The State of Mexican Venture Capital

The Mexican venture capital market is young and underdeveloped and as entrepreneur in Mexico, you are not only taking money, you are also taking the responsability to change the industry and country

Mexico Venture Capital Overview 2013

The Mexican Venture Capital market is young and small. The first seed funds only popped up around 10 years ago and currently only has 41 active venture funds. The majority of the capital for small and medium sized businesses (SMB) came traditionally from wealthy individuals. Still up to this point the SMB seems to grow the first stages of the company life using personal and family funds then followed by wealthy individuals. The fact that funding seems out of reach for most companies is logical since these 41 funds do no more than funding 300 deals a year, in a country with over 115 million people private funding is in its infancy.

Mexican Venture Capital in Seed Stage

To enter a seed stage funding with a Mexican venture capital firm like we did we used networking on an iTuesday event to get our first appointment with Alta Ventures and eight months later the money hit the bank account. Now that we have figured out a lot of the things involved to grow the business faster and we are ready to invite another VC that joins Alta Ventures. So I’m hitting the road soon to chat with VC’s and while planning for that, I made an overview of Mexican VC’s. I used the AMEXCAP member list as a source and started from there.

Who Are Active Mexican Venture Capital Funds In Mexico?

This is what I am understanding from the research on the Mexican venture capital market:

  • 63 Mexican venture capital funds that were active since 2000
  • 41 Mexican venture capital funds are still active today
  • 22 Mexican venture capital are inactive
    (Note: I consider them inactive if they did not expanded their portfolio in last 12 months)

The 41 active Mexican venture capital funds can be divided over the financing round preferences as grouped below. There are some VC’s that invest in multiple stages so that is why you find more than 41 VC’s here.

  • 5 Mexican Venture Capital Discovery Funds (for very small capital intensive startups $5,000 – $10,000 USD)
  • 7 Seed Funds (for startups in range $50,000 – $500,000 USD)
  • 14 Series A (for companies in range $500,000 – 5 MM USD)
  • 22 Series B and beyond (for companies above 5 MM USD)

Who Are The Active Mexician Venture Capital Funds in 2013

Discovery Seed Investment Series A Series B and above
500 Startups 500 Startups 500 Startups Adobe Capital
Alta Ventures Alta Ventures Alta Ventures Advent International Corporation
Naranya Labs Angel Investment Network Gerbera Capital Alta Growth Capital
Startup Factory Startup Factory Intel Capital Capital Índigo
Umbral Capital Startup Labs investoMex Darby Overseas Investments
Umbral Capital Jaguar Ventures DEG KW/Bank Engruppe
Wayra Kaszek Ventures EMX Capital
Latin Idea Ventures FOCIR
New Growth Fund Grupo IGS
Startup Factory Grupo MRP
Startup Labs Hunt México
Umbral Capital Linzor Capital Partners
Venture Partners Nexxus Capital
Wamex Northgate
Paul Capital Advisors
PC Capital Partners
Pinebridge Investments
Promotora Social México
RW Consulting
Southern Cross
StepStone Group
Temasek Holdings

Furthermore, there are three organisations that are not really Mexican venture capital funds but have characteristics that make them worth mentioning: ThePoolMX, Fondos de Fondos and Visionary Business Acceleration.

Do We Have A Choice?

Looking at our series A we have limited options if we focus on investors that are signaling in the media that they are open for Mexican tech companies, this is the list that I’m left with here in Mexico, since I have the weird preference to first invite Mexican venture capital funds to the party.

Alta Ventures already signalled interest in joining (it would be a bummer if your own current investor drops out), so they are not on the list for an extra fund. The rest… we are talking with six of them :-). Some have already shown interest others we thinks are not a good fit for various reasons (that won’t end up in a blog-post). So from the 13 Mexican venture capital on the initial list, we have only six we consider a decent fit for a company like ours.

  1. 500 Startups
  2. Gerbera Capital
  3. Intel Capital
  4. investoMex
  5. Jaguar Ventures
  6. Kaszek Ventures
  7. Latin Idea Ventures
  8. New Growth Fund
  9. Startup Factory
  10. Startup Labs
  11. Umbral Capital
  12. Venture Partners
  13. Wamex

Some of the above investors are have not updated their website since 2009, some are focused on real estate while others only do industrial capital. Some are stuck in 1999 and only want to invest if they can take 51% of your company … The rest, we are talking. Now the list is only six funds long, a pretty sad state from an entrepreneur’s perspective.

We opened the channels to these six Mexican venture capital funds, that we consider having smart money. Smart money to me is: (venture) capital that comes with advice and guidance. We really like working with Paul, Mike, Carl and Christian and maybe Alta Ventures spoilt us with their service because now, we want an additional partner that has the same attitude to investing in our next stage of growth. Grow the team, advice and support us, grow the business, increase value of the investment and work on an exit.

Take Capital, Share Your Success & Change Mexico

Mexico is underdeveloped in the private capital market and I think that as entrepreneur in Mexico you are not only taking money. When you take money from the investors on the lists above, you are taking part in a change in Mexico. Because if you proof that the investment made with Mexican venture capital came back with 100%-200% during the lifetime of the fund, you have opened up the doors for more capital to come in the country, more entrepreneurs getting funded and more jobs being created.

You are responsible for taking good care of the funds money, even if its called entrepreneurial-capital or risk-capital, and then being responsible for a change in your local community. If all this goes well, you are contributing to the growth of a country.

And you thought entrepreneurship was not stressful already. Sorry dude… it’s a mission not a job.

500 Startups in Mexico is one of the Mexican Venture Capital firms started since 2000

Dave McClure
 Monday 26th of August 2013 07:42:09 PM

nice summary. thanks for including 500 :) cc César Salazar Santiago Zavala George Kellerman Christine Tsai.

Dennis van der Heijden
 Monday 26th of August 2013 08:03:01 PM

You are welcome Dave. Keep up the good job here in MX. Looking forward to the first published 500 exit from Mexican soil.

Tomas Higbey
 Monday 26th of August 2013 08:04:13 PM

And even in smaller is the M&A of these start ups by companies in the Silicon Valley for example. the synergies are probably endless in this nascent development.

Dennis van der Heijden
 Monday 26th of August 2013 08:20:05 PM

Hi Tomas, Indeed. This is a major challenge, since the private capital market needs more validation that the discovery, seed and series A are worth the time. M&A's (mergers and acquisitions for the rest of us) are this validation. I know Alta's fund had one early in it's fund lifecycle but that was US based company. I think 2014-2016 this needs to start happening. Smart money we are looking for, also mean on series A a strong M&A network of course. Have you heard of any exits already? Dennis

Blanca ST
 Monday 26th of August 2013 10:40:09 PM

Great article, thanks for mentioning Alta Ventures México!

Kriztian Aguirre
 Tuesday 27th of August 2013 12:02:05 AM

Thanks for doing this for the VC industry in Mexico Dennis, you are a one of a kind entrepreneur! PS: Hope the website thing is not Alta's! We will re-design it soon, hehe.

Kriztian Aguirre
 Tuesday 27th of August 2013 12:11:18 AM

This is totally true. There have been several exits in the space, but they have been early and/or small in size. At Alta we see co-investing as the main source of our exits, although we also consider strategic M&A a potential exit path. Depending on the area the initial transactions will probably occur with foreign acquirers trying to enter the Mexican market or adding some talent (which we have a lot). In my opinion, exist are actually the most critical factor for the success of the industry in the country, it will motivate entrepreneurs, investors and other members of the ecosystem to continue building Mexico.

Josue Gio
 Wednesday 28th of August 2013 08:23:34 AM

Thanks Dennis van der Heijden a must to read post...

Salvador Aceves
 Wednesday 28th of August 2013 06:50:54 PM

This will be my reference material from now on...

Daniel Ramos
 Thursday 29th of August 2013 06:15:25 PM

Nice to see Startup Factory in the list. They are awesome.

Dennis van der Heijden
 Monday 2nd of September 2013 02:00:32 PM

Hi Daniel, what is your experience with Startup Factory? They funded your company? Love to hear more about what makes them awesome, I have heard little about them.

Dennis van der Heijden
 Tuesday 24th of September 2013 03:08:21 AM

New fund soon open, here details: Name: Capital InventMX Managers: Serial entrepreneurs in the Mexican internet ecosystem Sector: Internet and new technologies in general: ecommerce, online media, apps, online financial services, etc. Ideal profile: Companies with less than two years after lauching, entrepreneurs between 28 and 35 years old, beta functional. Investment amount: Range between US$200,000 and US$1,000,000

Dennis van der Heijden
 Wednesday 16th of October 2013 03:02:39 PM

FlyBridge also invests in Mexico the sweet spot is: direct sales model + SaaS + focus on LatAm where self service software product. Deal-size 500,000 - 10MM USD prefer to be one of the first investors.

Dennis van der Heijden
 Wednesday 16th of October 2013 03:24:29 PM

Its 280MM fund.

Dennis van der Heijden
 Monday 21st of October 2013 06:47:37 PM

Jaguar Ventures today announced their focus: ecommerce with checks-size, less than $500K USD in pre-moneys of less than 1.5 MM. So no series A focus but seed. I will not update the blog-post for this.

Pablo Lascurain
 Monday 21st of October 2013 06:56:55 PM

Nice, do you have some contacts?

Dennis van der Heijden
 Monday 21st of October 2013 07:28:46 PM

Pablo Lascurain Use the intro feature there and I'll forward it to Eric.

Dennis van der Heijden
 Tuesday 29th of October 2013 12:31:05 AM

VARIV Investments is another one that popped on my list. Ernesto Vargas and his brother Diego seem to be opening a fund or have a small fund with unknown size. Due to limited communication I'll not add them to the active investors... but just FYI.

Dennis van der Heijden
 Friday 1st of November 2013 02:40:54 AM

Bessemer Venture Partners (was not in article list) is looking for growth-stage businesses where they can invest $10mm+ USD in companies generating $5mm+ USD in revenue.

Edwin-Dale Clemons
 Sunday 24th of November 2013 05:37:15 AM

Inspirational insight. Gracias.

Dennis van der Heijden
 Sunday 6th of July 2014 10:41:10 PM

There is a new 8M USD fund in Mexico NXTP Labs opened up here

Alvaro Guevara Vazquez, composer, BMI
 Tuesday 29th of July 2014 10:57:57 AM

Greetings, I am Alvaro Guevara Vazquez, composer, BMI, and I am looking for some Venture Capital, for a very high profile and lucrative business venture involving a Mexican Olympic Icon-Senator, who is running for Governor of the State of Sonora, Mexico in 2015. I own a U.S. "Trade Mark", Official Domain Name and an Exclusive Image Licensing contract associated with this Olympic athlete/politician...worth an estimated $100,000,000 u.s.d. in merchandising and advertisement sales worldwide, that I plan to offer as collateral.... This business venture will provide exclusive limited edition collectors items-merchandise for sale: a tribute collection of original musical works, full color posters, t-shirts, original unpublished home photographs and other merchandise commemorating this Olympic Athlete's sports career and political crusade as a Gubernatorial candidate to change Mexico, for the benefit of all. The majority of this merchandise shall be produced on Mexican soil and create employment and business opportunities for numerous entrepreneurs and the labor force. Any leads to Mexican venture capital firms or for further information, you can contact me at Respectfully Yours, Alvaro Guevara y Vazquez, composer, B.M.I. U.S.A.