Two years ago my friend Diego introduced me to Francisco the head of one of Chile’s family offices. Francisco told us that he wanted to invest in startups and high growth small businesses not only because he thought Chile needed a fully private early stage startup fund to help entrepreneurs be successful, but also to potentially change how Chilean investors look at startups by showing them the way forward.
After working together for about six months, Francisco, Diego and I announced our first two investments, officially launching Magma Partners, a US$5M early stage investment fund powered 100% by capital from the three of us.
Our original plan was to invest in 4-6 companies per year, but we were inundated with qualified companies that needed capital, monitorship, connections and feedback from people who’d done it before. We received over 150 applications (more…)
Ever since I started blogging, I’ve done a year end post summarizing what I’ve done in the past year. These posts are mostly for me, so that I can look back and remember what I did, what I was thinking and what was important to me each year. Previous versions (2000s, 2009, 2010, 2011, 2012, 2013). Here’s what I did in 2014.
Like 2013, I rang in the new year on a friends balcony overlooking Santiago surrounded by friends, including my friend Polsky who was visiting from the US. Polsky and I took off for southern Chile, visiting Pucón, Frutillar and Puerto Varas during the first week of 2014. I was back in the south six weeks later when my parents and brother came to visit, adding Chiloé to the list. Every time I go to the South, I don’t understand why I don’t go more. It’s relaxing, stunningly beautiful, has incredible food and, in summer, has amazing weather.
I always come back from the south with new ideas, rejuvenated to get back to work and this time was no different. While 2013 was a year of starting many new projects, 2014 was the year that I focused.
In January, I partnered with Francisco Sáenz and Diego Philippito launch Magma Partners, a private seed stage investment fund and accelerator based in Santiago, Chile. Our goal was to bring US style investment and know how to Chile and pair it with Chilean connections and mentorship to help entrepreneurs create successful businesses.
A year in, I’m extremely proud to say that we’re already starting to see results. Over the course of 2014, we reviewed over 350 startups, met hundreds of entrepreneurs and finally invested in 13 startups. Running a fund has been much more work than I thought it would be. But it’s been worth it.
We’re already starting to see promising results from multiple companies, but 2015 will bring the hard part: helping our 13 portfolio companies make their way from nascent startups to real, scaling companies. I have high hopes and 2015 will be an extremely important year for Magma and our portfolio companies.
In addition to Magma, I started the year with four active projects Andes Property, La Condoneria, Startup Chile consulting and teaching entrepreneurship at multiple universities. By mid year, my head was ready to explode from so many different projects taking up brain space and I started to focus.
First, I realized that I was using the same part of my brain to mentor Magma companies as I had previously used to teach entrepreneurship at universities. I knew I had to stop teaching because I was getting mentorship overload, so I found other entrepreneurs to take over my classes. Next, I stopped doing Startup Chile consulting, as it was taking up too much brain space and tried to figure out how I could get La Condoneria and Andes Property to run more autonomously.
After a long search, I hired employees to help run La Condoneria and Andes Property, both of which continue to grow quickly month over month. At the start of the year, I was personally picking, packing and taking packages of condoms to chilexpress (chilean fedex) five times per week and was personally showing apartments to foreigners for Andes Property. I still work on both businesses, but Andres, Gonzalo and Bernadette have really stepped up to the challenge to take responsibilities away from me.
2014 was the year that I finally started to get better at spanish again after feeling like I’d plateaued in 2013. I still speak with a strong accent, but I can say 95% of what I want to say and am now happy making a joke per day, up from one per week last year. Baby steps.
2014 was the first time I wrote an entire post on my blog in Spanish and the first time one of my spanish blog posts went semi-viral in Chile. It was the first year I presented to large audiences in Spanish without notes, just like I do in English. I also did multiple radio interviews in Spanish for the first time. I’m still not as good as I’d like to be and I hate to see eyes glaze over because I’m not as engaging in Spanish and I am in English.
2014 was a great year for travel, as I explored Chile’s south on two separate trips to kick off the year. In February I took an incredible ten day trip to Uyuni, Potosi and Sucre in Bolivia. I’d previously been to Uyuni in 2011, but never to Potosi and Sucre, both of which were amazingly different from anything else I’d ever seen. I took a mile long tour of the Potosi mine, where miners as young as 10 years old use pick axes, dynamite, coca leaves, pure alcohol and their brute strength to try to scratch out a living. Sucre was an amazingly beautiful window into the Spanish Colonial past.
I took an express trip to Lima for the first time when my Aunt Nancy and Uncle Paul decided to come go to Machu Picchu. It was fun exploring old Lima with them and I ate the best meal of my life at Maido, a japanese/peruvian fusion restaurant. I can’t wait to go back to Peru to continue exploring the rest of the country.
I took three quick trips back to the US, one in late May to visit family, another for a friends’ wedding and the third for my group of college friends’ 10th annual Friendsgiving and the holidays with my family. I think I stayed better connected to family and friends by visiting more, but for shorter amounts of time each visit, a plan I’d like to keep up in 2015, rather than one 5-6 week long trip as I’ve done in previous years. It still isn’t fun to miss weddings, bachelor parties, thanksgiving, the Forward Festival and birthdays, but life is all about tradeoffs.
I made it back to Madison on all three trips, including an extended stay where my friends and I reunited for a weekend of Badger football and memories. I honestly can’t believe it’s been ten years since I started college. Time really flies. Madison is noticeably more dynamic each time I visit. The tech scene is on the leading edge of this new dynamism and I’m thankful and proud of Madison’s entrepreneurs for paving the way. Capital Entrepreneurs (made one meeting this year) and Forward Fest (sad I missed it this year) continue to be pillars of he newly emergent startup scene, with other entities and institutions arriving to continue to progress.
2014 saw me focus on two key businesses, continue to explore South America, attend a world cup and still stay connected with my friends and family in the US. I’ve been very lucky that the years keep getting better and better and I hope 2015 is no exception.
Favorite Posts of 2014
2014 was my lowest blog output in the six plus year history of my blog. And even worse, I didn’t make up for the lack of quantity with better quality. I’m not sure if its because I’m writing less or because my brain is getting mixed up because I’m speaking more spanish, but my writing is noticeably worse than in previous years. Last year 10 posts made my list. This year only four made the cut. I need to get back to writing more.
1493: Uncovering the New World Columbus Created – I learned more from this book and its companion book 1491 than I’ve learned in a really long time. 1493 talks about how things changed after Columbus arrived in the Americas. It busts myths, adds new facts and really made me think.
1491: New Revelations of the Americas Before Columbus – This book completely changed my understanding of what the Americas were like before Columbus and opened my eyes to some of the amazing things that native cultures in our hemisphere had done. Really worth reading and makes me want to explore Peru and Mexico.
Five Days at Memorial – An investigative journalist looks at what happened at Memorial Hospital in New Orleans before, during and after Hurricane Katrina where doctors potentially euthanized patients.
I haven’t written anything new on Staying out of the Cubicle lately, but that doesn’t mean I haven’t been busy! In the first six months since we launched Magma Partners, we’ve invested in five companies and with four more in the pipeline to close before the end of the month. It’s been a great ride so far and I can’t wait to help our portfolio companies continue to have success.
I’ve written a series of blog posts on the Magma blog that outline our vision for the Chilean and Latin American entrepreneurial ecosystem, plus advice on how entrepreneurs can find success more easily, one of which is already changing the conversation in Chile’s entrepreneurial ecosystem. We’ve been recently featured in Pousta and GigaOm.
Frequent mistakes made by Chilean Entrepreneurs
Since we launched Magma Partners, I’ve reviewed 300+ applications for funding, the vast majority from Chile, with some from Colombia, Argentina, Mexico, USA and Uruguay.
Of those 300+, we’ve invested in seven. I’ve met some amazing entrepreneurs and have learned from many of them. But the vast majority of companies we’ve reviewed have similar problems that prevent us from investing. I’m writing this post to try to help entrepreneurs who are looking for money avoid these mistakes so that they can be more ready to accept an investment.
Magma Investment Thesis for Chile and Latin America
At Magma Partners, we invest in the best entrepreneurs we can find. We would rather invest in an amazing entrepreneur with a mediocre idea rather than a mediocre entrepreneur with an amazing idea. An amazing entrepreneur can always change their idea. We also strongly believe that Magma must be able to provide direct help to each company we invest in outside of just money. If our only help is just money, it doesn’t make sense for us to invest in a startup.
Propiedad Facil – A property tool with all the tools a real estate agent needs to list, sell and rent a property.
Deenty – An educational platform that teaches spanish speakers everything they need to know about dental health and allows people to find top rated dentists, book appointments and access quality dental treatments at fair prices.
Petly – One stop shop for pet supplies and connections to pet service providers like veterinarians and groomers.
Ttanti – High quality watches made of handcrafted Chilean wood, swiss movements and Patagonian leather.
I’m excited to announce a new project I’ve been working on for the past six months: Magma Partners, a new seed fund in Santiago, Chile that invests in startups and high potential small businesses. Along with two Chilean partners, Francisco Sáenz and Diego Philippi, we’ll invest $25,000-$75,000 in 8-10 high potential entrepreneurs each year for the next three years. Some press: Andes Beat (en), Fayerwayer, Diario Financiero, Pulso Social, Pulso Social (en).
Our goal is to then provide follow on investments in the successful companies. We held our launch event last night where we announced the fund and our first two investments and it was a great time.
I’m excited to announce our first investment, Propiedad Fácil, a property portal and real estate service provider in Chile. I think Magma Partners represents an opportunity to help keep the Chilean entrepreneurial ecosystem’s momentum going since the Startup Chile burst onto the scene in 2010.
Ever since trying to raise money for Entrustet in Chile in 2011, I’ve seen an opportunity for a Chilean early stage seed fund that operates using best practices from the United States. Chile is a very conservative country, so most investors still treat startup investing as if they were investing in a bakery or a bank and try to get as much equity as possible in the first capital raise, killing startups in the process.
I strongly believe that a higher percentage Chilean entrepreneurs fail than they should because the nascent Chilean entrepreneurship ecosystem lacks high quality mentorship, people willing to connect startups to existing businesses and access to capital using US industry standard terms. The best Chilean entrepreneurs get their start and quickly move abroad to find funding.
Our fund aims to fill the niche of high potential entrepreneurs who are starting their business in Chile with the goal of expanding across Latin America. We promise to be transparent, use US industry standard terms, give real mentorship and help you connect with potential clients and investors in Chile, Latin American and abroad.
But we’re aiming much higher. One of the things that I like about Chile is that it’s small. With about 17m people, you can have a nationwide impact fairly easily. Our plan is to not only help the entrepreneurs we invest in, but also to be a real help to those who we can’t invest in. I believe that if we execute our plan, we may be able to change the culture in Chile.
We’ve partnered with the Kauffman Mindset program to give mentorship to both companies that we invest in and Chileans who are interested in starting a business.
If you’re an entrepreneur with a business based in Chile who’s looking for funding, please check out our site, fill out our application form and a partner will get back to you within 48 hours with a “no, it doesn’t meet our criteria and here’s why” or a “yes, we’re interested, lets set up a meeting!”