Demystifying the U.S. Capital Markets: 3 Tips from my YLAI Roadshow

This past spring, I met Pedro Carneiro from ACE Ventures when he traveled from Brazil as a YLAI Fellow to be embedded in Halcyon for six weeks—a collaboration from the YLAI / Young Leaders of the Americas Initiative sponsored by the U.S. Department of State . Little did I know that this initial introduction would develop into a dynamic partnership between Halcyon and ACE Ventures.

Over the past few weeks, our roles were reversed, as the YLAI program culminated in the opportunity for the Fellow Placement Organization (FPO) and fellow to propose a joint project in the fellow’s home country. Pedro and I were approved for a grant to conduct an educational speaking tour for start-up founders in four major innovation hubs across Recife, Vitória, Florianópolis, and São Paulo in Brazil. Leveraging my learnings working in-depth with dozens of international founders this year at Halcyon, I created content based on the challenges they’ve faced and the strategies they’ve pursued in different investment markets. To supplement my research, I met with Latin America-focused investors in Halcyon’s network to curate the other perspective of the story. Finally, I spoke with three incredibly talented Halcyon alums from past Latin America and the Caribbean (LAC) fellowship programs to use as case studies based on their experiences raising VC and non-VC funds in the U.S. market: Rodrigo Garcia Ayala ( Suyana Climate Insurance ), Tamara Chayo, PhD ( MEDU Protection ), and Joselyne Del Rosario ( DREX ).

I turned my findings in a series of presentations and workshops delivered across a speaking series roadshow, where I spoke directly with founders and ecosystem players looking to enter the U.S. market. I was grateful to be hosted by fantastic organizations including Insper Instituto de Ensino e Pesquisa , CESAR , Porto Digital , ACATE - Associação Catarinense de Tecnologia (Catarinense Technology Association) , CDL Florianopolis , Base27 , Sistema Findes , and Associação Brasileira de Startups . While I can’t take you along with me in Brazil, here are three of the top tips and resources I shared:  

1. Discover your driving motivation

You should have a compelling reason to enter the U.S. market. Is it to:

• Establish a parent or holding company?
• Sell products to U.S.-based customers?
• Raise capital?
• Leverage U.S. connections to open new markets?

Any of these alone might not be a good enough reason to take on the tax and legal liabilities for entering the U.S. capital markets. Doing so should be part of your long-term strategic plan, and you should have clear goals and defined outcomes with profiles of the people, partners, and/or investors that you’re seeking. Knowing the market and exercising careful planning ahead of time is key. Keep reading to learn how to establish a solid foundation prior to this international expansion.   

2. Build your foundation (in just 5 steps!)

Customer discovery is crucial, as your U.S. customers may be very different or quite similar to the customers in your starting market. If there’s no appetite, do some A/B testing to see if the U.S. as a commercial market is a good fit for your venture. If there is appetite, generate paying customers—traction is king anywhere in the world for raising investment. If your product is regulated in healthcare (by the U.S. Food and Drug Administration, or FDA) or climate (by the U.S. Environmental Protection Agency, or EPA), you can do small-scale pilots or get “Letters of Intent” (LOIs) for future contracts.

There is also a plethora of credible U.S. entry points that are not sales-based, including:

• Awards and competitions
• Accelerator programs (like Halcyon!)
• Conferences and speaking engagements
• Research universities (become an in-country partner, an implementing partner, a grant partner, etc.)

From there, you can engage in the incorporation and (optional) visa processes to become a U.S.-based company if this is the right next step for you and your venture. Creating strong connections in the U.S. first can be helpful to some degree.

3. Start accessing U.S. capital: 4 categories

If you’re ready to start accessing U.S. capital, four avenues are available—many of which are familiar to capital opportunities from your starting market.

• Fast growing VC hubs: States like Michigan (+886%), North Carolina (+409%), Colorado (+304%), Minnesota (+208%), and Texas (+107%) are experiencing huge spikes of growth and can be noted when pursuing VC funding.
• Global institutes/corporations: Major international development organizations are housed primarily in Washington, DC and New York City. Many funding institutes are also embedded within or partnered with large U.S.-based universities like New York University , Stanford University , and Massachusetts Institute of Technology , so direct your capital research there. Finally, look at large U.S. corporations that have startup program arms that distribute funding such as Nestlé .
• Accelerators/challenges: There are many challenge and accelerator opportunities, so narrowing your focus on a particular angle gives a greater chance for success. Filter your searches by sector, demographic, geography, or by the problem you’re solving for, whether they’re social impact-based, etc
• Federal government: There is a lot of money to be had from the federal government, but it is important to make a distinction between funds allocated for U.S. founders and foreign founders. All of the federal government’s domestically focused grants are conditional on at least one business owner holding majority share. The non-U.S. citizen must also hold a valid work visa. Examples include the Small Business Innovation Research (SBIR) Grant, Disadvantaged Business Entity (DBE) Technical Assistance, Departmental Innovation Grants, and many more. There are also grants available for non-U.S. founders through the government’s development organizations. Examples include grants from USAID 's Development Innovation Ventures (USAID DIV) and loans from the U.S. International Development Finance Corporation (DFC). 

Overall, I feel incredibly fortunate to have had the opportunity to present my research findings to Brazilian founders. Brazil has a vibrant innovation scene, and I was thoroughly impressed by the amazing founders I met. On the global stage, Brazilian founders are most known for their work in climate innovation. However, there are many innovation hubs that specialize in cyber security, HealthTech, and more, and I was most surprised at the sophistication of their deep tech sector. I cannot wait to return, and I look forward to further developing the relationships with my host organizations.