“Why don’t you raise an early stage venture fund. Mexico could use it.”
We are finally doing it! We’re raising a modestly-sized seed fund (target = $2M). Our investment thesis is fairly unique and one that favors reliability over speculation. Rather than “swing for the fences” with exotic business models, we focus on the basics. We invest in companies that have gained traction (customers & revenue) by solving real-world problems that exist in Mexico and Latin America. You can learn more by checking out the deck here.
HARVESTING THE LOW HANGING FRUIT
To state the obvious, Mexico is not the US. A full 70-80% of its 1.2 trillion dollar economy happens with small to medium businesses and the vast majority of these are untouched by even the most basic advances in internet technology. That’s changing, and it’s changing quickly. Innovation takes time, but innovation is not an issue. Most of the technology that is reshaping Mexico already exists – it just needs to be applied. Mexico is in the early stages of a (very steep) adoption curve and it’s in this curve that the opportunity lies – the low-hanging fruit.
Most of this low-hanging fruit was picked long ago in the US, but here, shockingly, most startup talk and action misses this opportunity completely. We seem to be infatuated by solving the more exotic problems that we don’t really have (yet). A social network for people who like to walk their dogs, a wine delivery network, online laser tag. . . really? I get it – a lot of the more obvious needs are basic, not very exciting and won’t do well at the next Startup Weekend, but this approach misses the boat. Mexico is doing 1.2 trillion dollars of very boring stuff – shipping, logistics, billing, transportation, etc. etc. and that’s what we’re targeting.
THE PROOF POINT
Like all good theories, this one needed a test case – enter VoxFeed. Two young entrepreneurs approached me last summer with an idea that would change how brands market to their consumers. The story had all the elements that I look for: money already being spent, a market with a lot of room to grow, and obvious exit paths in the form of acquirers already in the market. We agreed to work together for a couple of months to validate the team, solution, and market fit. By July we had a few customers, some revenue, and the core of the product. I, with the help of the Gain Angel Investor Network (GAIN), invested $50K. They delivered the platform at the end of the year (we changed the name from ReTweeti to Voxfeed upon launch) and in just six months from the launch, they’re crushing it:
-Over 6,000 users, growing at 24% per month
-Dozens of world class customers (AriB&B, eBay, TelCel, Nokia, BMW, GM. . . )
-Over 50 ad agencies are reselling the product
-On track to do $1M USD by the end of the year
-As may of this year, they’re even PROFITABLE!
WHO WOULD BENEFIT FROM THE FUND
We already have $350K of our $1M target committed. Again, our focus is on near-term execution and solving obvious problems, in underserved markets, and in a scalable, measurable way. We need $1M more to close the fund and these are the types of Limited Partner investors we’re looking for:
-Angel Investors who are interested in emerging markets, Latin America, or Mexico
-Those who like to invest in market traction (users, revenue, profitability).
-Existing investors who would like to add more linear, reliable exits to balance out a portfolio of more speculative bets (adding base hits to their “swing for the fences” home run plays)
-Investors who would like a hedge against a possible sudden market correction. If the “bubble” bursts and the venture market dries up, the companies in our portfolio will be fine. We target early (within the first six months) profitability so if the going gets tough, our companies can continue to bootstrap and grow.
Stay tuned to this channel because I plan to provide updates, advice, and general ramblings on investing in Mexico.