Experience and contacts are assets for second-time entrepreneurs

“I honestly think that this idea will not lead to anything”, Paulo Monteiro heard in 2015 at the end of a meeting with an investor in São Paulo, where he had traveled at dawn from Rio de Janeiro, where he lives. “What do you mean, it won’t come to anything?”, he reacted.

Six years after the episode, he understands. “I made this mistake of getting too involved with the idea.”

This is not a story about the idea that nobody bet on, and which, years later, turned out to be brilliant. “He was partly right. I was disgusted, I went back home, reflected, sat down with my partner and we changed the initial project a lot,” he explains.

At the time, he was a recent graduate and started his first startup: Responde Aí. Still active, the company is a platform to help students of exact sciences and currently has 140,000 subscribers — 20 million have already passed through there. Since 2020, it has been under the umbrella of Driven, Monteiro’s second, most daring venture: a distance school of technology.

As the innovation ecosystem matures in Brazil, second-time entrepreneurs become more common, a characteristic that is an asset when seeking capital, according to investors.

Of the first ten investments made by Argentine venture capital fund NXTP, in 2011, only one was in a startup whose owner had previous experience, says Gonzalo Costa, founder of the investor. “In our last 10 investments, 6 or 7 are undertaking for the second time”, he says, noting that this is not a determining factor, but a differential.

And it’s not just about those who were successful on the first try. “Personally, I highly value past experience, whether it was a success or a failure.”

There are two main characteristics of these entrepreneurs: knowing how to manage and hire the team and raise capital much more quickly. These are important points for Costa and his professional colleagues in Latin America, who are used to putting money into early-stage companies — which are, in many cases, just an idea.

“The biggest component of our investment is the team. When they are people we don’t know, we spend a lot of time analyzing and trying to understand who they are. When we already know them, a large part of this process is simplified”, he says.

Monteiro’s second project is an example: in seven years, Responde Aí reached 25 people on its team and raised R$ 2 million. Driven, in just one year, raised R$ 16 million and has 80 employees.

“The risk taking is much greater, there is more investment and you already know better what you do well and what you don’t”, says the entrepreneur. Monteiro is not very fond of the commercial part, for example, and prefers to deal with people. But without someone to take care of the numbers, the startup doesn’t thrive, and he knows it. “I need partners to complement me. I’m much more honest with myself about the type of person I need to marry to make it work,” he says.

Mistakes like the one you made in 2015 are rarer. At the time of the meeting, Responde Aí was a newly created education startup for students of exact sciences. They were still trying to find a business model and changed their minds several times. “In one of them I said: ‘It’s good, I’m going to present it to the investor'”, he says.’

The idea in question was to make Responde Aí a platform to answer specific questions from exact science students. The model was already working on an experimental basis. The university students put the question in the air, which fell into an email to be answered by professors, in a process that was still artisanal.

He learned a few things from experience: “Don’t take an unstructured idea to an investor. Don’t shut it out, be open to listening to feedback. And don’t schedule a meeting right after, because if you take a hit, you have at least some time to breathe,” he says, between laughs.

Eventually, the platform became something similar to what its critic suggested: a space that would replace everything the college student uses to study — typically a mix of workbooks, photocopies of his classmate, and YouTube videos.

With Driven, the risk gained a new scale right from the start. In 2014, putting R$5,000 in a studio to teach, for example, was a huge step. “Today I invest 50 thousand in a class with more peace of mind, because I already know that the student will like it and how much we will be able to charge”, he says. Knowing your industry, he finds more people willing to give him money.

In this regard, the network of contacts is fundamental. And the proximity to investors has also changed for the better, according to Monteiro. “I put the investor on a pedestal,” he says. “When something started to go wrong, I was afraid to tell. But when I arrived and said, the reaction was: ‘Paulo, let’s do it.’ an exchange relationship.”

Having the contact, however, is not everything. At least for Renato Valente, partner at venture investor Iporanga, for whom raising capital “is an art”.

“You have to be a great storyteller, especially in the first rounds. There are entrepreneurs who have the ability to tell a well-crafted story and you, as an investor, totally buy what they are talking about,” he says. Of course, with experience, this skill develops.

Valente recognizes, however, that networking is a large part of the path. “The first-time entrepreneur doesn’t know me, and I probably don’t know him. To reach out to me or other investors, he has to have a great introduction from someone or meet someone who knows me. through the website or sending an email is more difficult,” he says.

The selectivity is high because, as an investor, your biggest challenge is to know which companies will become very big. “It’s binary. Either it turns into a unicorn or it breaks. This is the world,” he says. “And we have to take this risk because the big companies pay all the others.”

He tries to identify entrepreneurs who want to go far. “Successful companies are harassed a lot. We identify who are the entrepreneurs who are making a life project and who will resist the temptations to sell the company early and make the big deal. The second-time entrepreneur may be less susceptible to selling the company ahead of time,” he says.

And are there downsides in founders who are in their second venture? “Maybe when he was very successful. Sometimes it can be easier to give up because he’s already made his sock,” he says.

For that, he says, he always asks himself if the entrepreneur is already in his comfort zone. “The best scenario is that of an entrepreneur who was successful in the company, but not that much. He comes hungry to do something much bigger. This one is super interesting.”

Despite the success in raising funds for his second company, Paulo Monteiro has new obstacles. “Today we have new challenges for a company that is growing fast. How to keep the company’s culture strong with such accelerated growth?”, he asks. “How to grow fast without compromising your brand’s quality?” For now, he says, he has been trying not to take steps bigger than his own leg.