Author: Nathan Lustig

Jooycar raises US$3M from HCS Capital

Jooycar is bringing the Usage-Based Insurance model to Latin America. Through a small device that plugs into your car, Jooycar has access to each vehicle’s usage metrics, which individuals and insurance companies can view through an app or on their online platform. Jooycar was founded by Maria Paz Gillet, Emilio Figueroa, and Mario Ungemach, a Chilean-Mexican team with years of startup and innovation experience under their belts.

Jooycar recently received US$3M in follow-on investment from HCS Capital, an investment fund based in Miami. Alex Horvitz and Luis Felipe San Martin, CEO and Managing Partner of HCS Capital, respectively, led the investment. We have invested in Jooycar twice as Magma since 2016 and are excited to add HCS as a coinvestor. Jooycar will use the investment from HCS to improve their platform and reach one million connected cars across Chile, Colombia, Peru, Brazil, and Mexico by 2021.

Jooycar is a perfect example of our investment thesis in action, as a startup that was founded in Chile that is now headed to the US. As a part of the investment, Jooycar will move its headquarters to the US to enter that market more smoothly. They have also added Rodrigo Labbe, ex Head of Marketing at DirecTV Chile, as new CEO, while Maria Paz will act as Chief Innovation Officer.

Maria Paz is a serial entrepreneur who started her career by building Chile’s first e-commerce platform. She went on to innovate within Cencosud, one of Chile’s largest retail brands, before leaving the company to found Jooycar. We have loved working with Maria Paz and watching her build Jooycar alongside her team. You can learn more about her story on Nathan Lustig’s podcast or in this article for Forbes about Jooycar.

Magma Partners invests in Chilean sports-streaming startup, Fanatiz

Fanatiz lets you keep up with Latin American football leagues from anywhere in the world. The service currently offers coverage of the Libertadores and Sudamericana Cups, and soccer leagues from Argentina, Brazil, Chile, Mexico, and Peru.

Founded in Chile in 2017, Fanatiz has its headquarters in Miami, while maintaining most of its operations in Chile. The startup also has offices in Spain and Argentina. We recently invested an undisclosed sum in Fanatiz to help the startup grow globally.

“We’re really excited to partner with Magma Partners as we continue our path of rapid growth and market expansion. With clients in over 100 countries, we place special value in Magma Partners’ vision and support for Latin American companies growing on the global stage,” said Fanatiz co-founder and CEO, Matias Rivera.

“Fanatiz embodies our commitment to helping Latin American startups tackle the US and international market,” said Managing Partner, Nathan Lustig.

The Fanatiz team was also selected by 500 Startups to participate in their Miami Growth program, alongside nine other startups from the US and Latin America.

After a little over one year in business, Fanatiz already has customers across the globe, including Pope Francis. The startup made the news last year when it provided the Pope with access to their app so he could follow his team, San Lorenzo, from the Vatican.

Expect to hear more about this dynamic startup in our quarterly updates!

Nathan Lustig’s Interview with Pedro Varas, CEO and Co-Founder of FounderList

Last month, I had Pedro Varas, the CEO of FounderList, interview me in Spanish on three topics: my personal journey, my view on the entrepreneurship ecosystem in Latin America, and vesting. You can watch the three trailers and find the links to the full interviews below. I hope you enjoy the videos.

Part 1. My Story

I was born and raised in Wisconsin. It wasn’t clear at first that I would follow the path to entrepreneurship since I studied political science in college. Then, in my freshman year, I couldn’t get season tickets for our football team,which upset me because I had been looking forward to the games quite a lot. I tried all means to find a ticket, and that is how I found out about a book exchange website at my university. I ended up buying the site with a friend and brought it to 175,000 users across  10 universities. After selling the site to another company, I started my second company, Entrustet, which aimed to resolve the issues of managing digital assets when someone died. This startup took me down South to join the pilot round of StartUp Chile, where my course changed. I eventually started my current career as a venture capitalist that bridges US and LatAm.

To view the complete interview please click here.

I also did a podcast in which Devin Baptiste from GroupRaise interviewed me in English. Check that out here if you are interested in knowing more details.


Part 2. Why Startups Fail

In this part, I talked about the startup ecosystems in LatAm, what will make an investor say no, why most startups fail, how I view the wage gap between US and LatAm, and which industries are the most promising for the region. When I first arrived in Chile, I saw there were many opportunities to improve the way business is done here. Following my entrepreneurial instincts, I stayed and became an investor. Fast forward to 2018, and things have improved a lot, yet there are still many opportunities. As the startup ecosystem continues developing, the time to invest in Latin America  is now. At the end of this interview, I recommend a daily practice to help every entrepreneur-to-be identify problems and create solutions.


To view the complete interview please click here.


Part 3. Vesting

Vesting is an important concept that many founders fail to understand. At Magma, we have rejected some good companies because they have founders who had left the company a long time ago but still owned a big share of the company. This is not fair to the founders who stayed and actually worked to make the company survive. In this video, you will find out what vesting is, why it is important, the difference between founder vesting and employee vesting, when to have an employee option pool and some cases.

To view the complete interview please click here.

Portal Finance secures US$200M partnership with BTG Pactual

Portal Finance originally came to Magma Partners in 2017 when the startup won our regional fintech competition. We provided them with US$50K of pre-seed funding when they were just “four guys in a closet,” as founder and CEO, Diego Caicedo puts it. Today, Portal Finance employs 70 people across Chile and Colombia and has issued over 700 loans to small businesses in the region. Portal Finance is an invoice-backed finance company that streamlines access to capital for small- and medium-sized businesses in Latin America.

Portal Finance uses electronic invoices to provide information to factoring companies to help them make faster and less-risky decisions about giving loans to small companies. This system means small businesses get loans quicker, and at lower rates than before.

Small businesses in Latin America often struggle to get credit because banks view them as a risky investment. Currently, supply chain financing and factoring are the only alternative financing options that 90% of small- and medium- sized enterprises around the world are able to access, and interest rates are typically 20% – 50% per year. Portal Finance gathers critical data from electronic invoices to evaluate and price a loan within just ten minutes, helping factoring companies, corporations, and their suppliers.  It was their unique approach to critical financing that brought us to invest in the company last year.

Magma Partners recently made a follow-on investment in Portal Finance through our Fund II, leading a US$1.6M round that will help the fintech startup reach profitability. Now valued at over US$60M, Portal Finance is one of the fastest-growing and most-dynamic startups in our portfolio.

“We believe that Latin America is a global leader in the factoring industry and the most developed market,” said Nathan Lustig, Magma’s Managing Partner, “and as the industry matures, new technology like Portal Finance’s will be needed in more developed markets, such as the United States.”

The partnership with BTG Pactual is a particularly exciting one, as Diego Caicedo notes it is the largest investment to date of a financial services firm in a Latin American fintech startup. Last year, Portal Finance launched a US$5M pilot program with BTG to test the possibility of creating a small business lending program through the investment bank. Today, Portal Finance officially announced a further US$200M partnership with BTG Pactual to continue developing their loan program.

“To build Portal Finance we had to connect a lot of dots and establish trust among many industry players, primarily the alternative assets team at BTG with whom we had a shared vision. By securing this milestone partnership with BTG Pactual, we can scale and execute our vision of transforming how SMEs finance their working capital needs across the region,”  said Diego Caicedo, CEO of Portal Finance.

This news was also recently covered in TechCrunch and on LatAm List.

Kr Magma Space Events in China

In January we launched the Sin0-Latin America Accelerator with Kr Space, one of the largest coworking spaces in China. We created initiative with Kr Space to help Latin Americans understand how they can leverage the Chinese market and for Chinese entrepreneurs and investors to better understand how they can do business in Latin America.

Since then, we’ve created monthly events with Kr Space to highlight individual countries and opportunities available to entrepreneurs and investors in each country. We’ve held events at Kr Space in Shanghai and Beijing, and at Latin American Embassies in Beijing. Here’s an overview of the Kr-Magma Space events in China so far this year.

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Magma Partners at the Santiago Google Cloud Summit

Last week, Magma Partners was invited to participate at the Santiago Google Cloud Summit, which brought together startups, investors and executives from some of Chile’s biggest companies to learn about the future of cloud technology. The summit had sessions on everything from machine learning to drone technology and showed Google’s commitment to empowering Latin American entrepreneurs and businesses.

We are thrilled to see the world’s biggest tech companies, like Google, seeing the value of Latin American entrepreneurship and helping these startups reach the US market.

We spoke to around 300 executives, entrepreneurs, and developers who were attending the event and approached us to learn more about what Magma does. The Summit brought together over a thousand people throughout the day, proving just how much of an impact Google is having on Chile’s tech ecosystem. It is hard to find a company of any size that does not use at least one Google product. We advise our portfolio companies to use Google Cloud products, including Google Drive, to manage information across remote teams and keep backups of important documents.

The event offered Magma an opportunity to engage with the enthusiastic tech community in Santiago, and to see the diversity of that group. The attendees ranged from top executives at companies like Cencosud and LATAM Airlines to young, eager entrepreneurs, all of whom were there to learn about cutting-edge technologies. In our conversations, we learned about dozens of new initiatives cropping up across the region and several intrepid attendees inquired about investing in startups alongside us through FounderList.

We are grateful to Google for organizing the event to support the development of entrepreneurship and tech innovation in Santiago, and for inviting us to attend! It was great to see the energy and enthusiasm of the participants as they took on challenging new topics in technology. We look forward to continuing to work alongside Google to promote and support Latin American entrepreneurship in the future.

Doing Business in Ecuador

I’ve been writing a series of blog posts about doing business in different Latin American countries. You can read the entire blog post about Doing Business in Ecuador on my blog. From the link:

Ecuador is a geographically small, Andean country rich in history and home to 16.1 million people, which makes it nearly the same size as Chile by population. The capital city, Quito, is officially recognized as a world heritage site by the United Nations. In recent years, Ecuador has transformed into a much more stable place to do business with one of the best performing economies in Latin America.

With relatively easy access to the US, many companies are coming to Ecuador to take advantage of its excellent trade routes, sometimes friendly trade agreements, and dynamic workforce. The minimum wage raised to $375 USD this year, ranking as one of the highest in South America. Ecuador’s close proximity to bordering countries, Colombia and Peru, make it a prime location for trade and a source for cheaper materials.

Read the rest of Doing Business in Ecuador.

Marco DeMello Psafe Podcast

Episode 23 of Crossing Borders Podcast with Psafe’s founder Marco DeMello, a Brazil mobile security company that’s raised more than $90M in venture capital to create a profitable business.

Outline of This Episode

  • [1:22] The new San Francisco headquarters for Psafe and how the company began and grew.
  • [7:11] The flip from desktop emphasis to mobile device emphasis.
  • [9:37] Marco’s experience in the military prior to getting into business and technology.
  • [13:40] Being part of “building the internet” as part of the Microsoft team.
  • [16:32] There are no stupid questions but there are stupid assumptions.
  • [22:35] The top misconceptions and best advice for dealing with security on mobile.
  • [29:06] Why Marco decided to leave Microsoft.
  • [31:52] How to ensure ownership happens in your company.
  • [38:17] The jump to starting Psafe and making the move back to Brazil.
  • [43:34] Advice to Latin American founders who want to find funding in Silicon Valley.
  • [47:12] The misconceptions about talent in Latin America and why they stay long term.
  • [50:59] Marco’s advice to himself if he were starting over today.

Resources & People Mentioned

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Greg Mitchell Investing in Peru Podcast

Episode 22 of Crossing Borders Podcast is with Greg Mitchell of Angel Ventures Peru. We talk about getting started in Peru, the ecosystem and more.

Outline of This Episode

  • [1:02] How Greg wound up in Latin America and what he’s doing now in Peru.
  • [3:18] The history of Angel Ventures and how the process works in Latin America.
  • [8:15] What it’s like to work locally to find investors and entrepreneurs to work with in Peru.
  • [15:03] The types of companies Greg is looking to invest in.
  • [19:05] Success stories from Greg’s work with startups in Peru.
  • [23:39] Why Greg loves living in Lima and Peru overall.
  • [26:53] The state of the Peruvian tech ecosystem.
  • [29:00] Where Greg sees the startup community in Peru heading in the next few years and why startups should consider working in Lima.
  • [31:55] Surprising things about the startup ecosystem in Peru.
  • [35:15] Who should contact Greg to see if working with Angel Ventures is a good fit.
  • [40:54] What’s next for Angel Ventures Peru?

Resources & People Mentioned

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Rocio Fonseca Start-Up Chile Podcast

Rocio Fonseca is the guest on Crossing Borders Podcast. Rocio, Start-Up Chile’s executive director, talks about what it was like starting up in Chile in the early 2000s, going to the US, working in Silicon Valley and coming back to Chile to lead Start-Up Chile.

Outline of This Episode

  • [0:13] My intro of Rocio Fonseca, Executive Director of Start-Up Chile.
  • [2:05] How Rocio came to study hard sciences at MIT.
  • [7:38] The patent Rocio created and the water treatment business she started as a result.
  • [8:55] The hardest part of a startup: How to communicate your vision.
  • [13:01] Lessons-learned from her time in Silicon Valley.
  • [16:28] The impact Start-Up Chile has had on immigration and the new tech visa process.
  • [19:40] The 3 different funding lines available through Start-Up Chile.
  • [23:12] Why is it so important to empower women entrepreneurs in Chile?
  • [27:05] Rocio’s best advice to women who want to pursue an entrepreneurial path.
  • [29:29] Biggest lessons-learned from 1500 startups about success in Latin America.
  • [35:23] Why should U.S. investors be looking at Latin America for opportunities?
  • [37:13] The advice Rocio would give to herself if she was starting over.
  • [40:19] The next big milestones for Start-Up Chile.

Resources & People Mentioned

Connect With Nathan

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