Note: Portal Finance recently closed a $200M deal with one of Latin America’s largest investment banks, BTG Pactual, to provide financing to small and medium businesses across Latin America. They were also winners of Magma Partners’ Latin America wide Fintech competition in 2016.
After growing up in the Bay Area, Diego Caicedo left Popayán, a small town in Colombia, at age fifteen to go to university in Bogota, then dropped out two semesters before finishing his degree in engineering. Why? He had a plan to build a massive, vertically-integrated coffee company that bridged the US and his native Colombia. Three years later, a strong La Niña year wiped out the coffee industry and he was back at square one.
Diego has never been one to give up after his first failure, though. In this episode, we talk about how he rebounded after closing his first business, how Diego became an entrepreneur in Chile’s mining industry, then how he realized the opportunities in Latin American fintech and started Portal Finance to help small businesses get liquidity when they need it. Diego is a lifelong entrepreneur with a lot of lessons to share with people just getting started, so check out this episode of Crossing Borders to learn more about how Diego does business across Colombia, Chile, and the United States.
Jack Fischl and Kyle Wiggins studied across the Charles River from each other in Boston, but they didn’t meet until they both became Peace Corps volunteers in Panama. Even then, they were placed in two communities that were a 14-hour bus ride apart. So how did they build a successful Latin American travel marketplace together? It started with a simple WordPress site they created over several visits to their local internet cafes.
After realizing their communities had no way of marketing the unique tours they were offering, and that local tour guides were being ripped off by large corporations, Jack and Kyle came up with Keteka. In this episode, Jack and Kyle explain what they learned from going through Start-Up Chile and the Booking.com Accelerator program, raising a funding round through Latin American angel investors on FounderList, and receiving investment from more traditional VCs like my firm Magma Partners. But it all started with the lessons they learned in the Peace Corps.
Since we closed our second fund in January to invest in fintech/insurancetech companies in Latin America and US companies with Latin American tech and sales teams, the entrepreneurs we support have been busy. And so have we. Here’s a roundup of some of the most interesting things that have happened in the first half of 2018.
We’ve invested in 8 companies out of Magma II since January. Here are three that are public. We’ll be announcing more of our investments in the next month.
CryptoMarket – CryptoMarket is a Chilean fintech company that operates cryptocurrency exchanges in Chile, Brazil, Argentina and Europe, with plans to open Mexico and Colombia this year. Magma coinvested with Consensys, the fund created by the cofounder of Ethereum in a $600k round.
BrainHi – Puerto Rico based Brainhi helps doctors and dentists book more appointments using chat bots. They’re the first Puerto Rican company to be accepted into YCombinator. I met them during a visit to Parallel18 in Q1.
Workep – Medellin and San Francisco based Workep is a project management tool built onto of G-Suite. I’ve know Carlos Eduardo Alvarez since meeting him at a BBQ in 2015 in Medellin and have been following since then. We reconnected at Parallel18 this year and invested recently.
I wrote an article on The Next Web about a topic that comes up weekly at Magma Partners: valuations in Latin America. I hope Latin American founders take a look at this article before they start talking with venture capitalists, so that we can start a conversation. I also hope that more US, Chinese and Latin American investors get in the market, and that more US, Chinese and Latin American companies start making acquisitions so that this valuation gap can change. From the article:
Latin American startups haven’t had the same valuations as Silicon Valley startups. This frustrates many Latin American entrepreneurs seeking investment, as they don’t understand why Latin American VCs aren’t doing deals at Silicon Valley valuations.
There are important reasons why Latin American early-stage investment valuations are lower. For one, there are few acquisitions in Latin America, and when acquisitions do happen, they tend to be at lower valuations than their counterparts in other parts of the world. VCs need to make returns, or they’ll be out of business. Therefore, if exits are lower, the initial price that venture capitalists pay must be lower.
But what other reasons are there for this? Why are there still so few Latin American exits and why are they at lower valuations compared to their international peers? Here are just a few of the reasons.
Read the rest of the article 6 reasons why Latin American valuations are lagging behind Silicon Valley on The Next Web and if you have any feedback, would love to hear about it in the comments here.