Interviewing Lucas Castro from CPX Digital

Lucas, you are leading CPX Digital, a startup born to help other startups prepare their strategic approach to potential investors. Can you share with us how you had the idea to create CPX Digital?

We started as an internal initiative called Cypress Digital, I wasn’t in the group during the first days, being invited by our CEO to be part of the group a few meetings later. The two first questions that we wanted to answer were “How to democratize the M&A process? How to have better and faster processes?”, previously, Cypress’ have been testing a lot of solutions to optimize sales and deals with automatization with no success at all. So, where should we start?

After a few discussions in the group and bringing our former partner, JP Rotta, to Cypress Digital’s group, we saw an opportunity to create a niche: Early-stage founders. The kind of entrepreneur that has been in contact with Cypress for a long time, looking for our fundraising services. Still, we know that early-stage venture capital funds don’t like middle men, they are investing in teams and fundraising ability is a must have for them.

Besides that, JP has been an entrepreneur and investor in several early-stage companies and VC funds. He talked with hundreds of entrepreneurs, most of them were unprepared for fundraising and didn’t know how to start a process properly.

The market was a rising star, with a lot of money available, and founders looking to raise funds in the near future. This was the opportunity to create a relationship with them from the beginning, why not try to create a solution for them?

Summarizing: standing on the shoulders of giants, analysing, understanding and validating within the market our and others perceptions.

What do you see happening in the startup area in the next year?

2021 was an outlier, if we analyse the data excluding that year we can see a clear path to a bigger market, with better and more experienced investors and entrepreneurs. The best signal about that is some American VC funds starting to invest directly in LatAm, we now have the perfect storm.

I will highlight just three topics highlighted by NfX, a top-notch VC fund:

• Compounding talent: A lot of experienced professionals having experience in Europe and the US getting back to LatAm
• Massive underserved market: There is a LOT of stuff to fix
• Relative homogeneity across the region: Cultural similarities and two languages

New funds will have difficulties raising capital, the global scenario isn’t favorable. Although, Brazil and LatAm have a lot of dry powder available. Only for Brazil for BRL 18 billion are available to invest in start-ups, mainly early-stage companies.

That scenario creates a future with more traded tech companies, more M&A and higher maturity in the ecosystem.

The future is bright, we must be part of that.

Do you think that this business model is exportable to other countries?

We are starting a new phase, transforming CPX into a software-based company, and that business model can be a global product. The evidence is the market, we know that if the problem is huge and there is demand associated with willingness to pay, a lot of people will try to solve it in different ways.

CPX’s monitoring a lot of peers around the world, VC Backed companies, companies founded by venture capitalists and even bulge bracket initiatives. All of them are trying to be part of early-stage founders fundraising life.

We know that it will be hard but it is a great opportunity to build the future market.

Did you experience any challenges at the beginning of this journey?

At the beginning we didn’t have any benchmarks or peers, so how could we start? We were navigating blind, trying to understand what is a signal and what is noise. Find the right question, test the hypothesis, and move on. Sometimes I and JP felt that we weren’t moving forward or needed to take two steps back.

Time is the unique thing that is equal to everyone, investing time searching and testing without a clear path is a stressful and necessary step.

Do you currently have any other business opportunities or ideas about which you are passionate?

Our market is still a dinosaur in the tech world, we have great minds to improve that. I’m working a lot with other teams at Cypress to create better processes and solutions for customers and partners. For example, we created with some of CPX knowledge:

• B2B partnership portals for specific companies
• Automatized M&A readiness reports for potential customers – Cypress Score
• Phyton program to cross potential customers network with Cypress’ Partners network, finding warm intros to improve conversion.