I caught up with Lightspeed Scout Carolina Huaranca about her journey to VC and advice for aspiring investors. This is a continuation of Lightspeed’s new “Scout Spotlight” series showcasing our amazing Scouts, what they care about, and some lessons learned along the path to venture.
Me: Let’s start with who you are! What’s your story?
Carolina: My name is Carolina Huaranca. I got my start in investing as an Entrepreneur-in-Residence and then Principal at Kapor Capital, an early stage seed firm based in Oakland, CA, that has invested in over 100 companies including Asana, Blokable, Twilio, Uber, ClassDojo, Ginger.io, Career Karma, and Thrive Market to name a few. Even more importantly, I’m the proud daughter of two incredible parents who immigrated from Peru to the United States during a very tumultuous time in Peru’s political history. They gave me and my brother a better life and I’m incredibly thankful for that.
My story in this country starts with a simple zip code. My parents had the foresight to go to a public library to understand how the public school system worked. They discovered that the zip code of where they chose to live determined the quality of public education and, in short, my future. So they chose to live in a zip code that had quality schools and one that was close to the factory my father bused to daily . I grew up in a rented 2 bedroom home, near a train station, on the “right side” of the tracks that would allow me to attend a phenomenal elementary school. This one decision changed the entire trajectory of my life in the US.
Upon graduating from Cornell University I went to work as a Mergers & Acquisitions investment banker in NYC because I thought this would be a great foundation for business. I made intentional career decisions, but you would never know that if you just skimmed my resume. I chose jobs based on my north star which is to democratize access and opportunity for underserved communities. This led me to start a career as a Product Marketer at SchoolNet, an EdTech startup that exited for $230M. I chose to work in technology as a way to impact more students and teachers. Afterwards, I helped launch one of the highest performing charter school networks in the US serving 6,500 students. This experience was directly transferable to founding a tech startup, Spriggle, and eventually investing at Kapor Capital.
This next chapter of my career will be focused on investing in Spanish-speaking Latin America and the United States. Both regions represent two significant parts of my identity. My hope is that I can be a bridge between the regions and invest in founders that are going to build the world that I want to live in — one with better access to financial services, work, health and education.
Me: What led you to become a Lightspeed Scout?
Carolina: I was inspired to join as a Scout because of Lightspeed’s global footprint and experience investing in emerging markets. I was planning to expand my investment focus to include Latin America so being able to scout with a firm that has a strong portfolio of companies outside the US was a priority for me. My belief is that the tech ecosystem in Latin America is more comparable to South East Asia than the US. I also really appreciated that Lightspeed was a multi-stage generalist fund. Having been a generalist investor at Kapor Capital, I was excited to have even more access to investors who had a global breadth of sector and geographic experience that I could leverage.
Me: What’s your investment focus? Any companies / new investments you want to highlight for readers?
Carolina: I invest in founders who are building tech and/or tech-enabled companies to empower low to moderate income communities in the Americas (Latin America and the United States). My focus areas are around three themes: fintech, work, and community. Each of these are essential pillars to enable someone to become truly empowered.
My first scout investment was in Kolors, a Mexican based startup that aims to create the largest intercity bus line without owning a single bus. Kolors is a tech platform that manages and optimizes the business operations (digital sales, marketing, revenue management, customer service, logistics) of intercity Small-Medium-Business (SMB) bus providers in Latin America.
Intercity bus travel is the main mode of domestic transportation in Latin America; it is equivalent to how people in the United States fly domestically. For context, 900M passengers in Mexico are transported by bus annually in comparison to 50M passengers transported by domestic airlines. Particularly for SMB bus operators, the industry is under-optimized, not digital first, and inefficient, resulting in costly operations, unpredictable revenue, subpar customer experience, and outdated branding and communications. Kolors launched with Mexico as its beachhead country where current passenger bus loads are sub-optimal (50% of capacity utilized).
I would be remiss not to mention that the CEO /Co-founder of Kolors, Rodrigo Martinez, was a former founder of a Kapor Capital portfolio company. This deal was not only special as it was my first in the region, but also because I collaborated on it with another amazing Lightspeed scout, Wifi Fernandez.
Right now, I am particularly interested in investing in founders that are building financial infrastructure in the region particularly for rural communities that are overlooked. Hillmer Reyes, a Peruvian fintech founder, is building a startup called Platia.app focused on just that. The company is pre-launch, but is one that I am actively tracking given Hillmer’s deep domain experience, but also because he is a technical founder and the company is truly innovating, rather than localizing a startup that existed in another region. I expect to be writing more about my perspective on this space in the future.
Me: What advice do you have for other aspiring VCs out there?
Carolina: There is no one size fits all career path to venture capital. One learns to invest on the job and one will continue to develop their voice as an investor over years. My biggest encouragement to people interested in a career in venture is that they get to know themselves so they can clearly assess their strengths, areas of growth and interests. Once you know that, you will be able to answer questions like what stage of venture gets you most excited and why. And, then you can narrow down what funds or investors you may want to get to know or work with. For example, seed stage investing looks very different than investing at the Series B stage. Each requires different skill sets. In the same way that there is a product-market fit for a startup, what is your investor-stage fit? Also, is there a sector that you are extremely passionate about? It is more than okay to explore, but because there are limited job opportunities in venture at firms I feel it always helps to focus going down one path first and then iterating. Remember we all have those super powers so be clear on what yours are.
Me: What advice do you have for founders out there looking to raise?
Carolina: My 5 tips for founders focus on the key questions they need to answer.
- What type of financing is best for my business? The reality is venture capital financing is not suited for all types of companies. It is best suited for companies that plan to grow quickly and are focused on building very big businesses. Remember that venture capitalists are looking to make multiples on what they invested. Founders should always take a step back and assess if venture capital is right for them. There are many types of financing out there for founders today. So, pick the financing that is best suited for your company and goals.
- Do you understand how venture capital works and the venture math behind it? If you understand how venture capitalists make money you will have more insight into how investment decisions are made and why. It will give you a great perspective for how you pitch your business and who you focus on reaching out to as well.
- Are you able to explain the problem and your business succinctly? Be sure to state the problem and for who you are solving it clearly. If you cannot articulate this then you are unlikely to sell me your business and vision. To get the attention of an investor, keep things simple. Often people want to tell me everything and in doing so, I end up more confused because they never truly get to the core problem. I encourage people to put in the work to practice their 2 minute pitch and leverage friends to get different perspectives.
- Have you done your homework on investors? Giving someone a piece of your company should not be taken lightly. Take the time to set up a spreadsheet of funds and include these categories at a minimum: fund name, investment team, fund size, stage, investment thesis, geographic scope, average check size, lead or syndicate investor, funding process, value-add support, and competitive/complementary portfolio investments. This is the minimum information I think you should start with. It will give you a high level overview to identify which funds you may want to partner with and start building a relationship with. For example, you may discover a fund you were interested in is actually out of scope because your company is out of stage or investment thesis. Or, you may find that a fund made a competitive investment. The key is understanding who you want to target because fundraising takes time and you want to be strategic in setting up your process.
- Are you ready for lots of rejection? And, how will you handle it? The reality is that you will get rejected. A lot. It is the nature of this business. And, the key here is taking rejection with grace. Do not take it personally and use the reason for the pass as additional information to guide how you may or may not want to build your business. At the end of the day you know your business better than any investor ever will because you are working on it every day. And, remember you only need one yes.
Me: Lastly, where can others learn more about you and connect with you?
Carolina: Free to reach out to me directly through my personal website: www.carolinahuaranca.com. The website also shares more about my investment thesis. Founders who would like to be considered for a pre-seed or seed investment can submit their pitches directly on my website by filling out a quick form. Community building is also something I am passionate about so I have set up group office hours so people can connect with me there as well.
Lastly, you can also find me on twitter at @carohuaranca or on LinkedIn. If you do reach out please do let me know what inspired you to contact me.
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