After many years of working with their team, we are excited to announce that we are joining forces with the Guadalajara-based accelerator Rampa!
We hope that through this acquisition we will establish Guadalajara as a beachhead to both invest in Mexican startups, as well as to help other startups from the region and the US open operations in Mexico, making Latin America’s second-largest market a key part of our investment thesis.
Over the years, Guadalajara has become an important hub for tech companies, churning out some of the most talented engineers in the region. Its proximity to Silicon Valley and high concentration of engineering talent makes it an ideal base for deepening our roots in Mexico, where we’ve invested in 12 Mexican startups including Albo and Moons.
By combining operations, Mak Gutierrez, Rampa’s founder, will join our team as CEO of Magma Infrastructure. He will run our a16z-inspired internal agency designed to support our portfolio of over 75 Latin American startups to generate sales, create partnerships, and scale more quickly.
“I’m excited to double down on both Guadalajara and our Infrastructure team,” said Nathan Lustig, Managing Partner at Magma Partners. He added, “Under Mak’s leadership, I’m confident our Infrastructure team will be able to help make our portfolio companies more successful.”
Rampa’s Alexa Clark Ibarra, will also join our GP team as an analyst, leveraging her experience recruiting startups to Rampa’s accelerator programs.
“I love supporting early-stage startups. It’s been my passion for 15 years. By joining Magma Infrastructure, I get to lead a team that’s supporting startups and building the ecosystem not just in Guadalajara, but across the region,” said Gutierrez.
As a result of the acquisition, our team has grown and its 15 members are now distributed across Guadalajara, Mexico City, Bogota, Santiago, Buenos Aires, and the US.
We look forward to working with our Guadalajara office to help startups from both South America and the US accelerate their expansion into the Mexican market!
As we have grown, our team has become larger and more distributed. For monthly all-hands meetings, our nine-person team comes online from the US, Mexico, Colombia, and Chile, and we depend on Google Cloud for these collaborations.
We were pleased to be featured in a recent Google Cloud case study about how we use the entire G Suite to meet with hundreds of entrepreneurs and investors across Latin America and Asia every year. These tools allow us to centralize information for our distributed team, coordinate meetings, collate critical data, and help startups make the connections they need to grow.
“The vast majority of startups in Latam do not fail for lack of money but lack of contacts and experienced people who constantly provide feedback, which has been fostered by G Suite,” said Managing Partner, Nathan Lustig.
G Suite provides us with the infrastructure we need to support over 53 startups in nine countries across the region. To learn more about our Google Cloud case study, click here.
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.