Discussion on Latin American Investment

A couple of weeks ago, I had the opportunity to speak on a panel about Latin American investment thanks to a gracious invitation by the Los Andes University.  I answered a number of questions about investment in Latin America compared to other regions as well as how Colombia stacks up in comparison to other countries in Latin America.

I spoke about the startup investment environment in Brazil which I consider above and beyond most of Latin America in terms of the size of the deals.  I’ve had the opportunity to visit the startups and some of the investors in this country a number of times and even analyzed an investment (while at Intel Capital) in a startup from Rio.

During my last visit, I was able to visit a number of really interesting startups such as Guiabolso, ContAzul, NuBank and Stone. Each of these are incredible companies.  I had several conversations with the founders of Stone and came away incredibly impressed by their ambitions, their experience and capacity to execute.   In terms of uniqueness of vision, I really enjoyed my conversation with the founders of Quinto Andar.

Because of a lack of time, I didn’t get to mention the Argentine ecosystem that has produced unicorns such as MercadoLibre, Despegar and OLX.   Additionally, they have some amazing diaspora in Silicon Valley and, as a group, are the most global thinkers in Latin America.  I’m certainly not saying there aren’t global thinkers in Mexico, Brazil, Colombia, Chile, etc.  I’m just saying, as a group, Argentinian entrepreneurs tend a bit more towards this. Some early stage startups that I really like over there are RSK (e.g., great engineering and ambition) as well as Bitex (e.g., great combination of using crypto yet making sure they conform to local financial regulations).

I mentioned that what has surprised me the most in the last three years has been the rapid rise of the Mexican startup ecosystem from a position that, 5-6 years ago, I saw as almost on a par with Colombia (on a relative basis given their different sizes).  The increase in the number of funds, fundings and incredibly talented entrepreneurs focused on creating great companies is astounding.

There are a number of great examples such as Clip, David Arana’s Konfio as well as others such as Kueski.  The example that epitomizes this ecosystem most, in my mind,  though, is OpenPay. As I’ve written before, this was the company that a boss I had at BBVA and I decided to suggest as an acquisition for the bank and which, ultimately, we acquired.

OpenPay took a couple years and more than a million dollars to build a world-class payments company.  The three founders, Erick, Heber and Roberto are serial entrepreneurs and are all product guys (as well as great human beings). They understand the power of building a solid product in the right industry.

Because of time, I wasn’t able to mention the great stuff happening in Peru, Chile, Ecuador and other countries.  Each of these have excellent talent that I’ve met and also admire.

With respect to Colombia, even though I think, as an ecosystem is behind the ones mentioned, I am incredibly happy here.  I’ve written before about the companies which which I am working and am an advisor and shareholder: Ubits (currently in YCombinator), 1Doc3 (just raised USD $1.6M), Vendty (continues to grow their POS SaaS business), Kiwi Campus (already raised USD $2M and is raising several million more) and Acsendo (has raised more than USD $1M and continues to grow their HR SaaS business).

After Tappsi (where I was an advisor, shareholder and Executive VP) had their exit (sold to Easy Taxi) and I sold my shares, my wife has been a lot more understanding about the time that I dedicate to being a startup advisor.  I still meet with new, young startup founders and am so happy to see the talent coming up the pike!

In terms of the ecosystem, much more than VCs, I think that this is an ecosystem that is benefiting much more from successful startup founders.  I mentioned to the audience that they need to reach out to these startup founders and the information that is available on the net such as the Startup School videos created by YC.

Colombia can really benefit from big thinkers such as David Velez (co-founder of NuBank) and the founders of Rappi.  I really like the way NuBank has gone to Berlin in search of talent to complement the already big team that they have (global excellence).  With respect to Rappi, I mentioned that regardless of what someone might think about their ability to ultimately fulfill the high expectations their investors have (particularly with respect to valuation), they have been superstars at selling their vision and expanding (revenue and geographic presence). Other Colombian founders don’t need to raise hundreds of millions of dollars to emulate at least a portion of what the founders of the aforementioned startups are doing: thinking bigger.

Additionally, the ecosystem has amazing founders who are becoming key angel investors.  The founders of PayU (formerly, PagosOnline) broke new ground after the hard work of building a digital payments startup and, then, a massive investment/acquisition by Buscape/Naspers.  Since then, they have been key angel investors in other startups.  They also give of their time to other entrepreneurs such as Juan and Andres from Tappsi, Jose and Miguel from Domicilios, Christian and Freddy from Platzi, among others.

All in all, it’s a great time to create a startup. In each country, including Colombia, there are some talented entrepreneurs creating great companies. One thing that I said during the event was that I don’t agree with thinking so much about the needs of investors since their is more of a scarcity of talented entrepreneurs than money.