Challenges Faced by LATAM Entrepreneurs When Raising Funds in The United States

Below you will find some of the challenges that LATAM entrepreneurs face when raising funds in the U.S., as seen by seasoned Angel and VC funds when citing reasons for not securing financing. 

1. Lack of relevant experience– Investors usually look for experienced entrepreneurs.  No experience on the given industry might make it hard to secure funding. Different perceptions on what amounts to relevant industry experience under the prism of diverse cultures often leads to disappointment.  If you do not have the requisite experience, do highlight any significant milestones and achievements in prior businesses. This could be successful product launches, collaborations, or partnerships. If you cannot show past investments or previous business ventures, it is essential that you build a strong team of experienced individuals in your company before you pitch.
2. No tangible product – Depending on the industry, investors may want to see a completed product or a prototype before investing. A startup that has no tangible product or prototype to show might have a difficult time seeking funding. 
3. Lack of financial projections – Investors expect startups to have a clear understanding of their financials. If a startup has no or poor financial projections, investors may doubt its ability to be profitable. 
4. Limited market size – Investors want to see a large addressable market. Startups with a small market may find it difficult to attract investors. Models susceptible to be scaled-up may be preferred.
5. Competition - With so many startups being formed every day, attracting investors is becoming increasingly difficult.  It is important in that regard to show a clear understanding of your competition and a path to overcome the challenges they present.  
6. No traction – Most investors expect to see some traction in a start-up. Meaning, a good number of users, revenue or acceptance the market before they make any investment. Even if you don't have previous funding history, building a strong customer base can help demonstrate traction. 
7. Geographic location – Some start-ups are based in regions where investors are not prevalent. That being said, in our experience, this has not discouraged LATAM based entrepreneurs to find ways to relocate or expand their businesses in order to grow and also attract the right investors. 
8. Unproven concept – If a new technology or product has not been tested, some investors are less likely to invest. That being said, in some industries, such as life sciences, unproven concept may be the very reason for some VC investors to make the decision to invest, subjecting disbursements to milestones and other structures.   
9. Legal issues – Start-ups with unaddressed legal issues may find it difficult to attract investors.  These are often US compliance issues that were not identified by the start-up and could have easily been avoided by seeking the right legal counsel early in the process. 
10. Founders' conflicts and lack of team alignment is also another important factor that may affect a startup's ability to secure funding.

Bottom line: Addressing the above ten challenges before approaching investors will allow you to significantly improve your ability to raise funds in the US. 

Our experienced team of lawyers, many of whom are admitted to practice in Latin American countries, and who have built long-lasting and trusting relationships throughout their careers can assist you as you prepare to raise funds. Please get in touch if you would like to learn how we can support your initiative!