Author: Sophia Wood

Magma Partners invests in EdTech Ubits

Ubits is a Colombian corporate learning platform that provides online courses for large corporations in Latin America. UBits currently has over 10,000 enrolled students and more than 200 e-courses available online.

More than 80,000 professionals at 70 companies across Latin America have been able to develop their skills through the platform, which offers a reduced training cost of 40% for enrolled companies. 

The online platform offers e-learning courses called ‘Bits’, specifically designed for rapid learning. Courses include marketing strategies, sales, and customer services, such as client communication and improving the user experience.

We’re excited to invest to support UBits founders Marta Forero and Julian Melo.

Leading UBits, Marta Forero was the only Latina woman in her Y Combinator cohort, and still one of very few to have participated. She continues to break barriers for women in the LatAm tech industry through the success of UBits, both in Y Combinator and in the company’s rapid expansion through Peru, Chile, and Mexico.

Magma Partners Invests in Dataplor

Dataplor is a small business intelligence platform providing valuable information on SMEs in emerging markets that are often not yet listed online. Through hand-collected and verified data the company aims to combat the issue of untapped business data in emerging markets through the use of hyperlocal information that can benefit global companies.

Dataplor now has over 100,000 ‘feet-on-the-street explorers’ tasked with collecting key information from small businesses such as exact location, opening hours, owner’s names and contact info, and payment methods, which is then connected to larger companies such as American Express, iZettle, PayPal and Google in Mexico. Prior to Dataplor, more than 80% of these SMEs had no digital footprint at all, making them untraceable for both customers and global partners.

Dataplor was founded in 2016 by Geoffrey Michener and is based in Los Angeles, CA and Mexico City. They are currently active across Latin America, collecting data in some of the major emerging markets in the region, including Mexico, Brazil and Colombia.

Magma Partners invested alongside Quest Venture Partners, Blue Startups, ff Venture Capital, and Sidekick Fund.

In Mexico, where 80% of businesses don’t have any digital footprint and less than 5% have a website, Dataplor is filling in the gaps left by Google and other major databases that have not yet reached these markets. With Dataplor, the gap between global companies and Latin American SMEs is closing, bringing new digital distribution and investment opportunities for both sides.

Magma Partners’ Q1 2019 Update

The Magma Team together in the office in February 2018.

After an active 2018, we’ve continued to push forward in 2019. Since our last update, we’ve invested in 4 new companies from four different countries, including Base Operations. We’ve also continued to expand our team and the services that we’re helping to provide in the Latin American ecosystem.

We now support 51 companies in our portfolio, which now sell $29M+ each year, have raised $46M in follow-on funding, and employ more than 600 people worldwide. Our growing team provides diverse experiences and networks to our portfolio, including support in marketing, PR, DevOps, sales, and international expansion strategies and covers geographies like Chile, USA, Mexico, Colombia and China. We’re excited to further support the startups in our portfolio as they continue grow!

Check out the following overview of news from our fund and our portfolio for Q1 2019.

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Magma Partners’ Term Sheet Review (free for all startups)

In eight years of working in the Latin American startup ecosystem, we’ve seen a lot of term sheets. A term sheet is the document that defines the relationship between a startup and its investors, including potentially-confusing legal clauses surrounding valuation, preferred stock, vesting, and investment instruments. Despite the best of intentions, VCs often provide startups with term sheets that do not properly align incentives for a successful investment relationship.

In the worst of cases, we’ve seen term sheets that are abusive or exploitative to the entrepreneur, or deals that look more like private equity than venture capital. These issues generally arise from lack of experience, rather than bad will, but they can kill a startup before the deal is even signed.

Financing can be a sensitive topic, but transparency is always the best policy. Entrepreneurs shouldn’t feel they have to analyze their term sheets in a vacuum. Magma Partners is dedicated to developing a healthy startup ecosystem in Latin America. We will review any term sheet you have, at any stage, and give you feedback for free.

What is a term sheet?

A term sheet is a blueprint for your future relationship with your investor. If you think of your relationship with VC as a marriage, a term sheet is your premarital agreement.

What does a term sheet include?

As Brad Feld and Jason Mendelson said in their book Venture Deals (our top recommended VC book), every term sheet consists of two kinds of terms: economic terms that decide the return investors will get in a liquidity event, and control terms that allow investors to exercise control over a business or veto certain decisions the company can make.

What can potentially go wrong?

Couples can split up. So do VC and founders. And getting the term sheet wrong may lead you to lose control over your own startup if things go sour with your VC. Yet many entrepreneurs don’t focus on the term sheet because they lack fundraising experience, guidance from seasoned mentors, or a reliable lawyer who understands the needs of a startup.

Leveraging our experience to support entrepreneurs

Magma Partners has seen hundreds of term sheets from Latin America, the US and China since we got started in 2014. We have often reviewed term sheets for entrepreneurs outside of our portfolio to support the ecosystem. We can recognize a term sheet that exploits entrepreneurs and establish unfair terms for the VC. We’ve seen entrepreneurs make mistakes that are totally avoidable. We have decided to offer our experience to help entrepreneurs build better companies and better relationships with venture capitalists.

Why are we doing this?

Our mission is to help startups grow to their full potential, but we can’t possibly invest in every single startup. Instead, we are giving back by trying to build a transparent startup ecosystem. We cannot achieve this goal without advocating for healthy relationships between investors and startups. Our term sheet review will help startups avoid investment traps so investors’ and startups’ interests are aligned from the start. We believe in paying it forward and this is one way we do it.

Questions about your term sheet?

Please send us a message through this form with any questions you have about your term sheets. We will happy to provide you feedback that we think best represents your interest.

 

Magma Partners invests in Keynua

Keynua is a platform for digital signatures that works to improve online identity verification through e-signatures and video identification technology.

The startup aims to establish a region-wide platform for identifying individuals and validating their transactions without the need for a notary, which will aid businesses in Latin America to streamline internal processes.

With Keynua, individuals record a three-second video where they verbally agree and ‘sign’ a document as well as providing proof of their visual identity as an alternative way of signing official documents.

Keynua was founded by Alfredo Granda, Inma Cañadas, Luis Alban, and Manuel Olguin in early 2019. The company is based in Lima, Peru and aims to expand into the rest of the country before scaling in the region.

Keynua is led by the same Peruvian team that created Cinepapaya, the largest movie ticketing service in the region until it was acquired by Fandango in 2016.

Magma Media: Content Marketing, PR, Growth for Startups

Most startups, even the ones in our portfolio, don’t do a great job on social media, PR, communications, or digital marketing. They might have a fantastic product and great clients, but many are dropping the ball on communications. They may not have social media profiles, or have placeholders that make their startups look smaller than they really are. Others don’t do any PR or content marketing. Others are throwing money at ads without creating tracking, landing pages and streamlined targeting.

Many of the entrepreneurs we support forget about their online brand. First-time founders, or even battle-scarred entrepreneurs, get caught up working on their product or business development. Or they think content marketing and PR won’t move the needle on their business. Or that they can’t afford agency services. We want the entrepreneurs we support to be focused on the most important things: sales and product, but we got tired of watching portfolio companies neglect the basics.

After working with 50+ startups at Magma, we can tell you: these strategies do work. Even an extremely lean business can benefit from basic content marketing and a social media strategy. It’s the first thing that clients, investors and journalists will see when they check out your business. Rightly or wrongly, first impressions make a difference.

We’ve taken the best practices from our top portfolio companies, combined with our own experience building the Magma Partners platform, and launched Magma Media to bring these services to our own portfolio companies. We’re inspired by Andreessen Horowitz’s in-house agency model. We believe that in Latin America, it’s even more important to add value to our portfolio companies. And we know great communications can help a startup succeed. They’re table stakes for every startup today.

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Magma Partners Invests in Base Operations

Base Operations is a security and risk management platform that helps people navigate emerging market cities with high crime rates and limited access to security data. 

Through intuitive heat maps, safe routing, check-ins, and geofenced alerts that mitigate risk, Base Operations helps keep global workforces safe and connected as businesses become more globalized. Founded in 2018 by Cory Siskind and Nick Gomez, Base Operations has its headquarters in Washington DC.

Magma Partners invested in the risk management startup to help the company’s sales and marketing efforts and continue its R&D.

Base Operations recently competed with the Techstars Impact Accelerator Program and is backed by leading VC firms like Glasswing Ventures and Spero Ventures.

The travel risk management market has a value of $11B and is growing 10% annually as companies expand operations internationally. 

The startup operates in 12 Latin American cities including Mexico City and expects to expand into Africa, Asian, US, and European cities by early 2020. Base Operations is currently also participating in a paid pilot program with Enel in Rio de Janeiro.

Magma Partners Invests in Truora to Help Eliminate Fraud in Latin America

Truora is a Colombian startup that aims to combat fraud in Latin America by providing instant background checks and identity theft detection services for businesses.

Truora was founded in 2018 in Bogota, Colombia by Cesar Pino, Daniel Bilbao, and Maite Muniz who shared a vision of helping the Latin American economy develop by increasing trust during hiring or transactions.

In just over a year of operations, Truora has already expanded into Colombia, Peru, Chile, and Mexico, and soon expects to be in Brazil. Magma Partners recently invested an undisclosed amount which will help Truora with its expansion throughout Latin America.

“We’re really excited to support the founders on their mission to eliminate fraud in Latin America. The Truora service is really valuable for many of our portfolio companies going forward,” said Nathan Lustig, Managing Partner at Magma Partners.

Truora has also received investments from Kaszek Ventures and Accel Partners. Among the 100 companies that Truora has helped process background checks are Rappi, Uber, and Davivienda.

“I decided to launch Truora because I wanted to give back to the region where I was born by solving a big problem. I’m happy to partner with Magma Partners to make this a reality,” said Daniel Bilbao, CEO and cofounder of Truora.

Although Truora is based in San Francisco, California, the bulk of its operations are in Cali, Colombia, and Mexico City.

Fraud detection and background checks are an essential piece of the Latin American infrastructure that Truora will solve as Checkr has in the US market.

Nathan Lustig’s advice for startups on Parallel18’s “Mentored” Series

Our Managing Partner, Nathan Lustig, recently appeared on Parallel 18’s “Mentored” Series to provide tips and advice to startups and VCs operating in the Latin American ecosystem. Here’s what to expect from the episode:

  • What VCs look for when they are analyzing Latin American startups
  • How startups and VCs in Latin America can align incentives for better outcomes
  • How US and Chinese investors analyze companies in LatAm
  • Tips for Latin American startups looking to raise capital outside the region
  • Why Puerto Rico is a great place to start a startup

To hear all of Nathan’s advice for startups and VCs, check out the video above for the full episode!  

What can startups and traditional businesses learn from each other?

What do startups and corporations need to know about each other? Our Managing Partner, Nathan Lustig, was recently in Mexico City for the 29th Annual Consejo Empresarial de America Latina (CEAL) to talk about just that issue. The event united business people, investors, entrepreneurs, and politicians to talk about how to support tech, innovation, and business across Latin America, from Mexico to Chile.

Distinguished guests included Mexico’s President-Elect, Andres Manuel Lopez Obrador, exiled Venezuelan politician, Antonio Ledezma, and Ex-President of Colombia, Oscar Naranjo. These presenters spoke of regional alliances and improved international ties, including with China, to help support Latin America’s budding ecosystem. There is a clear, and well-recognized need, for governments and corporations to lend their support to the private investors and actors in the tech ecosystem.

“Big corporations in Latin America are beginning to feel the threat from startups and are looking to partner, support, and innovate alongside smaller tech companies. For example, in retail, we have seen a spate of acquisitions – such as Walmart and Cornershop, and Falabella and Linio – that point to the fact that corporations are seeing startups as potential collaborators and competitors,” said our Managing Partner, Nathan Lustig. “This change is an opportunity for startups and corporations alike to learn from each other and improve services for their customers.”

Several Magma portfolio companies had the opportunity to present at the event, including Omnibank (previously Portal Finance), Workep, BrainHi, and Albo. These startups were among 25 companies chosen from across Latin America to present for the politicians, executives, and angel investors who attended the event.

Diego Caicedo, CEO of Omnibank, said of the event:

“We work with a lot of traditional businesses, like investment banks, who are just beginning to see opportunities in working with startups. This event was an opportunity for us to meet some of the most important actors in Latin America’s private sector and understand how we could work together.”

Nathan was invited to speak on the Venture Capital panel at the event alongside other regional VCs like Federico Antoni of ALL VP, Sebastian Vidal of Parallel18, and Hector Sepulveda of Mountain Nazca. The panel was moderated by Nicolas Kogan, Puerto Rico’s CEAL president.

“Startups can learn a lot from traditional business-people – and vice versa. This event allows startups and founders to interact with major players in their industry and learn from their experience, and for traditional business owners to explore potential partnerships with people who are innovating in their industry. It is a great place for fostering collaboration,” said Nicolas Kogan about the CEAL event.

We were thrilled and honored to be invited to present at the event, and to be able to support our companies that were able to join, as well. CEAL was an incredible way to bring together all the biggest actors in Latin American business, from politicians to first-time founders, and discuss the future of the region.

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