Introducing Magma Fund II: $15M to Support Entrepreneurs in Latin America

I’m excited to finally be able to announce our second fund, Magma II, which will continue to support the growth of U.S. incorporated startups with technology and sales teams based in Latin America, along with Fintech, InsuranceTech and Blockchain startups in Latin America. Just like Magma I, we’re still 100% privately funded.

Since we launched as Chile’s first fully private VC firm in 2014, and subsequently expanded across the region and into the United States, we’ve invested US$2.5m of our own money into 32 pre-seed and seed-stage companies with founders from ten countries. These startups now employ 300+ people from 15+ countries and have annual sales of US$15M+.

We’re excited to continue to build on Magma I by investing into 60 pre-seed and seed stage companies over the next three years into two niches:

  • US incorporated companies that have their tech and or sales teams in Latin America
  • Fintech, InsuranceTech and Blockchain startups that are based in Latin America, targeting the Latin America market

In Magma I, we invested $25k-$75k at pre-seed and then could follow on at seed with up to $350k in our best companies. Magma II will build on to that thesis, by investing at three stages:

  • Preseed – $25k-$75k
  • Seed – up to $500k, ideally following on into our preseed investments
  • Series A – up to $1M following on into our previous investments

While we would prefer to invest at preseed first, we’re happy to invest at seed stage as our first investment into a company. Magma II wouldn’t be possible without the support of our LPs from Latin America, US and China. I’m really excited to be working with some of the most interesting and forward thinking Family Offices in Latin America and successful entrepreneurs and family offices from the US and China.

When we first started Magma Partners, we viewed the China office as a small piece of the puzzle, but now it’s a core piece of our thesis. As we raised money for Magma II, we realized that we were ahead of three main trends that make Latin American technology companies even more interesting:
1. Maturation in the Latin American tech ecosystem
It’s a new era for tech investment in Latin America. Local investors, US investors and Chinese investors are starting to make investments in Latin America. VC investment in Latin America doubled in 2017 and there are more entrepreneurs leading companies that are generating an impact across the region and the world.
Many people argued that there wasn’t sufficient deal flow in Latin America, but we received more than 1000 applications in 2017 and expect more than 1500 in 2018. We see Latin America at an inflection point and believe the next five years will be incredibly interesting in Latin America.
2. US investors are starting to invest in Latin America

Just two years ago, most VCs from the U.S. avoided Latin American startups, except for a few select deals in Brazil.

However, this year marked an inflection point with US-based Andreessen HorowitzRedpointAccel and other top-tier VCs making significant investments in Latin America. We expect this trend to continue, as Techstars, YCombinator, 500 Startups and other top US early stage investors have accepted Latin American founders to their programs.

3. The Chinese government, tech companies and investors are starting to invest in Latin America
As the US government is turning away from Latin America and US companies are focused elsewhere, the Chinese government officially incorporated Latin America as part of the Belt and Road initiative, which will lead to up to hundreds of billions in infrastructure investment in Latin America.
We also saw surge in Chinese tech companies interested in Latin America, culminating in Didi’s billion dollar acquisition of Brazilian rival, 99.
Magma II’s Vision
After opening an office in Beijing, China, we now have a presence to help support entrepreneurs in Chile, Colombia, Mexico, the US and China, with plans to open an office in Buenos Aires, Argentina in 2018.
We’ll continue to leverage our contacts in the United States that have allowed Magma companies to raise more than $10M in follow on venture capital investment and stay true to our mission to help top founders in Latin America launch and scale their businesses.
We believe that in addition to our US office that helps our startups with soft landings, getting first clients and raising follow on capital, our China office will be strategic for three reasons:
We’re following the strategy that we’ve done in both English and Spanish: creating content to educate the market on why Latin American companies are interesting for investing and acquiring. We’ve partnered with 36Kr, a media company similar to TechCrunch in China, to continue to distribute content into the Chinese market.
Leveraging Chinese Capital
Our Chinese office will help Chinese companies and funds that are hungry to invest in Latin American and US companies to help our entrepreneurs grow their businesses.
Working with Chinese Companies for exits
As we saw with Didi, there will be more Chinese acquisitions of and partnerships with Latin American startups in the near future.
Sino Latin America Accelerator by Kr Space and Magma Partners
Kr & Magma Space Launch, January, Shanghai
In January, Jie Hao, Francisco Saenz and I were in Shanghai to launch the world’s first China-Latam and Latam-China accelerator. We partnered with Kr Space, which is one of China’s largest coworking spaces, to accelerate Chinese companies that want to launch and scale in Latin America and Latin American companies that want to leverage Chinese finance, technology and potential partnerships.
If you’re interested in working with us either for investment or the accelerator, please fill out our application form and we’ll get back to you within a week.