PR, communications, or digital marketing. They might have a fantastic product and great clients, but many are dropping the ball on communications. They may not have social media profiles, or have placeholders that make their startups look smaller than they really are. Others don’t do any PR or content marketing. Others are throwing money at ads without creating tracking, landing pages and streamlined targeting.

Many of the entrepreneurs we support forget about their online brand. First-time founders, or even battle-scarred entrepreneurs, get caught up working on their product or business development. Or they think content marketing and PR won’t move the needle on their business. Or that they can’t afford agency services. We want the entrepreneurs we support to be focused on the most important things: sales and product, but we got tired of watching portfolio companies neglect the basics.

After working with 50+ startups at Magma, we can tell you: these strategies do work. Even an extremely lean business can benefit from basic content marketing and a social media strategy. It’s the first thing that clients, investors and journalists will see when they check out your business. Rightly or wrongly, first impressions make a difference.

We’ve taken the best practices from our top portfolio companies, combined with our own experience building the Magma Partners platform, and launched Magma Media to bring these services to our own portfolio companies. We’re inspired by Andreessen Horowitz’s in-house agency model. We believe that in Latin America, it’s even more important to add value to our portfolio companies. And we know great communications can help a startup succeed. They’re table stakes for every startup today.

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