Announcing Firstrock Capital
I’m happy to announce the official launch of Firstrock Capital LP I, the natural evolution of the investment activity our team started back in 2013.
Firstrock has already invested in ten companies over the last couple of months. In addition to funding, we partner with entrepreneurs to help them recruit elite engineering talent while also removing obstacles to growth along the way.
We do this by helping our startups build engineering teams in Latin America with the top 1% of talent. Normally, we recruit senior software engineers for our startups with at least 9 years of experience building software at scale, managing teams and launching global products.
Building a team in Latin America enables our portfolio companies to hire more senior people that stay in the company longer, compared to the Bay Area, New York, or Boston, even at their earliest stages of development when there is less funding.
These teams are then able to build a better product faster than their competitors. Likewise, engineers in Latin America are able to easily make 2x-3x local market rate without giving up most of their income to rent and taxes like in traditional US startup hubs and since they are full-time employees working at these startups, they also participate in the stock option pool.
In addition to recruiting, we remove obstacles founders face along the way by providing support in four more areas:
- Public Relations & Marketing
- Business Development & Sales
- Finance & Fundraising
- Product & Engineering
The story behind Firstrock
After almost a decade as a founder of three VC backed companies, I started investing in 2013 with the intent of being the type of investor I wish I would have had. An investor that beyond connections, strategy and money, could help by getting real work done for the founders, particularly recruiting senior engineering talent.
My own experience building engineering teams both in startup hubs like NYC as well as outside them, was what set the foundation of our thesis.
The first VC-backed company I created was Grooveshark, a music streaming service that at its peak reached 35M people a month. One of the most interesting learnings from starting this company was that we were not based in New York, Boston or California, the company got started and grew from Gainesville, FL. At the time far from being anything close to a startup hub, a town of 100k people of which half were students and far from any major city.
Yet, we still had some major benefits that allowed us to grow very large with very little funding, in particular two key points:
- Very low costs of living. My two bedroom two bathroom was only $700/mo.
- Access to great engineering talent from the University of Florida.
And thanks to the internet, we could reach a global market while leveraging the low cost of living and the talent pool. I figured this could be done from anywhere, including Latin America.
In researching about startups and funds in Latin America, I found very little information, mostly because no media outlet was covering this topic, so I founded Pulsosocial, a sort of Techcrunch for Latin America. Soon after, I created a Public Relations firm to reach a wider audience of hackers and entrepreneurs, this firm has worked with the likes of Google Developer Relations, Rackspace, Evernote, Netflix, Airbnb and others.
This set the stage for my last startup, Onswipe, launched with our small team of talented software engineers based out of Mexico. Onswipe would become the leading platform for publishing and advertising on the mobile web, reaching 55m readers per month and raising from top VCs in the industry. Having the initial team in Latin America allowed us to launch the MVP with an investment of a couple of hundred of dollars in a matter of weeks. (Onswipe went on to be acquired in 2014.)
In 2013, I began investing as an Angel. I had just four companies in my portfolio and quickly realized why most investors don’t necessarily go beyond capital, connections and strategy: It’s a ton of work!
Rather than giving up or limiting the services provided to founders, I decided to build a team make this happen.
Assembling the team
If I wanted to provide the services I would have wanted as an entrepreneur, I had to build a team.
Hernando had been running the media company and public relations firm, and with his 20+ years building and running technology companies in the U.S., Asia and Latin America, he joined the ventures team to help companies scale in multiple geographies and provide his expertise in Fintech, Hardware, and overall legal and operations.
Erik worked for more than eight years as an economist and data scientist, first in a hedge fund and then helping global financial institutions understand and respond to black swan events such as the subprime collapse. During this time Erik served as advisor to various entrepreneurs for their business and financing strategies, which inspired him to switch towards venture capital. In 2013 we teamed up to scale the services and angel investment activity.
We brought all of the investing activity under Socialatom Ventures first with our own money, then added small angel syndicates. In all, we invested in 30+ startups, had two acquisitions; Streem acquired by Box, Authy acquired Twilio and built a diverse portfolio that include Smart Hardware, Fintech, Security, EdTech and more.
Along the way we added more experienced team members to help our founders by removing obstacles from their path.
- Jessica joined us to help founders recruit the top software engineers in Latin America and increase the talent pool with coderise.org.
- Edgard, which I had known for 10+ years, joined us to help founders expand internationally and solve operational and marketing challenges as they enter different regions.
- Elise helps startups not fail by working with founders to overcome obstacles involving traction limitations and capital growth.
With a proven team and thesis, we decided to scale up our activities to a new VC fund, allowing more investors as LPs; Firstrock Capital LP I, with Socialatom Ventures as the management company.
Founders we seek to back
Rather that trying to predict the future by focusing on a single vertical or following contrived themes, we have a pragmatic focus: We invest in tech startups that show sustained exponential growth in the U.S. and that have — or are open to having — their engineering team in Latin America. We then match the top 1% of US startups with the top 1% of Latin American engineering talent.
In summary, we are more likely to invest if your company has the following:
- You are — or your co-founder is — able to write software
- You are solving a problem you’ve lived yourself
- You’ve managed to build and launch the product
- Your product is getting market adoption in the U.S.
- You are open to — or already — have your engineering team in Latin America.
We can invest up to $5 million in aggregate in any given company and we are limited to investing in valuations or caps under $30 million. Normally, we start by investing tickets of $50,000 in any first transaction with the intention of additional follow-on investment in subsequent rounds.
If you think your company meets this criteria, we’d love to learn more! send us an e-mail to hi@firstrockcapital.com — we will get back to you.
