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Don't worry, we speak : Español (Spanish), too!

Ecosystem Pledge: What crisis VC done right looks like

Don't worry, we speak : Español (Spanish), too!

Contxto – Yes, venture capital can be a profitable endeavor. But, let me tell you something, if you’re in it solely for the money you might as well become a hedge fund trader or late-stage private equity partner.

VC is for the daring, for the crazy, those that want to help fund game-changers and world-builders to achieve success for business and humanity quickly and certainly. If that mentality changes when crisis strikes or during bad times, perhaps you were in it solely for the money. 

Bad news is some people across the ecosystem have been telling us some investors are indeed going back on their words. Tearing term sheets apart, ghosting founders, even reneging on previous contractual obligations. 

Good news is that some other investors are stepping up and pushing back against bad practices that may seem like saving one’s skin for now, but will leave a long lasting wound across the ecosystem.

Enter, the Ecosystem Pledge

A thriving, and now resilient, ecosystem needs the active commitment of all the players that participate. For the industry to function properly, VCs, LPs, family offices, Fund of funds, and others need to stay committed to their long term economic outlook, now more than ever.

The pledge believes that business and entrepreneurial ecosystems will be key drivers in the world economic revival when it comes. They will also be the crucial factors in the creation of a more sustainable and prepared world, capable of enduring similar situations going forward.

Or, in the words of one of ALLVP Managing Partners, Fernando Lelo:

Trust is an indispensable precondition to rebuild Mexico and entrepreneurs are a fundamental part of that future. This is why we signed this #EcosystemPledge […] Entrepreneurs, know that we will emerge together from this challenge!

The VC Amendments

Several VC firms including 500 Startups Latam, ALLVP, Angels Ventures Mexico, Dalus Capital, and Ignia, signed the agreement. The initiative is also being supported by Amexcap, Endeavor, and ASEM.

There are five pledges:

  • I will honor all my signed commitments to VC funds and startups and will deposit in agreed timing and conditions.
  • I will not take advantage of the lack of liquidity to force VC firms or startups forcing them unfairly advantageous deals. I will only sign new commitments that are fully actionable and that I can back.
  • If  I see a venture capitalist behaving differently from this standard, I will disclose this information to my colleagues as appropriate. 
  • I will stop doing business with VCs who engage in this behavior. LPs should stop investing. Entrepreneurs should stop considering those VCs. 
  • I recognize that under current conditions, as always, my behavior must set an example of integrity and mutual respect, eliciting trust and esteem from the multiple stakeholders I serve. I will remain accountable to my peers and to society for my actions.

If you want to take a deeper look and see what other companies are on board, click here.

A word of warning

I believe in these commitments and in the sincerity of these VCs’ drive to see this ecosystem survive and thrive. 

But I am also under no illusions. These pledges are, obviously, non-binding. With the worst of the crisis ahead of us, this goodwill manifesto could well become nice words from kind wellwishers. 

Nevertheless, it is indeed a great start. With companies laying folks off left, right, and center, this is a step in a direction we can all be proud to take.

Let’s just remember that the signatories of this document may indeed renege on these very commitments, and we at Contxto, will be there to remind them of their words in better times…

-VC

Victor Cortéshttps://contxto.com/
CEO & Co-Founder of Contxto. Passionate about tech, startups and venture capital. I eat sushi five times a week.

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