Quietly, a startup in Raleigh is racking up investor interest, earning validation from one of the world’s largest tech companies – and defying the odds in the process.
Latino entrepreneurs start more companies per capita than other racial groups in the U.S., yet they receive less than 2 percent of overall venture capital funding. It’s a statistic that packs a particular punch during a downturn, when venture capital is down across the board.
MuukLabs, however, is defying the odds.
The Raleigh-based company, which develops an AI-powered, no-code software testing platform, is the brainchild of entrepreneurs Ivan Barajas Vargas and Renan Ugalde, who bootstrapped it into existence, forgoing salaries for a year and a half while proving out the concept.
This week, the company was named one of the recipients of the Google for Startups Latino Founders Fund, bringing its outside funding haul (including grants) to nearly $3.8 million.
In an interview, Vargas talks about his entrepreneurial journey, and what’s next for the company now rooted in Raleigh.
Vargas immigrated to the Triangle from Mexico in 2011. A computer scientist by trade, he came for a job in Research Triangle Park at EMC (now Dell). And within a year he started pursuing an MBA at UNC. There, he said, the entrepreneurial bug hit.
Vargas came from a family of entrepreneurs running grocery stores and mechanic shops in Mexico. But Vargas admits he didn’t consider himself an entrepreneur until he saw the startup culture firsthand at UNC.
“I was sure I wanted to do something on my own,” he said.
The journey
So he and Ugalde began talking about software development – and the idea began to bake.
“We talked to a couple of people, potential users, and they were kind of excited about it,” Vargas said. “So we took a leap of faith and went all in.”
They founded MuukLabs, with Ugalde working full time initially and Vargas quitting his day job to join him within six months. They funneled in their savings accounts and credit lines. They went without salaries for a year and a half. But gradually, they started to see results. In 2019, the won an NC Idea grant – their first outside capital.
“That was validation,” he said. “A lot of smart people thought we were on to something.”
In 2020, they participated in Tech Stars Kansas City. Grants started to trickle in, followed by a formal seed raise in 2021. To date, Vargas estimates the company has secured about $1.5 million in grants, including from the National Science Foundation, and about $2.3 million from investors.
“We have enough runway to keep getting progress,” he said.
Vargas anticipates needing to raise capital again – but not until mid-2024. The last few months, in particular, have been a major boost. Vargas said late last year it all clicked – they knew how to talk about the product, who cares about it, and how to deliver it. Now it’s about execution – and growth. MuukLabs started the year with 12 employees and today is at 23.
The announcement Thursday that the firm is among those receiving $150,000 in non-equity cash grants as part from Google is further validation. Vargas credits his team, which he says drives the success.
The Google (Nasdaq: GOOG) grant comes with up to $100,000 in Google Cloud credits, training resources (such as sales and mental health coaching) and mentorship from Googlers.
Through both its Black and Latino Founders funds, Google has provided $45 million in cash awards to 547 entrepreneurs, according to the company.
Google for Startups has invested $650,000 across seven startups in North Carolina since 2020.
