Introducing Michael and AlterEstate

Q: Could you introduce yourself and your startup, AlterEstate?

A: I’m Michael Mota from the Dominican Republic, and I’m the founder and CEO of AlterEstate. Our startup is an all-in-one platform tailored for real estate companies in Latin America. We provide a comprehensive suite of tools, including CRM, website building, accounting, management, and reporting. It’s a fusion of various services like a CRM system, a website builder, and accounting software, all in one place. This integration allows real estate businesses to manage and control their operations efficiently.

Q: What inspired you to start AlterEstate? Was there a personal motivation?

A: I’ve always been drawn to the real estate industry, though I wasn’t initially sure in what capacity. My inspiration came around 2019 or 2020. At the time, I ran a website development company and encountered a major real estate agency in the Dominican Republic needing a website. They required more than just a site; they needed a system to manage properties, track agents’ sales processes, and handle complex, often offline, business processes. They were struggling with their existing CRM tool and rapid growth—they aimed to expand from 40 to over 200 agents in less than a year. After understanding their needs, I proposed building a platform that would replace their existing CRM and website. We developed a minimum viable product (MVP) in about three months, and they migrated all their operations to AlterEstate. That’s how our journey began.

Why 500 Global?

Q: How did you find out about 500 Global, and what made you choose them?

A: We experienced rapid growth at AlterEstate, about 20 to 25% month over month, but initially, our customer base was confined to the Dominican Republic. With my technical background as a solo founder, I was eager to expand internationally. The Dominican Republic, with its population of 10 million, seemed too limited a market. I came across 500 Global during this phase of seeking expansion, specifically aiming to enter the Mexican market. My knowledge of venture capital, funding rounds, and such was minimal, but I knew expansion was crucial. In my first interaction with 500 Global, I emphasized my goal of breaking into Mexico. What appealed to me was their structure – 500 Global has various divisions, including one in Mexico. This alignment with our expansion goals led me to apply to their Mexico division, seeing it as an opportunity to grow beyond our current geographical limits.

Initiating Dialogue

Q: Could you share how you started your conversation with 500 Global and the approach you took?

A: My approach was straightforward and direct. I wasn’t familiar with the typical interview processes for such programs and didn’t research how things usually worked with them. I simply went into the meeting and laid out our current situation at AlterEstate, clearly stating my expectations and objectives. This frankness was beneficial as it clearly conveyed our needs and what we were looking to gain from 500 Global. I believe that many people apply to accelerator programs without a clear understanding of what they want to achieve, often focusing primarily on financial support. However, for us, funding wasn’t the priority. We were more interested in their expertise in expansion and scaling up, especially as a bootstrap company. Being clear about our goals and how we wanted to achieve them played a significant role in our successful interaction with 500 Global.

Securing Funding with 500 Global

Q: Can you describe the process of closing the funding round with 500 Global?

A: The funding process with 500 Global was quite straightforward. Once you’re in their program, the initial meetings are about establishing what’s needed for funding. Each participant is assigned a point of contact for the three-month duration. In my case, I already had a C Corp incorporated, which simplified things. I had set up the corporation about five months before joining 500 Global. So, when it was time to receive the funding, it was just a matter of presenting my documents and bank account details, and the transfer was made within about a week.

Details on the Funding Round

Q: What kind of funding round were you involved in, and what were your goals for raising capital?

A: At that time, we weren’t actively looking to raise funds as we were bootstrapped and had some cash flow. If I had to categorize it, it would be closest to a pre-seed round. However, after completing the program and beginning our expansion into Mexico, we decided to actively pursue a funding round.

Post-Program Funding Success

Q: Did you end up raising funds after the program? Were 500 Global instrumental in leading this round?

A: Yes, after completing the program, we raised about $400,000. 500 Global didn’t lead the round; most of the investors were angel investors I already knew. I pitched to them, and 500 Global was instrumental in supporting us with the pitch deck, financials, and data room preparation. Although we didn’t have a traditional lead, it was primarily an angel investor network that completed the round.

Equity Exchange with 500 Global

Q: Was the funding from 500 Global in exchange for equity in AlterEstate?

A: Yes, there was an equity component involved with 500 Global’s funding, but it’s structured differently. The program I was part of required about 10% in what’s called a ‘KISS’ agreement (Keep It Simple Security). This type of agreement doesn’t immediately convert into equity; it only does so when you raise an equity round. As of now, we haven’t raised an equity round yet.

Closing the Funding Round Timeline

Q: How long did it take to close the funding round, and what was the effort involved from your team?

A: The process of closing the funding round took about one to two months, which, by Dominican Republic standards, is quite fast. This efficiency was largely due to our extensive preparation. We had been preparing for this for about six months, ensuring there were no loopholes in our financials or other aspects. So, when we actually began discussions with investors, it only took about a month to finalize everything.

Beyond Financial Support: Additional Assistance from 500 Global

Q: Besides financial support, what other forms of assistance or resources did 500 Global provide?

A: The support from 500 Global was transformative, extending well beyond just financial aspects. Before joining them, I had limited knowledge about investments and the business side of things. They provided comprehensive assistance in all aspects of fundraising and business development. This included introductions to potential customers and team members, as well as regular weekly meetings to discuss our progress and plans. This continuous follow-up significantly helped us improve our performance. In fact, during the three-month program, we were able to double our Monthly Recurring Revenue (MRR). The exposure to others in similar or more advanced stages was invaluable, offering insights into potential steps to take or avoid in our business journey.

Evolving Relationship with 500 Global

Q: How has your relationship with 500 Global changed since you secured the investment?

A: The relationship with 500 Global remains strong and has evolved into a more structured, albeit less frequent, engagement. We initially had monthly meetings, but now these have shifted to quarterly check-ups. These meetings are essential for discussing progress and future plans. An exciting development is their founders’ retreat, which started last year. It’s a fantastic opportunity to connect with other founders – I attended the first retreat where over 200 founders gathered in Mexico. There was another retreat in September with an equally impressive turnout. To me, the real value lies in the community and network that 500 Global fosters. It’s not just about the financial investment; it’s about being part of a community of founders, sharing experiences, challenges, and successes. This community aspect is invaluable.

Current Status of AlterEstate

Q: What is the current status of AlterEstate in terms of team growth, product offerings, and market presence?

A: AlterEstate currently operates in Mexico and the Dominican Republic, with the latter still being our main market. We began expanding into Mexico between 6 to 8 months ago. We’ve reached around $800K in Annual Recurring Revenue (ARR) and are growing steadily each month. Our growth is healthy, although there’s always a desire to accelerate further. Looking ahead, we plan to expand into Chile, Colombia, and Peru next year, leveraging the funding we’ve secured. Our team remains relatively small, with about 15 to 16 members. I firmly believe in the agility and efficiency of small teams, preferring to keep our team compact and hiring only essential personnel. This approach aligns with our strategy of focused and effective growth, allowing us to be more nimble and responsive in our operations and expansions.

Learning from Unsuccessful Strategies

Q: Could you share an experience with a strategy that didn’t work out as expected and what lessons you learned from it?

A: We’ve faced challenges, particularly with our expansion into Mexico. Initially, we tried entering the Mexican market twice before our current successful attempt, and it proved costly. We invested about $60,000 in strategies we believed would work, but they didn’t pan out, which was a significant financial setback, especially considering the economic context of Latin America.

However, these failed attempts were crucial learning experiences. They laid the groundwork for the strategy that’s working now. One of our biggest mistakes was focusing heavily on sales-driven growth. Our team, including myself, lacked sales expertise; our growth was primarily product-driven. We spent a lot of money on hiring sales experts, which ultimately didn’t yield the results we hoped for.

This experience taught me the importance of having a co-founder with strengths complementary to your own. For instance, having a co-founder skilled in sales might have made things easier. I learned that as a founder, I needed to take the lead in expanding into new markets, something I initially tried to avoid by hiring others. No one can sell your product as passionately as a founder. When I started visiting Mexico monthly, engaging directly with the market and customers, we began to see real progress. Understanding the local needs and receiving direct feedback helped us adjust our approach, leading to growth and customer acquisition in Mexico.

Advice for Approaching 500 Global and Fundraising

Q: Do you have any advice for startups looking to apply to 500 Global or engage in the fundraising process?

A: The key is to have a clear understanding of what you want from an accelerator like 500 Global or Y Combinator. I often encounter entrepreneurs here in the Dominican Republic who express interest in these programs, but when asked about their expectations, the focus is usually on the financial aspect. However, it’s important to recognize that money can be sourced from various places, including banks. If it’s just funding you’re after, there are other avenues to explore.

What’s crucial is to define what else you expect from these accelerators. This clarity in your objectives and expectations will significantly enhance the relationship and the benefits you derive from the program. It’s not just about obtaining funding; it’s about understanding and utilizing the full range of resources and support these accelerators offer. So, go in with a clear plan and a vision beyond just the financial aspect to truly make the most of the opportunity.