LatAm Startup Investment Boom: Lessons from Dalus, Kaszek, and Monashees (Online)

Hello, hello, good afternoon over there in Mexico, good morning here. I'm over here in Dubai this morning, but very, very glad to be connected with you guys today. Everyone, everybody from the Foundry Institute Monterrey and everybody interested in this session, we are very glad to, and we have a panel of honor today, so we're very excited. So without further ado, let me start by introducing Foundry Institute, which is the largest accelerator, pre-seed accelerator project in the world. We have over 2,000, I mean 200 chapters all over the world. And we are in, we have a huge network of over 600 directors of over 45,000, 4,500 graduates. And it's a very complete project of 14 weeks that's composed of very interesting topics that we cover week to week, but that are also accompanied by the help of very high-level mentors and experts that help the pre-seed projects to become a reality or to get to the next level. But thank you very much for being with us today. I will leave the floor to Mr. Mario García, which is my fellow co-director in the Founder Institute Monterrey chapter.

Gracias, Astrid. Pues aquí hablamos en inglés y en español. Ya saben, somos el capítulo de Monterrey. Y pues bueno, un gustazo estar con todos ustedes, como hemos estado en los eventos pasados promocionando por ahí el Batch 2022 de Founder Institute. Rápidamente, como lo saben, por ahí es codirigido por nuestro amigo inversionista Rogelio de los Santos. Que esta vez también va a estar ahorita aquí en el estrado con los panelistas de lujo que tenemos el día de hoy. Rogelio por ahí de Dallas Capital. Está Astrid Chedid, que ahorita está en Dubái precisamente organizando un gran evento de inversiones que hace todos los años y liderea para Latinoamérica. Y su servidor Mario García, que soy el encargado y cofundador del Club de Ángeles Inversionistas, Angel Hub. Pues es un gustazo, al igual que nuestros aliados, que por ahí juntos hacemos posible lo que es este capítulo de Monterrey, The Foundry Institute. Que si quieres avanzar, por favor, tenemos por ahí abriendo ya y estamos casi listos para iniciar por ahí el 27 de abril el Batch 2022. El año pasado nos fue muy bien, se graduaron 11 equipos. Y bueno, pues ahora otra vez los que quieran apuntarse, ahí está por ahí. En La Liga ya saben, tenemos mentores de lujo, tenemos contenido de Silicon Valley y lo que queremos es ayudarlos a que lleven su startup al siguiente nivel. Acuérdense que estamos para apoyar founders y tenemos a muchos founders e inversionistas igual que los queremos apoyar y les damos las herramientas y las metodologías para que lleguen al siguiente nivel, pre-seed, y que bueno, pues que levanten rondas y por qué no que lleguen con estos Fondos, ojalá que pronto, ¿no? Como los que tenemos aquí presentes, ¿no? Que bueno, son líderes de Latinoamérica, ¿no? Entonces aprovechen rápido, emprendedores. Tomenle por aquí el código QR y pues vámonos. Les voy a presentar rápidamente al panel de lujo que tenemos, donde tenemos por aquí a Eric Archer, the founder and managing partner de Monashis. Hi, Eric. How are you?

Hi, Mario. How are you? It's really nice to be here. Thank you.

Okay, you're welcome, Eric. Y bueno, in Spanish, Hernán Casá, co-founder and managing partner de Kasek. Bienvenido, Hernán. Un gustazo y un placer tenerte aquí.

Hola a todos. El gusto es mío.

Y bueno, pues tenemos a Rogelio de los Santos, nuestro codirector y co-founder and managing partner de, pues bueno, también uno de los fondos más activos en México y Latam, Talus Capital. Hola Roger. Y bueno, por ahí Rogelio trae unos detallitos técnicos, está en el aeropuerto. Él va en camino a Dubái al evento precisamente con Astrid. Y bueno, pues ahorita hubo un movimiento por ahí en la sala y ahorita se va a conectar también con nosotros. Y bueno, tenemos a René Lankenau, un emprendedor muy conocido acá en el norte, muy exitoso. Que es cofundador de White Paper, un medio mucho, muy interesante. Y pues bueno, René nos va a ayudar a moderar este panel. Bienvenido, René.

Gracias, Manuel. Listo.

Pues ahora sí, te cedo el micrófono.

Adelante.

Comencemos con lo bueno. Perfecto.

All right. So, I'm actually going to switch to English so we can do this. So, it works basically for Eric and for all of us. But if there's anyone that wants to ask a question in Spanish or anything, just let us know through the chat functionality there. So I know the track record that you guys have, and you've been doing this for several years now. You've been very active in the entrepreneurial sector in the whole region. How has it changed in the last 10, 12 years? How does it differ right now, the kind of companies that you guys are seeing, the kind of entrepreneurs, from how it was, say, beginning 2010, 2011?

Well, I can start here. René, thank you, and thank you again all for the invitation to be here. It's a pleasure. We started actually, you know, Monashese in 2005. So maybe I can start Talking a bit about how it changed because we started, we joke that we started running the marathon, you know, 5 kilometers before the starting line. The market really started, and I think René, you put it very well, that it's, you know, 2010, around 12 years ago. We actually at Monash East consider 2010 this year zero of the modern tech VC industry in Latin America in this new phase. And there's a big difference between 12 years ago and today. I think there was a combination of factors that created the condition, you know, conditions for the industry to take off in LatAm, you know, initially mostly in Brazil. You know, there was this exit of Buscapé in 2009, acquired by Naspers, and then first investments by Silicon Valley VCs, you know, testing the waters. Brazil was growing, you know, the economy was growing, surfing the commodities wave. So you had these repatriated Brazilians and foreign entrepreneurs looking at Brazil to start their new companies. And all these things combined, and you saw the, actually the beginning of the industry. It was very, you know, very vibrant, but still very early and there was not a lot of capital. So you had capital for early stage investors and maybe if you're lucky a Series B in the first years, but I mean not a lot of growth capital. Actually what really changed from those first years and even entrepreneurs actually for the first time, most or maybe all the entrepreneurs were not proven or experienced like you see today. You see new entrepreneurs starting their companies. So you accelerate to today, I mean, it's completely different. I mean, you have, especially in the last 6, 7 years, you know, this flow of capital that I think actually happened because you had the maturing of those first companies that were built, you know, in the beginning of 2010s. And the maturing of the companies and the lowering of interest rates and more capital available just had a great combination for the availability of growth capital to— so entrepreneurs can build, you know, greater, you know, bigger companies in shorter cycles is what we see today. But of course, you know, there are many things to talk. I'll just stay here, stop here and say, hey, it's totally different. It happened. It took some time, but I mean, it's very exciting what's happening. And what I have to say is that we're in the first 3 minutes of the game.

Wow. Yeah, I think I'd like to complement what Eric said, and I totally agree with all his statements. We have as a fund, this year we will make 11 years with CASEK, but we had 12 prior as entrepreneurs with MercadoLibre. So we started in 1999. So if in 2005 there was no ecosystem, imagine in 1999. But again, I agree with everything Eric said. The only thing I would like to add is that I think what changed on top of investors and growth capital and more experienced entrepreneurs starting businesses, etc., was penetration of internet, mobile internet. So you had critical mass that allowed many of those businesses to emerge that obviously attracted investors and all those kinds of things. At the end of the day, the technology game is a game of scale. And at the beginning, you could only aspire to get to scale in Brazil because that was the only market where counting first internet users and mobile users was where you could get to critical mass. And that started to change, obviously kept on growing in Brazil big time, but then Mexico, became a very relevant market. And today, what I typically say is that I think we're going to get to critical mass in almost all countries in Latin America. So in the past, if you were launching a business in Peru, you were doing that as your, maybe your headquarters, but then you had to expand into other geographies to get to that scale. I think today you can build a business with scale even in Peru, and it will even happen, I don't know, in Uruguay, which is one of the smallest countries in the region. So I think that transformation was the increase of internet penetration, and that was led big time with mobile internet that transformed the region entirely.

Makes sense. And Eric, you briefly touched on this too a while ago, but regarding the entrepreneurs themselves, there's quite a change. I mean, you right now, meet with people who have done this before or who've been part of teams that have built large companies. And I guess that also has an impact in how enthusiastically you want to get involved with this kind of companies, right?

Of course. No, no, it's a great point, René. And just before answering your question, just to complement, I think great remarks by Hernán here. I really think that have to do, I mean, with different skills that were actually developed in the last 10 years besides everything that we mentioned? I mean, two skills that actually didn't exist in the region, you know, in scale, which is managing hypergrowth and managing international expansion that allows for these pan-regional companies. So these are new things, new skills that are actually being put into practice, and new entrepreneurs are being trained in the companies that actually are doing it. So we have a multiplication effect. But answering your question about, you know, the difference of entrepreneurs, When we started, I mean, I like to say, I mean, there are two big trends, two big things, two parts of the equation that are very important here. First is that when we started in 2005, we would go to the top schools in Brazil. And in the beginning, we were only focused on Brazil, and then since 2015, we also became a pan-regional Latin American fund with investments in all the countries. But I mean, in the beginning, it was only about Brazil. So we went to top schools, and top universities to talk about high-impact entrepreneurship and venture capital. And at the end of these presentations with hundreds of students that were interested, you know, in hearing, but we would ask, you know, who wants to be an entrepreneur? And nobody raised that, not even one person, not even a single person. So it's really remarkable when Hernán talks about 1999, the previous cycle was even more risky and more kind of difficult. It was not a viable career option in the region, and this is 2005. Today you go to the same schools and same universities, everybody wants to be an entrepreneur, even those that shouldn't be entrepreneurs. I mean, of course there's a hype, there's a lot of capital, but even discounting that, you have this cultural change in the region of this, I want to be an entrepreneur, or I want to start my career in startup and learn how to be an entrepreneur. But that part of the equation is only the first part. The second Maybe even more important is, you know, I can tell you that when we started, we would try to attract, you know, and invite top entrepreneurs and tech professionals from Silicon Valley to sit on boards and be advisors in our company. So we'll try to, you know, just learn things. And I remember very well, they would come in the beginning, some of them were interested in for some reason about Latin America and curious, and they would come and they would say, listen, there's a huge gap between these tech companies in Brazil and the companies in Silicon Valley. There's a huge gap. And we said, I mean, we know that, that's what we need to change, you know, very, very few exceptions. And what I can tell you just to finish here, which is probably the best news, is that our companies of course receive a lot of investments from global growth tech investors, you know, from all around the world. Our companies actually have raised like $10 billion in capital from all these like large global investors. And what I can tell you is that— and we are in touch with them continuously— and what I can tell you is that in the last 2, 3 years, these global tech investors have spontaneously talked, you know, mentioned to us that today some of the best founders and some of the best companies in their global portfolios are in Latin America. And I think that's the best news. Maybe we're not at scale yet, but I mean, we closed the gap. And I think that's what's really exciting about and shows the quality of the entrepreneurs we have.

What do you think, Hernán?

No, I totally agree. Just one extra data point that illustrates This is when you look at our first fund that got started in 2011, I think we put together a portfolio of 24 companies. All of those were led by first-time founders. And when you look at the portfolio we're currently building, where we're probably two-thirds done there with the new, the latest fund that we raised last year, And more than half of the companies have second-time founders. And in a few cases, we have even third-time founders. So clearly, the experience that those people bring today is totally different to the one they had 10 years ago. And even those that are not second-time founders, they come from companies where they experienced technology firsthand, where they experienced this internationalization that Eric was describing, this scalability that they were building in other companies. So they come with much more relevant experience, and that is what allows them to hit the ground running, right? And is what— exactly what Eric was saying. In the past, they were terrific entrepreneurs as well, but they required some hand-holding at the beginning because they didn't have the firsthand experience that today's entrepreneurs typically bring.

Wow. Yeah, so basically, the size of the markets have changed regarding smartphone penetration and such.

Totally.

You have more experienced entrepreneurs. People know what being an entrepreneur means, and even from a cultural point of view, you have more local investors getting involved. So things have really changed in the past 10, 15 years. And last year was absolutely amazing, at least regarding fundraising, the amounts that were destined for Latin American companies were absolutely groundbreaking. Is there anything else that has changed or was this just something that had to happen with the passage of time? Or is there any other factor that we should keep in mind?

I think what happened was somehow expected by those that believed in the Latin American tech ecosystems. Also, Eric is clearly in that group, we are in that group, etc. As it typically happens, maybe it took longer than we initially expected, but then ended up being probably much more interesting versus what we had ever imagined. And I think we're, as Eric said, we're just at the beginning of this. I am asked now, so will 2022 be larger in terms of amount of money invested versus 2021? I have no clue. My guess is that it will not be because of all these reasons that are happening in the market. But I'm totally convinced that by 2030 we're going to joke about the small numbers we had in 2021. So again, the trajectory is not always linear up and to the right, but by today when you take a few steps back and look at it, it will be like that for sure. So what happened is what happens with ecosystems, right? It's really hard to say this was the factor that initiated everything. In reality, it's typically combination of things that have happened. And you mentioned all of those, we mentioned those already. So it has happened, but the interesting thing is that we all believe— I think I'm more convinced now that it will continue than I was 10 years ago or 20 years ago. So certainly, I think the outlook is very positive.

Is there something missing on the other hand, something that you know that happens in more developed markets, but something that we're not seeing here regarding entrepreneurs or their companies or—

I wouldn't say there's something missing, but obviously tech talent is something that we all want to have more. But you go and ask Google Silicon Valley and they will tell you that, and you go and ask an entrepreneur starting a company tomorrow in Monterrey and he or she will tell you that as well. So I wish there were more developers out there. But slowly but steadily, that is also growing, and a lot of new technologies that allow you to scale also the productivity of your tech team and the development of your code. So I think it's happening, and we will be solving all those friction points that we have, and new friction points will emerge for sure. But that's the story of innovation and technology.

Yeah, sounds about right. And regarding your actual jobs, the actual thing that you guys do, what key issues makes you quickly decide to support an entrepreneur? Are there some things that you see that you say, you know, I want to fund this guy, this person here?

Well, I can start on this one. And just before I start, I just wanted to mention one point on the previous question and the previous answer. Totally aligned with Hernán on all the points. What I would mention that maybe we're— I wouldn't say we're missing, but I think it's a natural step. I think we are in the process of having more innovation. You know, I think Latin America is still kind of more execution-driven, and we see more and more innovation, but I think we're in the early stages of true global innovation. When we started back in 2005, I think we had two dreams. One was to help put Latin America on the global map of tech, because it was not, and today it is. The second dream is Latin America be a center for, or a region that actually creates innovation, tech innovation globally. I think we will get there. So I think in my opinion, that's the next phase and we see it happening. But sorry, so going back to your question on entrepreneurs, I mean, that's basically the most important thing we do, right? I mean, if you ask me, I mean, 10 years ago, I mean, what do you see? What do you analyze in an opportunity? I mean, we always said, oh, we have to see the team and the market and the business model and everything. And today, if you ask me, I mean, For me, the 3 most important things are the team, the team, and the team. I mean, it's all about the team. The team will pivot, the team will adjust the business model, the pivot will find the market, will actually anticipate the market. So our focus is to really look at the founders and the team. And in my opinion, if you ask different people at Monechiz, I mean, we have our frameworks, you know, to actually try to understand, you know, the psychology of the entrepreneur, because in the end, what you need to know, I mean, who are the entrepreneurs that will have the resilience? Who are the entrepreneurs that have what it takes? Competence, leadership skills, the competence to build companies and everything. I mean, this is actually very important, but it's not the only thing. That is actually to be in the game. To be in the game, you have to be very competent as an entrepreneur. But in my opinion, what really makes the difference is what drives the entrepreneurs. Why they're doing it, you know, what is the passion behind it? Is the passion for impact? Is the passion for the problem they're solving? No, there are good passions and there are bad passions, and they have to have the good passions because the passion will actually give the resilience and to face the ups and downs. And the challenge here today is that the time is compressing. I mean, you meet a great team and they already have like 3 term sheets, or they want to decide in the next few days. So you don't have time to spend with them like the old days, but I don't miss the old days because then you had time, but you didn't have the same quality of opportunities. But I mean, the challenge is to really try to understand very quickly, you know, proven entrepreneurs of course are gold standard, or entrepreneurs that were trained in very successful companies are gold standard. But you, what's really behind, I think in my opinion, is that what we really need to try to quickly get, and I'm gonna idea of.

Okay, Hernán? Yeah, and more from a personal level, what entrepreneurs need to have for us is on the one hand being very humble and on the other hand being rainmakers. And that's a very tough combination, right? Because you need to be humble first and foremost to know what you don't know, right? And to recognize that and try to surround yourself with people that can help you narrow those gaps. That's something that we think is very important because eventually nothing is done by one person, everything is done by a team, and the more complementarity you can bring to a team, the better. And then the other piece is obviously that idea of being able to dream big, to understand things that are not evident today, and then make that vision happen, right? Make the impossible happen. So we try to look for that combination that is a very subjective thing, because how do you measure humility? How do you measure rainmaking? It's really difficult to do that, but that's the special spark that you try to— because as Eric said, everyone that we meet is fantastic, right? If you look at the average population, those people stand out big, big time. So what you're trying to get is that very 0.1% that can make the impossible happen. And for that, we see that if you are too confident, you will probably not make it. If you are very humble but do not have confidence, you will not make it either.

So You need to— can you share an example of someone that comes to mind when you talk about this?

Yeah, so a very obvious example, but it's David Vélez from Nubank, right? Ridiculously smart person at the time when he got started, very bright professional with a stellar career— GA, Morgan Stanley, Sequoia— but he knew that he knew nothing about the banking system in Brazil. He knew that he knew almost nothing about technology even though he was an engineer, and he recognized that. And minute one, he brought on board two co-founders that were basically tackling those two gaps that he had. But then he had a very clear vision of— was ridiculous how banks operated in Brazil and how frustrated the customers were and how big the opportunity was and how he could try to solve that with technology, right? And I think that that's the perfect example of someone that is ridiculously confident and also understands very clearly his gaps and tries to somehow bridge them. Yeah.

Eric, anyone comes to mind?

Well, several. Several come to mind. I have to say, I mean, the founders of Rappi, you know, especially Simón Borrero and Sebastián Mejía. I mean, they also— I agree with that balance. I mean, the ambition, you know, to really build something really kind of large, expand internationally very early in the life of the company, at the same time incredible people, you know, very, very, uh, very humble also, um, and, uh, making it happen. I mean, uh, going early to, to Mexico, going early to Brazil and building a, a very successful kind of regional company. So that, that's, that's one example.

Yeah, it comes to mind. Yeah, you know, many of those in the audience right now might be working on their first startup, their first company, and, and you've already talked a bit about the traits that you, that you'd like to see in founders, but What are the 2 or 3 things that first-time founders really need to nail from the beginning or really need to make sure that they work?

I think the list is always long, but if I had to pick 2 or 3 things, I would say one is to be able to articulate really well that long-term vision and understand well what's that problem that they are solving or what's that opportunity they are creating. And if you can articulate that in a way that makes other people want to be part of it, I think that that's fantastic. And if you get somehow trapped into the explanation and it doesn't seem to be so clear, then you lost the battle before you started it. So that very, very clear vision, but it's a vision that probably you want to be there in 20 years. No, no, not tomorrow. And then the other piece that is exactly the opposite of that is know exactly what are the most important things you need to do next quarter or next 6 months. And then the rest, it will happen as you move and you will learn things. But sometimes we have entrepreneurs that cannot articulate well that vision and it doesn't seem to be very compelling for us. Sometimes you do have someone that can articulate that vision, but then when you tell, so So what are the most important things that you need to start doing now, right? I don't know yet, I have to figure it out. That's the gap. And then someday you have someone that tells you exactly with lots of precision what will happen in the next 20 years. And you know that that is impossible to happen because the unexpected is always what wins. So you need to be able to find that balance of that terrific long-term vision in a compelling way and clarity on what you think are the 2, 3, 4 things you need to accomplish next quarter, next 6 months, next year.

Great. Federico? Yeah, to complement some other points, I think, well, of course, choosing the problem you're going to solve, I mean, it's at the top because it has to be a relevant problem and you have to have, you know, an identification some type of identification with that problem. I mean, we see some teams just looking for, you know, things to do or getting inspiration from businesses in other geographies. And sometimes they don't stop to think that they will have to deal with this for many years. I mean, you know, it's not like 6 months, you know. So I think I would choose very carefully the problem you're solving. Sometimes it's natural, sometimes you have to a lot of homework. The other thing is choosing as a single, let's say as an entrepreneur, choose your co-founders very carefully. I mean, the other thing we see today is sometimes some type of anxiety of like, oh, I need to have a team or co-founders to complement me and let's choose. I mean, I met these people like 3 months or a few weeks ago and let's do it, you know. You have to spend time with your co-founders, ideally know them well. Of course, you have many, many teams that come and they know each other for a long time, which is great, but, you know, try to avoid the kind of the last-minute thing and, you know, complement each other, know that you're really, you know, aligned, you know, you have a human alignment about the vision and what you're doing. And finally, I mean, more practical thing, that we also see today less problems, but we used to see a lot of problems, is the cap table. You know, just protect the cap table from the beginning because we saw a lot of teams that came with— did an angel round or friends and family or even small seed fund that completely unbalanced the cap table. It's not impossible to fix, but I mean, the more you start in the right way, and today there's a lot of knowledge just talking to other founders, founders on how to do it. I think that's very important.

Well, sounds great. I have some questions that people are starting to post here on the chat, so I'll start reading them. Guillermo Guzmán asks, what sectors do you see growing better in Latin America within the next 3 years?

I think in our case, we typically focus more on founders, than on sectors. So we may have a list of sectors as potential targets, but then an entrepreneur comes with a terrific idea, an extraordinary person, and we end up investing in a sector that we had no clue that was interesting before meeting that entrepreneur. But having said that, I would say that certainly we remain quite bullish on fintech. I think there's still lots of things to be built in that space. And the way we see it is that there was a first wave more related to the consumer. And still within that wave, I think there's a long way to go. Then there was a second wave related to B2B. And I think we're in the middle of that wave. We're going to see many companies emerge in that space. And the third one, which is the newer one, is that layer of the infrastructure layer, right? And what is going to be built to make our finance in general more open, more efficient. And there you will probably eventually connect that with initiatives around crypto and Web3. So all those areas I think will grow enormously.

Keep going.

Eric?

I think the same here on the focus on the founders. I mean, you see sometimes, you know, this image of venture capital, you know, really thinking about trends and which ones are the sectors and focusing on sectors and these. And in the end, what we have in venture capital is just a privilege of having kind of an advanced post that you can see the deal flow and you see what the bad founders are working on, and we follow that. We follow, you know, we can have a great thesis about sectors, but if we don't have— don't find the best founders building companies there, it's useless. And at the same time, as Hernán mentioned, I mean, we have to keep an open mind. That's the exercise, the open mind to be surprised and see a good opportunity, something that you were not expecting. In Latin America, in terms of sectors, I mean, naturally, you want to build very large businesses, of course, you know, the high-impact entrepreneurs and venture capital at large businesses can be very large. So naturally, these businesses will follow on the B2C side, you know, the spending of the families. So it's about living expenses and proptech and health and foods and delivery networks around food, education, transportation, and mobility. And of course, you have the enabler sectors like fintech and fintech infrastructure and logistics. And you have B2B, which of course, with the digitalization of small-medium companies, you see great opportunities in those areas and B2B marketplaces. So, it's not, in my opinion, going to go out of these sectors for the largest companies. But of course, we can always be surprised. Great.

Another question. This comes from Camila, and she's asking how to bridge the gap of getting funding for founders that have not the signaling of being ex-TRAPPIST or coming from a top US university.

So I'd say that 50% of the founders we backed in the last fund had that ex-Rappi kind of halo, but the other half do not have it, right? And they are all extraordinary people, and this is a very Darwinian process, right? So it's not that every founder that wants to start a company will get funded. I think today the chances of getting funded are ridiculously higher versus what they were 5, 10, 15 years ago, But still, you need to convince someone to invest in your company. And for that is going back to what we were discussing earlier, a very compelling idea, being very compelling in the way you present that idea, and making sure that you know the zoom in, zoom out, right? So this is what I want to accomplish, and this is what I need to do now for that. These are the people I brought on board to complement me. And so all the pieces that investors will look into. Is there a secret formula that will guarantee you? There is not. It's like when you apply to business school, like, you know what you have to do, but there's no perfect recipe for it. But certainly the more you have of that, the higher your chance of succeeding.

Yeah, I would complement that with at least how we how we think about it. I mean, of course we want to invest in founders, you know, building companies and all the other investors. And if there is a perception of lower risk, of course there will be more investors interested. I mean, that's just natural. And if you put in a very simple kind of 2x2 matrix, I mean, proven entrepreneurs or very experienced entrepreneurs actually replicating a business model that is going well in another geography, the perception of risk is very low. So everybody goes there, but there's no free lunch, valuations go up. I mean, as investors, we are very careful with portfolio construction. We don't want to invest only in that quadrant. We want to invest in first-time entrepreneurs. We want to invest in innovation because those are the opportunities where you have, you know, great prospects too. So it's a matter of portfolio construction. Of course, naturally you will see more of the capital going in that quadrant. There's nothing we can do about it. But I mean, it doesn't mean that there's no capital available for the other situation.

Sounds interesting. I have another question here from Eduardo de la Garza. Eduardo, nice to hear from you. What would be the right balance for a seed stage cap table with 500K or $1 million USD investment? The right balance for a seed stage cap table that— that I'm guessing this is a company that, that's gonna receive between $500K and $1 million USD.

You know, how much dilution he's asking? Probably, yeah, yeah, for, for $500K. Well, it's, it's really— it depends so much, but I mean, I wouldn't Ideally, you want to, as a founder, no, you don't want to dilute more than 10%, I would say. I mean, in the seed stage or something with that type of check. I mean, just to give you a number, I don't want to say, oh, it varies a lot. But I mean, I would, it's not a large check, but it's a good check to start. And you have to, you know, find the right investors that will recognize that it's important to to leave space, you know, for other investors in the future and to keep the incentives high, you know, for the team.

Yeah, I think it's hard to answer that because it's typically case by case, but certainly what you don't have to do is to give up 50% of your company for that amount of capital, right? Because no matter what happens, then you're probably starting with the wrong foot. And again, if it's 5, 10, 15%, 20, obviously the lower the better, but that depends also on what kind of alternatives you have. But avoid those extreme situations that put you basically out of the game before you start playing it.

Yeah, yeah, I agree. There are some questions regarding Web3. Everyone wants to know, what are you looking at? Anything you've invested yet in the sector?

We will start investing in, in some crypto companies, more, more protocols than in tokens and currencies. I think there's a terrific opportunity there. There are still some challenges, right? So, so one of the things that some people are thinking now, and we agree with that, is that Web3 has tremendous potential and has been able to show that they can even finance themselves without the need of typical VCs. But that they still lack— I think what Web2 did was creating a terrific user interface, terrific layer for all of us to get access to technology easily. And Web3 is still really cumbersome in that regard, at least the way I see it. Probably my daughters don't see it like that, right? But that's the way I see it. And I think that once that combination gets unlocked, when Web3 can acquire the usability layer that Web2 so successfully built, I think the sky is the limit for that.

Yeah.

All right. Yeah, I agree that, you know, it's, you can't deny the potential. I mean, everything that's happening, it's accelerating so fast. I mean, it's a new platform, you know, of course crypto, NFTs, DeFi, you know, crypto's investments versus payments. I mean, it's huge. So in terms of opportunities, We haven't invested yet. We looked at several things in the deal flow but haven't invested. But it's, in terms of opportunities, is really great. When you look at it, it's really high potential. It's very, say, everything is great, but it's very high potential and we have to look at it. But if you look at the other aspects, you know, that of this whole trend. I mean, the Dow Jones, for example. I mean, if you look at the Dow Jones, I mean, then there's a proven dynamics in VC that I don't know, it's too early to tell if that is going to succeed or not, especially when you give access to a broader base of, I don't know, retail investors and individual investors that don't understand what venture capital means or investing in very early stage, the type of risk, you know, high risk, long-term investments depend on access to the best opportunities, depend on portfolio construction. So then you can backfire in the future depending on how it goes. And so depending those aspects, I would be more careful.

Early to know. And then with this, I'm actually going to go back to one of the topics we were talking about because there's a question question here that I feel it's interesting. Is age a key factor when choosing an entrepreneur? Being above 50 is less interesting than below 30, or is age something that doesn't matter at all? This is something that's being asked here by Juan Pablo Gonzalez.

I think there are two aspects, right? Age typically comes with more experience, But also typically comes with less energy, and if you can combine both, you can be someone with lots of experience and still with energy and really looking for the next 10, 20 years and not the next 5. I think you are the best possible entrepreneur, and we've invested in entrepreneurs that are 60 years old, and we invest in entrepreneurs that are 18. And when we invest in the 18-year-old entrepreneur, we say, what the heck are we doing? And then when we invest in the 60-year-old entrepreneur, we say, hopefully he's still alive when this gains liquidity. But I think on average, entrepreneurs tend to be younger. Probably the ideal age is around 30 because you have some experience but still Lots of energy and a long runway ahead of you, but it's also case by case. Yeah.

Age is not a factor for us. I mean, it reflects, I mean, of course, the profile of the deal flow. Of course, you see more kind of younger entrepreneurs, but we don't have any kind of age preference. I mean, again, it's similar to that open mind. You have to have an open mind to see an incredible entrepreneur. 18 years old or 50 or 55 or 60.

So regarding the sectors and going back to that question, Pedro here is asking, you know, fintech, healthtech, proptech, crypto, e-commerce seem to be very hot right now in the region, but there are other areas such as social networking and maybe advertising-based projects that seem to be outside the radar? Is Latin America not ready for media and entertainment, for example? Or are you guys seeing anything in like more atypical sectors?

I can start with that one. No, go ahead. No, we don't have— again, I mean, we haven't seen— of course, the past is not a We're not seeing that the past, and we're not driving looking at the rear mirror. But I mean, you know, in terms of entrepreneur-driven kind of VC-backed, you know, companies in media and entertainment, in tech, there are very, very few, I mean, opportunities. I mean, it tells you something, but of course at the same time, you know, you see kind of gaming, wildlife, I mean, huge success. So you have to be open to that too. Of course, I wouldn't say it would be the big priority and where all the great new companies will come from. And sorry, I may sound repetitive here. I mean, we don't have any problem with those companies and we review them all the time and we talk to them and we've invested in the past and we are open to invest again. I just don't think, you know, It's at the top of the opportunity. That's my feeling, but maybe I may be wrong.

I agree with that. And in our case, we invested in a couple of companies in those spaces, one more on the social network side, another one more on the entertainment side, and both businesses did not go well. And then the number one challenge was that From the get-go, you need to be very global. So if you are entertainment, you need to have global entertainment available. Otherwise, you are at a big disadvantage versus the global players. And that being started out of Latin America, it's always more challenging because you have someone that starts out of the US, so that's a larger market. So from day zero, they can pay more for that content and you're at a disadvantage. And we all consume global content, right? We like, I don't know, Mexican movies and Brazilian movies, but also Hollywood movies or French movies. And if you can have access of all of those, you become more of a destination than if you are just focused on Brazilian movies or whatever. And in terms of social networks, the same thing, right? You want to connect with everyone globally. And I don't know, I'm from Argentina, maybe half of my friends are from Argentina, but the other half are from all over the world. And I want to be in a platform where I can connect with all of them. And when you start again out of Latin America, it's harder for you to build that reach out initially. So your product needs to be significantly better versus someone starting that out of more of a core area like the US or large country in Europe. So again, it's not impossible, but yes, we've seen it That has been more challenging.

And I'm sorry, just to this point, totally agree. I mean, you have to be global. I mentioned the example of wildlife. And just to tell you a real example, I mean, we love what's happening with the creator's economy and this creator's revolution. So there are great opportunities, but I agree with Hernán that you have to be global from the start. We just invested in a in a music tech company that hasn't launched yet, but it's global and from Latin America. And so that just shows that we are open to making these investments and there are opportunities, but it's just maybe a different profile of risk and ambition.

Yeah, makes sense.

Okay, guys, so I think we're running out of time. This has been really amazing, at least from my point of view. I'd like to thank you, but give the word to Astrid, so maybe she can—

I have another question, just maybe to wrap up. I would like to know which are the top skills that you feel the entrepreneurs need to level up and to become a model founder for you to invest in them.

I think we talked a little bit about it, and there are many things, but something that sometimes doesn't come up so naturally out of Latin American entrepreneurs is the capacity to do the storytelling, and that's very, very, very important. Because that's what you need to do to have that compelling vision and transmit that compelling vision to others and have others willing to join your company. So again, they've improved big time versus the kind of storytelling that we heard 10, 20 years ago, but still there's a gap. And I think it comes back from the Latino kind of way of being, where we— it's not so natural for us to speak about ourselves and somehow sell what we are offering.

Confidently sell, right? Thank you.

Yeah, I think it's a great answer. The other one that's— I think it's getting better and better every day, but I think we still can improve. It's not a skill, but it's the level of ambition. I mean, and it has really improved in the last 10 years, as we discussed, but I mean, we still have, maybe for similar reasons than what Hernán said, I mean, sometimes, you know, kind of a little lack of, no, this will be good enough. No, I mean, that's It has to do with the confidence to really build something really amazing. So I mean, we're getting much better. It's incredible today what you have, what you see in the teams. But I think still it's a big movement we can improve that.

Thanks so much. Mario, I don't know if you want to wrap up.

No, yes, no, just thanks a lot, Hernán and Eric. It was a very, very useful conversation with you guys. It's an honor for us, for Foundry Institute Monterrey, to have you here, you know, to people, to funds that have supported and improved a lot the ecosystem of LATAM. So thanks a lot. And finally, how do the audience can contact you or your funds? So can you give us, you know, like a handle or or an email or something?

Hernan@plasek.com. Happy, it's our job to listen to entrepreneurs, so happy to receive their comments, questions, business plans.

Thank you, Hernan.

Likewise, Eric, Eric@monachis.com. So yeah, just, we can direct them in to the team and discuss.

Thanks a lot. And René, well, everybody knows that you can contact him at whitepaper.mx, but what is your email, René?

I'll write it here, rené@whitepaper.mx.

Well, thanks a lot. Thanks a lot. It was a pleasure. Nos vemos, por favor, en el próximo evento de Foundry Institut Monterrey. Por ahí va a ser a finales de abril y va a haber sorpresas. Y por favor, regístrense los que no han aplicado para el Batch 2022. De nuevo, Hernán, Eric, nos vemos pronto. Gracias por todo, seguimos en contacto.

Gracias, René. Muchas gracias. Gracias a todos. Buenas noches.

Buenas noches.