ZeroPaper´s CEO explains how to prepare your startup to be successfully acquired by a corporation
BY: Claudia Repsold & Lianna Patch
Success has a special vibe — it’s almost palpable when you’re around it. Andre Macedo has this confidence in his voice. He speaks quickly and proudly about how he and three geeky friends founded the startup ZeroPaper, and two years later sold it to Intuit, the American leader in business solutions and financial management for small to medium-sized companies in the United States. This interview has been translated from Portuguese and edited for clarity.
Brazil & U.S. Biz: Tell us a little bit about ZeroPaper. How did you guys come up with the idea to create the company?
Andre Macedo: Carlos Eduardo Braga has been my friend since the fourth grade. He used to work with Arley Moura. We were all geeks working with FinTech tools for Brazilian banks. We all had steady jobs in major banks. However, people used to ask us about a financial management solution to control their small business operations.
It became a regular question. Then, we realized that Brazilian professionals and small-business owners were searching for technological solutions to control the finances of their business, but they did not have enough money to invest in software, nor to hire an IT specialist. We came up with the idea to create a free money management tool to help small business owners control their finances and therefore have a better chance to succeed. Each one of us is good in one area: I’m the business guy; Carlos Braga is the C.F.O; Arley Moura is the C.T.O; and Cadu Carvalho is the designer. We all have different talents, but we are aiming at the same goal.
Brazil & U.S. Biz: How did you start the company from scratch?
Macedo: We had the idea, and then we went to Rio de Janeiro to pitch our idea at 21212 Accelerator’s Program event. At that time, we secured capital seed of R$ 20,000 ($8,000 U.S.) into ZeroPaper. We were thrilled. We left our city, Brasilia, and moved to Rio de Janeiro to make it happen. In six months, all we did was work hard while living on instant noodles to save every penny. We invested our capital seed into legally organizing the company, paying a lawyer and an accountant to file all the paperwork correctly. From our banking experience, we knew how important organization is to a business’ [ability] to thrive.
Three months later we pitched our idea at 21212 Accelerator’s Angel Day event and secured a larger investment from angel investors José Schettino and Emmanuel Orillard.
In the sixth month of the program, the 21212 Accelerator had another event for startups to pitch to potential investors, called Demo Day. Once again, we got picked up by an investor, but this time, it was a venture capital company, TOTVS Ventures – one of the largest in Brazil. One year later, we got acquired by Intuit.
Brazil & U.S. Biz: What’s your advice for a startup that wants to be acquired by a large company?
Macedo: Get your paperwork in order from the very beginning. In Brazil 73 percent of small businesses will survive more than two years, and the lack of financial control is the biggest failure factor. The investor will always look at your paperwork, and if it is too messy, they will avoid your company. At the end of the day, [straightening up] a startup will add to its acquisition cost. Keep in mind that every penny will influence investors’ decisions. You need to organize your startup to deal with open capital companies.
Brazil & U.S. Biz: How did you guys feel when you closed the deal with Intuit? What was the first thought that crossed your mind?
Macedo: We felt like, “Mission Accomplished” — now we would be able to do what we’d dreamed [of doing]. We want to help more small business owners to take financial control of their business. We got other acquisition proposals before, but none of them had the same business philosophy we had. Intuit does. Intuit will give us the structure we need to lower the mortality rate of small businesses in Brazil. It does not matter that we are not the owners anymore. What really matters is that the Intuit deal equipped us with better tools to accomplish our goals.
Brazil & U.S. Biz: How has the transition from ZeroPaper to Intuit gone?
Macedo: Very smoothly. We moved from Brasilia to São Paulo, and we are working on building up Intuit’s infrastructure in Brazil. Before we closed the deal, Intuit did not have an office in Brazil. We are the ones opening the Intuit office in São Paulo.
Brazil and U.S. Biz: Looking back at all of the decisions you made in the company, what would you have done differently?
Macedo: I do not have any regrets. Perhaps if I had moved from Brasilia to São Paulo in the early stages of ZeroPaper, the company might have taken off much faster. I lost many deals because I did not have enough money to pay for an airplane ticket to come to São Paulo. The location of your business can help you close more deals.
Brazil & U.S. Biz: What do you think has changed in the Brazilian startup scene in the last two years?
Macedo: I think we are getting more professional. The tech bubble, where everyone thought they could make millions in a few months by owning a startup, has burst. Nobody is that naïve anymore. Actually, nine out of 10 startups will go out of business in the first two years. ZeroPaper is the first Brazilian startup that came from an accelerator and got to the exit round of investment. The owners of Accelerator 21212 said that ZeroPaper’s acquisition paid the expense of accelerating all the other startups.
Brazil & U.S. Biz: ZeroPaper is free, but QuickBooks, which Intuit owns, is paid. Will your pricing model change?
Macedo: ZeroPaper will remain free, although some of the upgrades are paid. QuickBooks and ZeroPaper are not competitors. The companies that use QuickBooks are larger than the ones that use ZeroPaper. It is a distinct market. Together, we can offer a complete line of FinTech tools to cater to any size of business.