🎙️ EP21: Funding Fintech & Blockchain in Latin America with Carlos Torres de… | InvestHer Podcast

Welcome to episode 21 of Investor Podcast. And this week is going to be a great one because we are taking you over to Latin America for the very first time. In this episode, you're going to meet Carlos Torres de la Cuba, who is a founding partner of AMG Block, which is a VC fund focusing on funding founders in the blockchain fintech space in Latin America. And it's a fascinating conversation because he does a deep dive into the differences between VC markets in Mexico and in other countries in Latin America, and what you need to know if you want to approach them. So many good tips in this episode. I know you're going to enjoy it. So keep on listening. Investor Podcast is for you, the female founder who has a product, a service, or a message that you believe in and need to get funded. Or for you, the investor who wants to learn more about the huge untapped investment opportunity that gives you a higher return women entrepreneurs. My name is Anne Ravanona. I'm an entrepreneur, TEDx speaker, and women's advocate, and I'm passionate about helping women entrepreneurs get funded. In each episode, we'll take a behind-the-scenes look into real-world funding tactics and strategies to help you get the funding you need faster. Let's put the fun into funding. Thanks for spending some time with me today. Now let's get started. There we are. We all know that. So welcome, Carlos. Thank you so much for being with us live on our funding conversation this week. I'm so thrilled to have you. So I'm your host, Anne Ravanona, founder of Global InvestHer, and we're here to have a good chat with Carlos Torres de la Cuba. So Carlos, let's start off because I'd like to start off with One fun fact about you. Let's get that started before we jump into our conversation.

Yeah, no, thanks for having me, Anne. Pleasure to be here. So fun fact about myself, I was thinking about this. I don't know if it's a fun fact or not, but so both my parents are from Peru, but I was born and raised in Mexico City. But most of my family is still in Peru, so I have strong connections throughout Latin America and would encourage anyone listening from Switzerland, Sweden, Berlin to come visit Latin America. Once the pandemic passes and things start opening up back again, we'd love to welcome you. here in Mexico or provide some insights into other Latin American countries as well.

That's so awesome. I didn't know that your parents were from Peru. That's so cool. So you're a true, a true Latino from really from the continent and with the vast experience also from Mexico and across, across, because we're, we're dying to hear more and pick your brains about what's happening in VC across Latin America and of course in Mexico in particular. And before we go there, I always love to kick us off with a chat about you, Carlos. How did you become a VC? Because you've got a very prolific financial and academic career behind you. Like if you read the list of your degrees, it's very, very impressive. But tell us your story. How did you get into VC? Because I think it's always very inspiring for people who are not in VC to be able to learn from your path, because we all have different paths.

Yeah, no, definitely. I think there are different paths into venture. I have a, I'd say, a nonlinear path, right? So I started out in corporate banking here in Mexico, worked for some global institutions like HSBC, providing, you know, the bank's products and services to the corporate world here in Mexico. Then on the investment side, I had the opportunity to work for a fund focused on sustainable investments, particularly water and energy projects here in Mexico. Then I continued my professional journey in corporate banking for a regional bank that's currently one of the leading digital banks in Mexico. And that's, you know, around the time when I decided, what am I going to do next with my professional career, right? So I did my MBA in the US. I did a 1-year MBA. And then I had the opportunity to work for the venture arm of a family office. Wanted to tap into the startup community in the Boston area. So I did that for about a year, and then I returned to Mexico and joined as investor and director of finance for a fintech startup that's focused on providing loans to the underserved SME market here in Mexico. And that's, you know, when I realized that there was, and there is still, a huge gap in the early-stage ecosystem here in Mexico and in Latin America. And that's why, you know, I decided to go back to the other side of the table and focus again on the venture landscape. So we are currently focused on seed stage investments, particularly with a focus on fintech in Mexico and Latin America.

Mm-hmm.

You know, fintech obviously encompasses different business verticals. So we're seeing new solutions being built around payments, lending, wealth management, insurance, prop tech, even blockchain and crypto, right? And especially in emerging markets like Latin America where there's corruption, there's lack of transparency, there are financial inefficiencies, we believe blockchain is one of the technologies that's going to disrupt the traditional finance industry and it's a core part of our thesis. So yeah, that's a little bit about my professional journey. And how I came into being a VC.

Isn't it awesome, guys? I think it's fantastic because you've come from the spectrum. You've worked from like at a major bank serving corporate clients, so you understand the banking and the corporate client aspect. You've worked in fintech startups but also on small SME loans for underserved clients. You've worked with wealth management and then family offices. So that's really really cool. It's kind of like you've done a 360-degree tour of funding and finance from different aspects. So, so tell us a little bit more about how you set up AMG Block. And you've mentioned your thesis, and I love the way you kind of pulled apart what fintech means. And actually, before we go there, I want to say, like, you're in one of the hottest sectors, as you know, obviously, you're an intelligent man, not just because it's your area of expertise, but you know it's on the rise and it's on the up and up. And so like when we were looking at research and so on, the latest research is showing that, you know, fintech is the sector that has produced the highest number of unicorns. Okay, so the latest research that came out, it's like 17%, it's the highest sector. So you're on the hot trend. So that's cool. And I would say for all our listeners and people who are part of our conversation today, it's like You want to be with VCs who are backing the right trends because it means they've really got their finger on the pulse. So, you know, I think that's, that's, that's why we want to hear from you, Carlos. So tell us, tell us a bit more about why AMG Block. And then in particular, you've mentioned some of the sectors you want to focus on, but I know you have, as you say, a penchant for blockchain. So tell us a bit more about that.

Yeah, I mean, obviously fintech, like you said, is one of the hottest markets out there. And we've started to see success stories coming out of Latin America. I mean, when you look at, for instance, Nubank from Brazil, it's currently the leading or the most valued neobank out there, right, with a $30 billion valuation. Why? Because the inefficiencies in a region like Latin America, particularly within financial services, are huge, right? So there is still a huge opportunity. A lot of these unicorns come from more developed ecosystems like the US, Europe, or Asia. But they're starting to tap into a region like Latin America because they see the potential, the market opportunity there, and how these new technologies or these new way of providing financial services in a region like Latin America could potentially have much bigger impact.

Right? Mm-hmm.

And for us, you know, the particular focus on fintech and blockchain particularly was because when I was a director of finance for this fintech startup, we were looking at alternative means of fundraising, right? So we came across this whole ICO boom, which is the initial coin offerings, right? Which was a way to apply blockchain into sort of the crowdfunding space and be able to raise money from pretty much anywhere in the world.

Hmm.

The problem was that a lot of money, you know, was lost. There was a lot of fraud there, but this sort of evolution of the ICOs into a regulated market really caught our attention. So we started digging into the application of blockchain in the venture capital landscape. So initially what we wanted to do was actually to tokenize the fund. What this means was, is to provide a digital representation to our investors backed by the portfolio of the fund itself, right? And that's, you know, why— what AMG actually stands for, which stands for Assets Monetized Globally. But we realized that we were still early. I think it's still early in terms of the development of the ecosystem. A big part of why we were doing this was to provide liquidity to our investors. So for those that don't know, venture as an asset class is a long-term investment, right? Typically funds have a 10-year lifetime and investors have to wait till the fund actually has some exits, meaning that they sell their investment in the portfolio or the startups that they invested in, right? So being able to provide liquidity means that as investor, you're able to sell either part or all of your investment in a regulated secondary market, right? But all of this infrastructure was still being developed and it's still being developed, I'd say. So that's why we decided to sort of pivot and do this traditional fund. venture fund and eventually look into the applications of the technology in a market like venture, right? We've started to see blockchain being applied across different sectors. So we're really excited about the impact that a new technology like blockchain has across different industries. And that's why we're always taking a closer look at all the innovation going on in the space.

And I think, thank you for explaining clearly as well what it means like to have a fund and how long it takes to get liquidity and what it means like to have an exit, because for people who are new to this space, you know, those are all kind of foreign terms. And what does an exit mean for a venture fund? So what do you mean when you say you want a company in your portfolio to have an exit? Again, this is kind of just to share with those who are not familiar with the term.

Yeah, there are different exit strategies, right? I mean, the ideal one I'd say is doing an IPO, right? So selling your shares in the public market and giving, you know, also an opportunity for other investors to participate in the vision and the trajectory of a startup. Other exit strategies include, you know, mergers and acquisitions, a sale to, you know, a strategic partner, for instance. Or a competitor.

Sorry? Or a competitor, somebody who buys you out.

Or a competitor as well. So in Latin America, for instance, the M&A market is the go-to exit strategy right now. Why? Because the public markets aren't as developed. as they are in, say, the US, right? I mean, the number of IPOs in Mexico is still very small, but, you know, it's a developing market for sure. Other exit strategies could also be, you know, as a VC, you invest at the seed stage, so you have a specific strategy to invest at a specific stage.

Right.

Other alternative asset managers like private equity invest more at the growth stage. So an exit strategy could be to sell your investment in that startup to that other fund that has more of a growth stage strategy, right? So there are different paths into exit strategies. And one is also the application of blockchains through the tokenization of a startup, right? So that's also something that when we started researching and looking at the applications of blockchain in the venture capital landscape, it was something that could be replicated for the startups themselves, right? As a means to, you know, sell a small percentage of their company through the use of technology as well.

Can you explain for people who may not know exactly what blockchain is, just very simply, like what you mean by tokenizing? So what does it mean by tokenizing that, equity or that stock that gets transferred into a piece of code, you know, that is, I, you know, has its own DNA and nobody else can buy that stock. That's my very, very— but what's your proper definition of what technology is?

I think the best way to explain it is like you said, I mean, at the end of the day, you don't have to understand all the inner workings of the technology itself, right? I mean, it's a way to put something on the blockchain that you can't tamper with it. It's decentralized, it's public. So everyone knows in a secure and cryptographic manner who owns what percentage or how many shares of a specific startup, right? And it's a way to democratize access into these type of asset classes as well.

And so that's, that's super important. It's a way to democratize it. So, so just for our, for everybody's understanding, what Carlos is talking is cutting-edge stuff here. And it really is that, like, venture, venture capital has, has been around for a long time, and it needs disrupting. And I am like you, I profoundly believe that blockchain is the key to do that. And it's also, it's going to democratize access to capital. It's not, you know, it's going to democratize it in the VC world, but it also will mean that anybody, if they have money, can actually— you don't have to wait to become an accredited investor of having, you know, reaching certain rules in different jurisdictions. I think in the US, what you have to be to be accredited, to have a minimum salary of $200,000 plus be worth $1 million in total net worth, and then $300,000 salary if you're married or something like that. be able to actually invest.

Yeah, exactly. I mean, the definition of accredited investors tends to vary depending on where you're based. But yeah, I mean, traditionally venture as an asset class has only been open to this type of investor, right? There's still some regulatory challenges to democratizing access into the space, which, you know, regulation tends to hinder innovation in the space, but I think it's moving forward. I mean, these regulations were enacted over probably 70 years ago, so there wasn't, I'd say, even an idea of what technology was going to be out there in 70 years, right? And we don't know what's going to be out there in 70 years from now. So I'd say regulation needs to catch up to the technology advancements, and hopefully that happens within the next few years to give access, you know, like you said, to anyone in the world to tap into new asset classes that could potentially provide better returns and diversify accordingly, you know.

That's it. And I mean, that's what interests me. Like, I certainly Very openly, I'm going to say it here. It is in my plans to create a fund. I'm not even going to call it a fund. I do want to create an instrument that will be based on blockchain because I really want to democratize access to capital, and I want to democratize it for anybody to invest in women entrepreneurs in particular. So I want everybody to be able to do it. And so that's why I get very excited talking to you. But let's kind of hone in. What I'm picking up from you as well, Carlos, what's very interesting in your strategy for your fund is like for AMG, Block is to say, okay, let's start. The market's not ready. We are— we're going to keep a pulse on what's happening, and we're ready to change and pivot when we need to. But let's start off with a fund because that's what this area understands at the moment. Let's kind of get our seeds in that way, and then see if we can, you know, spot the best talent in blockchain in our area. And then when we're ready, we want to pivot and open it up because What you're talking about is super important, as we know, in startup success. It's all about timing. There's actually one TED Talk that just says like there's 5 key factors for success of a high-growth startup, and the number one factor is the timing, because you could be too early, you know, and you're very smart the way you're going about it.

Thanks. No, I think, I mean, timing is everything, especially now with all the innovation in the space, right? I mean, if you wanted to create this tokenization platform 5 years ago, then obviously that doesn't really apply. I mean, it's important to consider where the market is, where the market is going, and the right time to actually do that. or take that product or service out there to the market need, right? I mean, it's important to identify the problem and what's the solution, right? I mean, there are a lot of problems out there, there are a lot of solutions being built, but timing is everything, like you said.

Timing is everything, and so I'd love us to kind of dig deeper, so into your investment thesis, so you said Tell us a bit more about that and what particular— because we want to, we want to do a shout out. This is your ad to say, okay, great blockchain and other, you're going to tell us, here are the companies you want to hear from. So tell us exactly what you're looking for.

Yeah, so our focus right now, like I said, is fintech, right? We have right now a focus on Mexico and Latin America, obviously being based in Mexico City. But, you know, the market dynamics across Latin America are very similar. Brazil might be a little different, right? So we don't focus a lot in Brazil. It's a more developed venture ecosystem as well.

Hmm.

So we're seeing a lot of startups and innovation coming from, you know, Argentina, Chile, Peru, Colombia, some of these tech hubs that started to grow and that are also much needed. early-stage capitals, right? So we are focused on seed stage, which could vary across, you know, the definition of seed across the landscape. So for us, that means an average initial check size of around $250K US.

Mm-hmm.

And we reserve a similar amount for follow-on investments. And the investment dynamics are very different in Latin America, right? An investment of this size could give a startup runway of at least a year, right? When in other markets, that's used to cover the legal costs to set up a round, right? So these investment dynamics, the valuations being obviously more attractive and sometimes down to earth, represent a huge opportunity, and that's our current focus. What we've seen is in the market, especially in Mexico, right? I mean, the venture landscape is still being developed. There are still a very small number of funds investing in the ecosystem. And sometimes what happens is as they start to grow their assets under management, they start shifting a little bit their investment thesis and invest at pre-Series A or Series A.

Hmm.

So we are focused on this gap between, you know, some what's called the accelerators, right? And the already established VCs, which is the seed stage investment landscape. And that's where I think all the innovation going forward is gonna happen. And really excited to be in this space right now.

I love it. I love it. And I really wanna hear more. I want us to pick your brain 'cause it's not every day we have a Latin American VC and a specialist on Mexico. So tell us, a bit more what's it like, the funding landscape. Let's kind of just not just looking at VC, but from your experience, what are you seeing is what's the flavor of the funding landscape in Mexico and then broader in Latin America to some of the other countries that you mentioned? Let's do a crash course on Latin America funding because honestly, I think it's, you know, this is your, of course, from what you know, want to share, Carlos, because I just think it'd be so helpful to all our listeners and to all our all our members who are here live with us now, because you know this space and I know it's moving, okay? And I'm not putting it all on your head and say Carlos is the one and only expert on this in Latin America. You are one of them. So we want to pick your brain and get your brilliance. So tell us a bit more. Start off with Mexico. What's particular about funding and the sources of funding available to startups in Mexico?

Yeah, it's like you said, I mean, it's evolving. We're starting to see some, you know, success stories coming out of the region. You know, some of the already established VCs which have done great work to support the ecosystem are just starting to see their investments, you know, pay for what they started building 10 years ago, right?

Yeah.

So the— right now, similar to other regions, right? I mean, obviously there's sort of a pathway into raising from friends and family, and then go maybe through an accelerator, and then start looking for venture investments, right? What's interesting though is that the— I'd say the mindset of the entrepreneur has started to change, right?

Mm-hm.

With all of this, success stories, I'd say the entrepreneur is starting to believe that the opportunity is there, and they've started to attract international investors into the Latin American landscape, right?

Mm-hm.

So there is a lot of interest from, I'd say, international investors in the region, and that sort of showcases that the opportunity is there.

So when you say international investors, which countries are you thinking of, just so we have a better idea?

So for instance, SoftBank, I think it was last year or a couple of years ago, they announced a $5 billion fund for Latin America alone, right? So they've made some great investments in companies like Rappi. In Mexico, they invested in No Alpha Credit. They invested Pretty much across the— they've made a lot of investments in Brazil as well. But this type of, you know, I'd say, interest from institutionals like them is driving more attention into the region. Tiger Global invested in Mexico recently. Some, you know, great VCs like Andreessen Horowitz, Sequoia have started to invest in in the region. So that, you know, sort of showcases the opportunity, but we're still, in my opinion, missing the local investor, right? It's always, I think, important to have someone on the ground, right, that understand the market dynamics, the regulatory landscape, you know, that understand the opportunities and challenges. And that's where we hope to obviously make a difference in the venture landscape.

You read my mind because when you were saying that about those international VCs coming in, I'm like, yeah, Yeah, and I want to link back to the conversation, the funding conversation we had a couple of weeks ago with Mac Rarebreed.

Yeah.

And like, he was talking, like, one of his key messages was it's about cultural fit. Now here we're kind of talking about national culture, but in his case he was talking about racial culture as well, you know, racial and other diverse culture, whatever that type of diversity is. And so that's what makes it exciting to talk to you. So what's happening with regard to local VCs? Are you the only one kind of focused on blockchain and fintech in Mexico, or do you have a couple, some other? And how do you see it evolving then, the local VC scene?

Yeah, I mean, obviously we're not the only one. There are a lot of They have more of a generalist thesis, right? So VCs investing in fintech, e-commerce, healthcare, pretty much any industry with a tech component.

Yeah.

There are a lot of investments with this type of thesis. In terms of blockchain, we have seen some interest from local VCs, some regional VCs also tapping into the landscape. So it's still very early, right? I mean, in terms of the development of blockchain applications across different industries. But what's interesting is some of the solutions being built specifically with blockchain or DeFi, for instance, they're being built outside of Latin America, but the users come from Latin America, right?

Interesting.

The macroeconomic environment in the region, in countries like Argentina, Argentina or Venezuela have forced the population to look for alternative means of store of value. So obviously crypto provides that to them. We've started to see countries in Latin America adopt Bitcoin as legal tender, right? El Salvador, Paraguay is rolling out an initiative. So there is definitely interest from VCs in the space. It's still very early in terms of the evolution of, I'd say, the industry. But in terms of fintech, some of the great success stories actually are fintech companies, right? Bitso, which is a crypto exchange, Kleeb, Kavak, which started out as a marketplace to actually buy and sell cars. but they are rolling out their own fintech products, right? So you could also consider them to be more of an embedded fintech company, and all of these were success stories for some of the already established VCs, right? So in terms of, you know, competition, we don't see it more as competition, right? We see it more as collaboration, given the need in the market, right? So we're always looking to partner with other funds, whether it's locally or regionally, and continue driving, you know, innovation and investment into entrepreneurs in the Latin American landscape.

So one thing I noticed when you were mentioning the different sources of funding in Mexico earlier, you didn't mention angel networks and business angels. So you said friends and family, which we know there'll be a certain amount of kind of— I won't— I don't want to say unsophisticated angels, but let's say less professional angels would be in that in that part. But are there angel networks in Mexico, or is that really not a— because like there's a gap. I mean, in those sources you were saying, I'm like, okay, accelerator, we know all that, but angels? There's nothing between the friends and family and the accelerator and seed stage VCs?

Yeah, there are some angel networks. There are some, you know, coming to market. So for instance, there's a fund called Angel Ventures that has a sort of an angel community.

Yeah.

And that's how they started, you know, their brand, I'd say, right? But it's not as developed as in other markets, right? I mean, it's something that I think is much needed in the space, right? But there are, you know, certain communities being built specifically to help, you know, entrepreneurs. And I want to give a shout out to one that I just recently came across called Amela. which is for women entrepreneurs in Latin America.

You read my mind again because that was my next question. I was coming to ask you about the women and what— tell me more.

So it's a private community for women only, so I'm not even there, but I was just made note of. And it's, you know, to sort of create this community of women entrepreneurs in the region that You know, they were able to share resources, strategies, even, you know, the ups and downs of being an entrepreneur in the space, right?

That's exactly what we do in our community.

I know, I know, and I'll connect you to the people that are leading this initiative for sure, because I mean, there's still a lot to do in terms of, you know, supporting women The landscape, for sure.

So, okay, so I'm gonna be a bit controversial here, okay? We know that in Mexico, let's say in Mexico, and I don't want to put just a finger on Mexico, but Mexico and Latin American countries tend to have a very patriarchal machismo culture. So how— what insights would you be able to give us about access to funding for The women entrepreneurs that you may have met already or have funded in the past, have you any insights as to what it's like for the female founders currently in Mexico going the rounds, given this, this more macho— am I wrong in saying that? And I don't want to be. I'm always very culturally sensitive, but that's why I framed it by saying I'm going to be a bit culturally insensitive on purpose.

I mean, it's true. We're still Machismo is still very much present in Mexico, to be honest. But I think it's starting to change. You know, there's, you know, a lot of educational components out there to, you know, understanding the benefits of funding women entrepreneurs or businesses solving women problems or, you know, teams that have a woman on their team. So there's definitely some reduced gap, but it's still— there's still a long way to go, right? So yeah, it's something that when we first connected, I mean, I'm still learning about that, right? I mean, I would love to have more women investors, which is something that Big shout out to Anne, who you'll meet soon.

Yeah.

She's focused on reducing the gender gap inequality in venture and in startup investment, right? So, I mean, this type of, I'd say, educational and research being done around this space is definitely helping, but there's still a lot, a longer way to go, right?

Okay, and I hear you, and thank you for sharing that. And that's fair enough because different countries are at different stages as well in the gender equality space, and then add on the venture space and the funding space. And so I get that. It's just always interesting to kind of hear what it's like on the ground at the moment and what the pulse is. And thank you so much for connecting me with Anna. I can't wait to be talking. I think we're talking in a couple of weeks. wait to talk to her. So you've given us a spotlight of a flavor of funding in Mexico. How about some of the other countries that you mentioned? Maybe let's move over to Chile and Argentina. Chile and Argentina, what flavors do they have? Because the reason I'm asking you this, Carlos, is that it's very important for all of our global audience to understand that Latin America is a continent with many countries and many cultures. It's not one block with the same culture like in the United States, okay? And like even in Europe, we understand that complexity because we are 28 countries in our union. So what's the flavor, would you say— I'm going to call it the flavor of funding— in Chile, for example, and then in Argentina, the other markets that are important to you?

Yeah, I think it depends, right? I mean, the funding market is still being developed, like I was saying earlier. I mean, Chile has more of a thriving ecosystem. Why is that? Because the government has been able to support startups and the funding in Chile. Mexico had a similar program that helped develop the venture ecosystem. Peru just rolled out a fund-to-fund initiative to, you know, continue funding funds focused on Peruvian startups. But the reality is that, you know, outside Brazil, the venture landscape is still very, very small, right? And that's why part of our thesis is not only to invest in Mexico, but also in some of these other emerging countries.

Hmm.

Always looking to partner with someone locally, going back to the point of having someone understand the local market dynamics and the cultural— there are a lot of similarities, right? But tends to vary in a certain way, whether it's if you're in Peru or if you're in Mexico, right? We have a lot of similarities, but if you dive deeper into the inner workings, then it tends to have some— small changes, but it's interesting in terms of how they tend to develop, right? I mean, some of the startups that started out in, let's say, Chile, they see their, I'd say, the natural next market to be Mexico, right? So obviously Mexico is a bigger country, represents a bigger opportunity, and we have such, I'd say, diversity across Mexico that businesses tend to grow faster in a region like Mexico. And it's also because it's an entryway into the US market, right? I mean, the Latino population in the US has started to grow and continues to grow, right? So that represents another huge opportunity, right? All these Latinos have in the US still have, you know, family in Latin America. So they're always looking for, in our case, you know, financial solutions to actually be able to support, right? I mean, Rappi, for instance, which is one of the unicorns in Latin America, they're a Colombian startup. But I'd say their business really blew up when they started operating in Mexico, right?

Mm-hmm.

Similar to other startups that came out of other Latin American countries, they have a tendency to open up operations in Mexico, and they want to tap into the Mexican system, right? So that's why, you know, part of our strategy is to invest regionally and provide this support across, cross-border, right?

Very interesting. Okay, so if I've understood correctly, if we kind of look at the family of countries in Latin America that kind of have similar ecosystems, you're putting like Chile, Peru, Argentina, and Mexico kind of in a similar bucket, if we want to say, if I'm trying to make things synthesize. And then Brazil has its own culture because— so Mexico being the most developed, in your opinion, would Mexico be the biggest market of those countries I've just mentioned? And then we have Brazil, which is its own big— okay, language, but also cultural, big cultural differences. So—

Exactly.

How does Brazil compare then with maturity of market for the VC and funding landscape in general?

Yeah, I'd say Brazil is a more developed venture ecosystem. I mean, we just saw CASEC raise a $1 billion fund, which in Mexico we still don't have this type of funding for VCs, right? There are more VCs investing. They also have more or have had more support from the government to support the ecosystem as well.

Mm-hmm.

So yeah, it's— and I mean, Brazil is obviously a huge opportunity, but it's not easy to operate, right? There are, like you said, different dynamics and culturality when operating in a market like Brazil. For us, I mean, I don't wanna say we don't look at Brazil, but I'd say Brazil is already being served by local and international investors. So we want to focus on these underserved markets, like the ones you mentioned, and that are in much-needed early-stage capital going forward.

So thank you for that landscape lesson. I'm going to call it the landscape lesson, Carlos, because it's fascinating. And I think it's very important for all of us in this space to be educated about what's happening in other ecosystems. Also, why? Because what interests me is to understand the bridges that we've just learned from you, that Mexico is a very important hub, if I understood it like, you know, it's basically that the other startups that can develop in their own ecosystem, let's put Brazil aside, but in the other Latin American countries, they develop in their own countries, then go to Mexico for the next stage of growth to set up their regional hub there. access more capital and access the US markets. And then, and then, so I have a question here from one of our listeners. So they say, what type of shift do you see in valuations for Mexican companies given the current rise of unicorns? Is there more foreign direct investment or more support from local players? Good question. Very technical question and a good one.

Yeah, no, I agree. It's interesting because, I mean, when you look at the US market, you sometimes see seed rounds that are $10, $15 million, right? When for us, that would be more of a Series A, Series B round, right?

Yeah.

Maybe B round. So there's definitely a lot going on around private valuations. For us, the way we see it is It all depends, right, on the opportunity that the startups are working on. But I don't think we're going to start seeing these type of rounds or valuations in the short term, right? When you see international investors investing at the seed stage, they typically invest around $1 million, right?

Yeah.

Or more. So that is starting to drive Obviously certain valuations at the early stage is up.

Yeah.

But, you know, when you look at the reality, and this is something I was talking to a global VC investing in Mexico, right? I mean, these international investors tend to invest in startups that actually speak English, right? Not a lot of entrepreneurs in Mexico could speak English, right? So That's an untapped opportunity as well.

Mm-hmm.

Why? Because obviously, you know, these entrepreneurs, if they want to, you know, go out and raise bigger rounds from international investors, they're going to have to be able to, you know, explain in another language other than Spanish their vision, what, you know, their goals going forward. So there's still, you know, I'd say an inequality in terms of who gets funding, right? So I mean, there's definitely an interesting, I'd say, dynamics in the space and something that, you know, for us, it's, you know, focusing on at the seed stage, it's important to understand what the current market is like, right? What the startups are— going forward, what they're looking for. And going back to the point of how much runway a round like this could actually give a startup in a region like Mexico, it's much cheaper to hire talent in a region like Mexico or in Latin America, right?

Mm-hmm.

Marketing is much cheaper. So going forward, I think Yeah, there are some rounds that could be driven up by international investors, but I think there's still a long way to go in the venture ecosystem in a region like Latin America.

And so I think the second part of the question, which was also around, do you see kind of more FDI or more support from local players? impacting the Mexican funding scene?

Yeah, there is support, you know, from development institutions. So for instance, the IDB rolled out a program to support fund managers in Latin America. But one of their sort of requisites to apply for that funding For funds, right, was that the fund size had to be at least $20 million US.

Which is huge. That's not realistic given your market, no?

Exactly.

Really? So they're applying an American paradigm to the wrong market. Yeah, we need to educate them. Okay, our friends in IDB, I hope you're listening. We need to do some work.

Well, I mean, it's important.

Explain what equity is for those who don't know. Sorry, Carlos.

Yeah. So yeah, I mean, at the end of the day, yeah, they want to continue funding the ecosystem, but they have to be— I don't know if flexible is the word, but they have to understand the current stage of the market, right? I mean, especially you know, for emerging fund managers like myself, I mean, a $20 million fund is enormous. It's enormous, right? Uh, uh, so, so yeah, it's, uh, it's not realistic.

I mean, normally what you— most funds started maybe between $1 to $5, like that's the usual starting seed fund, like when you're doing your own funds. No, it did like— or at least $1 to $10.

So $10 is a big And it's interesting because, for instance, in the US, a fund less than $15 million is oftentimes called a nano VC, right? Or micro VCs are funds less than $100 million. I mean, there's still a— I mean, obviously the capital markets in the US are much— is one of the biggest in the world, if not the biggest, right? But I mean, $10 million in a region like Latin America has much bigger impact.

It's going to go very far. Exactly.

It's gonna go very far, right? But I mean, it's glad, and we're glad to see, you know, these development institutions, you know, support the ecosystem. But, you know, I think they have to adapt to the reality in Latin America.

It's a very good message. Okay, so we'll get to our fire round of questions as we kind of round up here. So What's the best way for founders to approach you, Carlos? Do you have a preferred way? I know you don't have a form up on the website yet, I think.

We do have a contact form, you could use that. I'm pretty active on LinkedIn. The only, you know, and this is a recommendation, I mean, always try to personalize the message when reaching out to someone, how, you know, you came across their profile, or, you know, there has to be some I'd say interaction, right? I mean, these cold outreaches— I mean, I'm always open to cold outreach, but this, you have to make it personalized, right? That's why I would recommend anyone. But I mean, I'm pretty active on LinkedIn. Feel free to reach out. Would love to connect, you know, with— love meeting people from different parts of the world. world working in the landscape for sure.

And so what specific advice would you have for female founders, Carlos? And I know you may not see so many in the fintech space because that's a real issue across the world, not just in Mexico and Latin America. Just given your general advice— sorry, general experience as a VC and having been on the other side of it in a startup yourself, What general advice could you give to women entrepreneurs who are looking for money?

Yeah, I think, I mean, this isn't only for, I'd say, female entrepreneurs, it's for any entrepreneur out there. I mean, don't be afraid, you know, to reach out, cold outreaches to VCs or angel investors. But it's always important to know your market, right? And know what the person that you're reaching out, whether it's an investor, angel investor, or VC, know what they're investing, right? So for instance, we are focused on fintech. So if someone reaches out with an opportunity in, let's say healthcare.

Yeah.

That's not a good fit for us, right? It's always important to understand what, the fund is investing in, what stage they're investing in, to see if there's a good fit. It's always important, I'd say, also to the entrepreneurs to understand what they want from an investor, right? If it's an investor that has more of a hands-on approach and you want support, you know, on your governance or your go-to-market strategy or, you know, raise additional funding, you have to have a clear understanding of what you want to get out of a an investor, right? Because it's a two-way relationship, right? I mean, yes, investors want to invest in great startups, but as entrepreneurs, you also want to work with someone that's going to be there along the way, right? And there's going to be a lot of ups and downs in the way, and you want someone that's there with you, whether it's on the ups or on the downs, right?

Absolutely. And so you've mentioned some of the key dos. What would be the key don'ts, Carlos, that you would say Never do this or that and the other. This is the big no-no that you should never do.

Yeah, I would say, you know, sending those— I'd say, what do you call it in English? I forgot the word. Like massive campaigns trying to reach out to every investor without having a personalized outreach, right? It's important to understand that you're gonna be a good fit to the investor that you're reaching out.

Right? Mm-hmm.

And try to have a— from the very beginning, an understanding on if it's a good fit or not, because otherwise you're going to be wasting your time, right? So, I mean, there are a lot of dos and don'ts. I think some of them are common sense, some of them aren't. But I'm always open to providing some personalized feedback or suggestions going forward. So to anyone listening, feel free to reach out. And if there's anything I can do to support, don't hesitate to ask. That's the other thing. I mean, people, when you ask, they tend to be helpful, right? So don't be afraid to ask for support going forward.

So once we— quick tip that I've learned from having spoken to hundreds of investors now is like to— it's that like, you know, it's like we're having here. It's fabulous. You are a human being. This is what I want. This is the whole point of this conversation is to show that you're a human being. You're not a wolf. You're not one of these sharks. You're not one of these that we portray on the TV. And therefore, it's like about building a relationship. Yeah, it's exactly what you said. It's like, do your homework on us before, make sure that we're going to be a good fit. And just remember and ask for help, because one of the things when I was interviewing lots of investors in the past, I'd say, okay, can you give me the names of 3 other investors I need to talk to about funding female founders? Because I want to get the scoop on what we should be sharing to train our female founders on how best to approach you. So it's like even that, it's asking for contacts or introductions. And I think the other thing, the other tip I would share with everybody is to say, Ask for feedback. Now, this is a tricky question, Carlos, because, you know, often many entrepreneurs say to me, okay, we've been, we've gone, we've done the pitch, and then we hear nothing and we're ghosted. And I think it happens, you know, more in angel rounds than at VC round, because I think VCs, you know, it's different. But sometimes the founders can feel a bit ghosted that they don't hear and get any feedback. Or even know that it's a clear no. So what advice could you give everybody on how to read the signs? What's the sign of a no from a potential investor? That's really important advice.

Yeah, and I think something going back to your point, I mean, at the end of the day, like I said, we're also persons, right? And what softened not talked about is that us as fund managers, we actually go through the same process of fundraising, right, for our funds ourselves. So we go through the same process of, you know, receiving thousands of nos, some yeses along the way. We know the frustrations. We have, you know, we go through the same process, right? So one, you know, recommendation that would be, you know, try to keep your investors updated on what's going on. So for us, you know, we send out a monthly newsletter with updates, you know, on the fund and the Latin American investment landscape. And it's something that I think, you know, startups, if they want to start building their relationship with, you know, funds, they can also do it, right? I mean, there are a lot of tech solutions that for free you can actually send out a great update on, you know, sort of the milestones that you've hit since you last spoke with that investor. And I mean, I think that the best way to get a straight answer is to just ask. I mean, is this a good fit for you or not, right?

Mm-hmm.

I mean, if you feel like the investor is sort of hovering around because there are, you know, certain things that might not be a good fit, then you'll probably— it's— you'll get a hang of, you know, whether it's a Yes or no, right? So it's not an easy path for sure, right? You have to have a lot of perseverance, you have to have a passion going forward. What investors like to see is your ability to actually adapt to these changing circumstances, your ability to learn. So For instance, if we were talking to a company that's currently, you know, in the e-commerce industry, but they have on their vision rolling out, you know, a financial solution embedded into their own product, right? So all this whole concept of embedded finance. So for us, it was, you know, pretty straightforward. Listen, not a good fit for us right now, but keep me updated. Once it falls within our thesis, then it's a great way to reconnect.

Right.

And they're keeping us updated through their investor updates. So yeah, I'd say there are a lot of ways to go about it, but it's always about, I'd say, Passion and perseverance.

I love that, passion and perseverance. God, that really sums up an entrepreneur, doesn't it? Not just an entrepreneur who's funding, fundraising, it's an entrepreneur. And so what would be your favorite resources on funding and fundraising or newsletters that you would share, maybe in particular to Mexico or just to Latin America? What would be the best resources you'd point people to to learn about funding in your region?

Yeah, I mean, I think there are a lot. I mean, podcasts, there are a lot of podcasts, you know, with great entrepreneurs, great investors out there. So I'd encourage anyone to look at, you know, podcasts like, for us, for instance, Venture Unlocked is a great podcast that, you know, dives deeper into the emerging fund manager ecosystem. The 20 Minute VC has some great podcasts out there. There are, for instance, in Mexico, podcasts related specifically to the Mexican market. So if you— some of them are in Spanish, obviously. So if you're looking for some resources in English, you might find some with more of an international focus.

Mm-hmm.

And in terms of, you know, like Newsbase, TechCrunch has some great articles on the Latin American ecosystem. LAVCA, which is the Latin American Venture Capital Association, has some great resources. You know, I'd say there's a lot out there. I mean, I would recommend those and obviously join ours as well. It's on the website.

Absolutely, and it'll be in the show notes, everybody, so you'll have a link, you have a link down below, uh, to, uh, AMG Block, uh, website so you can, you can sign up for the newsletter. And I'm definitely going to sign up. I haven't done it yet, and you've just reminded me. I'm definitely going to do it because I definitely want to hear more about it. Um, so last question is like, how can we put more fun into funding, Carlos? How can we put more fun into the process? It's—

I was thinking about this question and I mean, I'd say the more the merrier, right? Bring more people into funding, you know, open access to pretty much anyone to be able to invest. So I'd say democratizing access to funding Whether it's, you know, as, uh, through crowdfunding, through, uh, you know, venture angel groups. I'd say it's more fun the more we are. So, uh, that's the way I see it, you know.

I love it. This is more fun the more we are. So thank you so much. Any last questions from, from our audience? If you have, just type it in now really quickly as we wrap up. And any last message to our female founders, Carlos? Because I know that you'd love to see— not only were you saying that you'd love to have some, you know, if there are potential fantastic women investors just to knock on your door in Mexico, because it'd be great to build the network out. Any particular advice or last message you'd have to female founders?

Yeah, I'd say, I mean, Don't be afraid, right? I mean, it's not gonna be an easy path, but I'd say it's gonna be worth it, right? So don't be afraid to take that jump into the entrepreneurial side, and if you have a vision, go for it. Going back, you know, Passion and perseverance.

Love it.

Goes a long way. So, and, you know, if there's anything, you know, that I can do to support, feel free to reach out. I mean, there— I have a 3-year-old daughter, right? So I'm thinking about the legacy that I'm gonna be leaving behind for her, right? So if there's anything I can do, to create a better future, I'm gonna do it, right? So that's, you know, going back to when we initially connected and I was telling you about that, right? I mean, it's what am I gonna leave behind for my daughter, right? So yeah.

Oh, I'm sure everybody's heartstrings are being pulled there because they are mine. And, and that's also one of my motivations Carlos, because I have a daughter. She's now going to be 20 in a few weeks. 20! Oh my God. So yeah, 20-year-old daughter and a 17-year-old son. And I mean, the hard truth is that today, if both of them went looking for funding, my son would be 70% more likely to get funded just because he's a man.

Exactly.

He doesn't even have to be good. And he hasn't— he's white as well. So, you know, he's got double whammy there. And like you, I'm very— that's— I want to change things for our daughters, for our grand— future granddaughters and future great-granddaughters. And like, you know, we started off this conversation talking about Generation Equality Forum, and wrapping it up, I think it's nice to close it by saying, you know, there is still so much to be done. When I had that immense blessing to have a 2-second conversation with Hillary Clinton yesterday and get my photo with her, I was just like starstruck, as you can imagine. But I said to— I congratulated her and thanked her for all the work she's done on, you know, for women and for gender equality over the years. And she just said, yep, there's still much to do. There's still so much to do. And I said, yeah. So we're doing it all together. Thank you for being one of our allies, Carlos, and being one of those male allies in there. And I'm sure you're going to get a lot of, you know, phone calls. And I think from people in— we know fintech now, Mexican startups, you're listening to this international podcast. In English, you know where to go. Go to Carlos. Go to AMG Block. And also, hey, you if there are any investors out there who you'd like to partner with Carlos to help invest in in the future and innovation, connect with him as well because this is this is what it's about. It's about making the pie bigger, isn't it, Carlos? Exactly. Yeah.

Appreciate it, Anne.

Thank you so much. Thank you for your patience for the technical thing earlier. I really appreciate it. I really do. That normally doesn't happen. It just Sorry it happened to us, Carlos, but I thank you so much. Thank you to all our participants and our listeners. Can you guys in the chat box just say in one word what this podcast was for you? Go on, give some feedback. We want to give some love back to Carlos before we, we sign off, so put it in the chat box. I'm gonna say like I was very inspired, very inspired, Carlos, and thank you for giving us the insights. Here we go, inspirational is coming through. It's not me, it's The participants are saying it too. It's so inspirational to hear, you know, a young VC like yourself making a mark in a growing, fabulous growth market that is Mexico. You're putting Mexico on the map here with us, and I'm so glad. You know, investors, watch out. You know, it's a hot market in Mexico, and you should know. And blockchain and fintech is here to go. And then Andres was saying knowledge. Yes. You shared a lot of knowledge, a lot of knowledge bombs, as we say, knowledge nuggets and knowledge bombs. So thank you so much. And Simona says she loved the tip on finding the right fit. Thank you. So there you go. Everybody got something out of it. And so for all our future listeners, I'm sure they're going to send it. You can share in the comments what you think. Thank you, Carlos. I'm going to free you. You got to get back to investing in fabulous companies. So thank you so much. Thank you very much.

Thank you, Adam. Pleasure. I would love to do this again soon.

We will. We'll do. Let's do this in a couple of months just to take stock and to see. Hmm. Okay. Then maybe some. Hey, hopefully you can tell us you've invested in a women-founded or co-founded startup. That's what I and we'll celebrate it.

Exactly. And we'll do a section in Spanish because I know you speak Spanish.

Haremos la próxima en español. Sí. Venga. Okay, with lots of fun. Take care, Carlos. Thank you so much. Bye, everybody.

Thank you. Bye, everyone. Thanks.

Bye. Thank you for listening to InvestHer Podcast. Don't miss more great funding tips and insights by subscribing to the podcast on Apple or your favorite podcast host. And while you're there, I'd love you to rate and review the show. We'd love to hear from you. So if you'd like to send in some questions, interact with our guests, or suggest other great people we should feature, join our community on the Flick InvestHer group or send us a message on investherpodcast.com. Want more great resources for female founders about funding? Check out our InvestHer Academy at academy.globalinvesther.com. I'm Anne Ravanona and look forward to having you with us again for our next episode. Let's put the fun into funding and get more women entrepreneurs funded.