As part of its mission to support innovative entrepreneurship and impact Puerto Rico’s economy, parallel18 — along with its parent organization, the Puerto Rico Science, Technology and Research Trust — announced the 39 startups that will benefit from its $1 million Business Continuity Fund.
The BCF is an investment vehicle created to help graduated companies from the program to face the new economic challenges caused by COVID-19.
According to a report published by the SME Banking Club about coronavirus’s economic impact on the global startup ecosystem, international venture capital financing has been reduced by approximately 20% since the pandemic started.
This report, published in May 2020, also details that four out of 10 technology startups are in what they call a “red zone” where they might disappear if they don’t receive investment soon.
Within this context and with the disbursement of the fund put in place, the international program for startups based in San Juan hopes that the BCF’s injection of capital will ensure these companies’ continuity and growth towards global markets from Puerto Rico.
“From the moment the magnitude of COVID-19 became evident, we had to reinvent ourselves as a program and, at the same time, keep fulfilling our mission to support entrepreneurs from Puerto Rico and the rest of the world,” said Eduardo Padial, parallel18’s director of operations.
“It was then that, having reduced our eighth cohort because of the pandemic, the Trust agreed to redirect P18’s remaining operational budget to invest $1 million in a special relief fund,” he added.
This way, the Science Trust invested between $25,000 and $35,000 in every startup using a standard convertible note, with the flexibility that the entrepreneur can repay the capital after two years.
Sp, the return on investment will directly impact Puerto Rico’s economy through the Science Trust which, as an entity, is dedicated to creating innovative support structures to boost the island’s technological development, the nonprofit said.
“The fund allowed us to act immediately and develop an investment vehicle that could support a very diverse group of companies graduated from our program, both local and international, that needed capital to propel their accelerated growth or keep the business afloat in the face of the pandemic,” said Padial, adding that the investments made strengthen the program’s commitment to supporting underrepresented entrepreneurs, since 31% of the startups are led by women.
Additionally, the P18Ventures portfolio increases its diversity by adding alumni with LGBTTQ founders and BIPOC (black, Indigenous and people of color community).
To be eligible for the investment, applicants had to be alumni from parallel18’s acceleration curriculum, P18.
“Within the pandemic’s framework, supporting established companies has become vital to keep expanding the impact that entrepreneurial support organizations, like parallel18, have in revitalizing the innovation and entrepreneurship ecosystem and creating jobs in Puerto Rico,” said Science Trust CEO Lucy Crespo.
“Through this fund, the Trust seeks to strengthen its commitment not only with the development of high-impact startups from the island, but also with providing the necessary tools to guarantee that, once these startups emerge, they can continue operating and, in turn, stimulate the local economy,” she said.
Five startups raise investment from P18Ventures
Amasar (Puerto Rico), Agtools (United States), The Live Green Co (Chile), BoxPower (United States), and FitCo (Peru) are the five startups that, aside from receiving the BCF, also raised investment through P18Ventures, parallel18’s traditional matching fund. This portfolio grows after every P18 cohort when the fund invests an average of $75,000 per selected startup as a match to the investment that alumni raise from private sources.
These five new investments from the matching fund, along with the BCF special fund disbursement, push the P18Ventures’ total capital invested so far to $2.6 million, executives said.
This story was written by our staff based on a press release.