What does ATO Ventures mean?

Against The Odds. The name comes from our founder's belief that an entrepreneur's likelihood of success is highly correlated with whether or not he/she/they have succeeded against the odds in other areas of their life. Given that, statistically, 90% or more of startups are destined to fail, the name also speaks to the sheer fact that to succeed as a founder, one will need to persevere against the odds.  Lastly, the name is particularly fitting for a fund located in Puerto Rico. If you know anything about this small and mighty island, you know that, if any community can succeed against the odds, it is Puerto Rico!

What industries does ATO Ventures cover?

Our primary areas of focus are Health, Fitness & Wellness and Digital Media & Entertainment, although, in rare cases, we will invest in other sectors as well.

In what stage does ATO Ventures invest?

Our preferred stage is a startup that has completed "Lean Startup" steps, but is Pre-Launch and Pre-Funding.

How much money do you invest?

We have a two-stage investment model. Our first investment is used to cover the cost of Market Validation Testing, which is completed by an independent team in collaboration with the startup and ATO Ventures. Testing typically costs around $10,000 to $50,000. If the testing is successful, we then invest another $125,000 to $250,000. If the startup needs more capital, we syndicate the round with our Limited Partners (LP) and other co-investors. For example, we raised about $2M for a startup that we recently invested in.

Why Market Validation Testing?

The number one reason startups fail is lack of product-market fit. Put simply, they launch, and not enough people buy their product to create a sustainable, let alone scalable, business. In other words, there wasn't a (big enough) market for their product.  Market Validation Testing is the process of making sure there are paying customers before spending time and money launching into a specific market.

At the end of a successful Market Validation test, we will have helped the startup prove its market-fit by capturing its first customers in a market that is both scalable and reachable. At that point, the startup will have revenue, the correct formula for a successful launch and additional capital from ATO Ventures to finish their MVP and go to market.

What is ATO Ventures definition of validated?

There are actual paying customers in scalable, reachable markets.

Do I have to be in Puerto Rico?

No. We will invest in startups from almost anywhere in the world. That being said, we expect that you will have some amount of presence in Puerto Rico within a year of receiving a Seed investment. Additionally, as with most USA investors, we require you to form a Delaware C-Corp in order to receive investment, but this does not require you to be in the USA. We are happy to connect you with affordable tools and legal counsel to help you through this process.

What is Your Investment Process?

Like most investors, we have a multi-phased process for evaluating potential investments. Unlike most investors, we are extremely transparent about our investment process. Our goal is to let founders know as quickly as possible if we are not a good match for them so that they can focus there energy elsewhere.

Before scheduling interviews, we a have founders complete a two-part submission form, both parts of which are reviewed and scored algorithmically. We do this because, as one of the very few venture firms that will back pre-launch startups, we get a lot of inquiries, and our tiny team would take a very long time to get back to you if we didn't have the help of software.

Submission Part 1 will take you about five minutes to complete. The system, which we run about once per week, will look for a basic fit with regard to industry, size and stage. Startups that meet the requirements of our mandate, as described on our site, are then invited to continue to the second part.

Part 2 is, again, scored by our system. It looks for things like market size, funding goals and revenue stage to make sure the startup is in our wheelhouse. It also flags issues related to incongruencies with calculations such as CAC and LTV, in order aid future discussions.

If the system calculates a passing score on Part 2, we then move into the interview stage. After a series of conversations, we will present a Term Sheet, which will spell out the terms of both the Pre-Seed / MVT investment and the Seed (post-MVT) investment, so the founder knows exactly what to expect and can decide whether or not they would like to continue. If so, we then move into a Due Diligence phase, which concludes with the actual investment.

You can view the entire process, here: ATOventures.com/process