Juan Díaz-Andreu: “Startups and entrepreneurs should not solve personal needs, but business needs”

The business school professor and investor in startups Juan Díaz-Andreu contributes his vision on the creation of startups in the Canary Islands. According to the businessman, the archipelago could become a small Silicon Valley, since it has a good HUB for technological development.

Question: What would you highlight the most in your profile?

Answer: Although in my main activity, I work as a “Headhunter” in the international company Alexander Hughes, as an investor in startups I am interested in projects whose focus is international and in technology issues I am a “trend hunter”

Q: Have you had any experience in the field of university incubation?

A: I have been collaborating for many years with similar initiatives at IE Business School (www.ie.edu) and CUNEF University (www.cunef.edu). With which, yes. In addition, it is an activity that I like very much.

Q: To a person who has just graduated from university, what advice would he give before setting up a startup?

A: I think it is good that, after graduating, they work in another startup or in a large company where they learn a lot about a sector and, ideally, have a good boss so they can learn processes, work methodologies and how to manage clients. and teams, which is really the most difficult thing in any company: to attract talent and retain it, not retain it, which is a word that people use a lot, people have to fall in love with it, not retain it.

Q: Seeing that it is becoming increasingly difficult to find work in Spain, especially for young people, do you think it is a mistake to start a business out of necessity?

A: It is always a possible option, but you have to be aware of the personal and economic sacrifices that this entails. The creation of a company should not solve a personal need, but rather solve a business need.

Q: Before setting up a startup, do you do any prior validation?

A: The most important validation is that the service or product solves a need that exists in the market and that, ideally, the team is able to pivot that idea until it reaches the appropriate execution, for this I recommend the use of the Canvas model.

Q: Have you had any experience in the field of startups arising from professional training?

A: I have been teaching for 22 years in business schools and universities, I have little contact with what traditional professional training is, but clearly all types of training, whether it is undergraduate, postgraduate or professional training, can give anyone the basis for set up your own business.

Q: What do you think of international mixed teams of entrepreneurs?

A: Given that for the success of a company, the business model must be scalable, it is always necessary to think about future development in other markets outside of Spain. Normally, Spanish entrepreneurs think of Latin America or Europe and, therefore, it is very positive to have members within the team who know these markets.

Q: What experience have you had with startups in Latin America, or with Spanish startups in Latin American markets?

A: I have invested in startups whose primary market is Europe, but the second is Latin America. It must be taken into account that the denomination of Ibero-America as a single market is very relative due to its size, dispersion, economic, social and cultural differences. Although we think we speak Spanish and Portuguese, we actually communicate very differently among the many countries that make up that region. It is necessary to take into account all these differences and not treat Ibero-America as a single monolithic block, since there are “many” Ibero-Americas.

Q: Have you ever had experience with startups in the Canary Islands?

A: I know the Canary Islands quite well and have good contacts with local entrepreneurs and businessmen in Gran Canaria, such as the Verge brothers with whom I have been in contact recently, and also in Tenerife and Lanzarote.

I believe that the islands could be a hub for the development of relevant entrepreneurship in Spain.

Q: What potential would you see in a region like the Canary Islands and an island like La Palma?

A: I don't know La Palma, but I am sure that the Canary Islands could be a good HUB for technological development as it can attract many young people from all over Europe and Latin America. These young people could have an excellent professional and personal balance due to the climate and quality of life.

A challenge that must be faced for this possibility is the dispersion of the islands and university centers, since training is the source of talent and is the basis of any business. The Canary Islands could be a magnificent base for “Nearshoring” that would prevent European companies from taking their development centers to distant geographies in the “Offshoring” model, and instead of taking them to India or other geographies that are economically very interesting, they could have to many young people working in the Canary Islands seeing what kind of tax aid and entrepreneurship could be given. Clearly, a small Silicon Valley could be set up in the archipelago.

Q: Do you think there is a trend to invest in more and more early stage startups and how do you personally position yourself in these stages?

A: Different investors have different risk profiles: some prefer to enter early stages (seed capital) with high risk and others prefer scaleups or mature companies, although the investment volume is higher, the risk is lower.

Q: What should a startup have achieved before starting to seek investment in an ideation or pre-SEED phase?

A: Although it may seem like a paradox, to go to a financing round it will not normally be possible to do so with an idea and not even with a business plan. In most cases investors want the company to demonstrate its ability to develop a customer base, have billed and collected and, ideally, have a positive EBITDA.

Q: Is there any formula to value the investment of a startup that does not have consolidated sales?

A: I think it is a very difficult challenge to overcome, it only occurs to me that an investor could value an intangible asset such as a patent. If not, normally, as I mentioned before, this comes from customers, billing, collection and positive EBITDA.

Q: What advice would you give to a person who wants to start investing in startups in very early stages?

A: I think it is essential to know the team very well and understand their capabilities and areas for improvement, a good team can always improve a mediocre idea. A mediocre team can possibly spoil a brilliant idea.