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.
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: (more…)
Decide why you want to be a thought leader — To make yourself feel good? To be “famous”? To get invited to conferences to speak? To drive leads for your business? To start a consultancy? Something else? Pick your goal and work backward from there.
Have useful thoughts — It should go without saying, but thought leaders should provide useful content that helps people understand the world better. If you’re trying to be a thought leader simply regurgitating mealy mouthed, hedged thoughts of others, you’re likely a social media personality, not a thought leader. (more…)
Mexico has all the right ingredients for an e-commerce boom: a young, tech-savvy population, rapidly increasing Internet penetration, and access to the world’s biggest e-commerce retailers, namely Amazon, Walmart, and Alibaba. In fact, Amazon and Alibaba have been vying for territory in Mexico’s e-commerce space for the past three years, betting on explosive growth.
While Mexico accounts for 12.6% of Latin America’s online purchases, only 1.6% of Mexico’s retail spending is conducted online. As Latin America’s second-largest e-commerce market, Mexico is poised for an online retail boom as Internet services reach more and more of the population.
Mexico’s strategic location close to the United States has a lot to do with this market’s growth potential. As one of three partners in the US$1.2 trillion NAFTA trade deal, Mexico is uniquely well-connected to the US and Canada, making international e-commerce much more available to the population.