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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.

Magma Partners in China: Kr Space Seminar, CLACIE & Chile Week

The relationship between Latin America and China intensified over the past three months. Tencent invested US$180M in Nubank, Ant Financial invested millions in Stone Co’s IPO, and Beijing agreed to swap over US$18B in yuan for Argentine pesos.   

China’s relationship with Chile has grown, as well, as the Magma Partners China office has spoken at monthly events about investment in Latin America. During the past three months, Magma China co-hosted a seminar during a visit from Roberto Ampuero, Chile’s Minister of Foreign Affairs and presented at two significant events to increase people’s awareness of Latin America  as an investment destination.

Here’s how Magma has promoted Sino-Latin American investment in three events over the past three months.

September: Kr Space Seminar

Roberto Ampuero, Minister of Foreign Affairs of Chile, visited China after being invited by China’s Minister of Foreign Affairs, Yi Wang. During his three day trip, Mr. Ampuero presented during a seminar entitled “Chile, the Latin-American Center of Entrepreneurship and Venture Capital at Kr Space’s Zhongguancun Community at Beijing. Magma Partners collaborated with ProChile and Kr Space to co-host the event and generate more awareness of Chile in China. The event also included a presentation from Chris Martin, Vice President of Mobike’s International Expansion Department, who explained why Mobike is interested in LatAm and why they picked Santiago as Mobike’s first Latin American destination. Mobike has just landed at Chile this year and is planning to expand to other countries in the region over the next couple of years.

Chile’s stable economy and business-friendly government make it an interesting destination for Chinese investors. As Ampuero stated at the event, “Chinese enterprises are welcome to come to Latin America. Chile can offer varied talents. We encourage people to invest in Chile, to start a business here, and to talk to our younger generations to get to know the country better. Thus we build a bridge between Chile and China.”

October: CLACIE Annual Conference

Jie at CLACIE annual conference.

On Oct.30, The China-Latin America and Caribbean Investment Exchange (CLACIE), hosted their annual conference in Beijing, China, sponsored by IDB. This invite-only event gathered 125 people who are involved in  the China-LatAm investment relationship who would discuss Chinese-Latin American cooperation across several industries..

Jie Hao, Magma’s Chinese partner, presented at the tech forum as a panel speaker and shared his insights on the emerging LatAm tech ecosystem as a Chinese investor. “Early-stage startups from Latin America are unlikely to find funding in China, even if they visit many times, if all they do is do roadshows, so far Chinese funds have invested into companies in their B, or C round, with early stage being out of scope”

November: Chile Week

Jie Hao at Chile Week’s panel.

Two days later, on November 1st, the 4th Chile Week officially kicked off in Beijing. InvestChile organizes this event once yearly to promote understanding of Chile in China.  The event unites big names from Chile to present before a Chinese audience; Former President Eduardo Frei Ruiz-Tagle spoke alongside Chilean Ambassador to China, Luis Schmidt, Chinese Ambassador to Chile, Bu Xu, and Minister of Foreign Affairs, Roberto Ampuero. Jie once again spoke on a panel about the tech and financial connections between China and Chile.

During Chile Week, Chile officially signed and joined the Belt & Road initiative, China’s development strategy meant to boost multilateral connections, trade, and investments. According to InvestChile, this strategic connection positions Chile as the main hub for Chinese companies operating in LatAm and offers financial backup services to companies of both countries that assists with creating stronger tech innovation.

The Future of Chile – China

Recently, the ties between China and LatAm have been growing stronger. Unlike in the past, not just the construction industry  is receiving backing from the Chinese government. China’s private investors and companies have begun backing Latin American startups. China’s startups see Latin America as a potential market for their fintech solutions. The two regions grow closer with each coming month.

Our partner, Jie Hao believes there is a significant opportunity for Latin American entrepreneurs to visit China to learn about the Chinese startup ecosystem and see if they can apply the Chinese innovation experience to Latin America. “Chinese startups are already far advanced and under extreme competition. Latin America entrepreneurs will learn the best business models, the best technology, how their peers can survive in China, how to raise funds etc.”

Early this year, Magma Partners partnered with 36Kr and launched the first ever Sino-LatAm accelerator worldwide. So far we have hosted a series of events at embassies of latam countries in Beijing and Kr Spaces as part of our efforts to promote awareness of LatAm in China. We are watching China’s growing interest in Latin America and believe that China will have a strong influence in the region’s startup ecosystem over the next few years..

 

Nathan Lustig presents at the Peru Venture Capital Conference

Last month, Nathan Lustig gave a talk at the Peru Venture Capital Conference about the Latin American entrepreneurial ecosystem and how Magma is working to support startups in the region. In this talk, he shared how he started Magma Partners in 2014 and how it has progressed so far.

We believe that Latin America is at its inflection point. In the past few years, more US and European entrepreneurs have come to Latin America to develop their startups. At the same time, he has witnessed an emergence of Latin American founders that are striving for their ambitions.

Yet the infrastructure for entrepreneurship in Latin America is not yet fully developed. Magma has been working hard to push the ecosystem forward with entrepreneur-friendly deals, that try to break down invisible barriers of class, gender, and race that still exist in this region.

Magma has recently started to build more pillars for the ecosystem by creating partnerships and content that support the region. Noting the growing influence of China in Latin America, Magma and their Chinese partner, 36Kr, launched the first Sino-Latin American accelerator in the world. Nathan produces a podcast called Crossing Borders where he interviews Latin American entrepreneurs who have interesting stories that rarely reach an English-speaking audience. Magma also created LatAm List, a Latin American TechCrunch that shares regional startup news in English.

To view the whole talk please click here.

 

Magma Invests in Kushki

Kushki is a digital payments startup with expertise in financial technology and data security. They process more than $30M per year in online transactions, providing a simple and easy way for businesses to accept payments through the internet, mobile apps, and social media.

The Ecuadorian startup aims to reduce the number of cash payments in Latin America by offering a secure and easy-to-use service through which companies can accept online payments with efficient technology and reduced costs. Their innovative technology is the first of its kind in many Latin American countries and Kushki is the first platform to unite more than eight countries in the region under a single payment processor.

Kushki was founded in 2015 by Aron Schwarzkopf, Sebastian Castro, Madeleine Clavijo, and Daniela Espinosa. Kushki currently has offices in Europe, United States (New York, Boston), Ecuador (Quito), Colombia (Bogota), Chile (Santiago) and Peru (Lima), with headquarters in Brooklyn, New York.

Aron Schwarzkopf and Sebastian Castro began Kushki after their previous fintech business Leaf was acquired by Heartland Payment Systems in 2015. They decided to create Kushki to combat entrenched issues in their home country of Ecuador, and across the region.

Magma Partners is excited to invest and support Kushki’s growth into the Stripe for Latin America. 

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!

Magma Partners Invests in Cybersecurity Startup Kriptos

Kriptos is a cybersecurity startup that uses artificial intelligence to automatically analyze, classify, and label company documents to prevent data loss and protect crucial information.

Kriptos helps businesses save money by providing improved cybersecurity by identifying and protecting classified documents, and also teaches employees how to handle documents safely.

The company was founded in 2018 by Ecuadorian cousins Christian Torres and Alfonso Villalba and has rapidly spread from Ecuador to Chile, Colombia, Mexico and Peru within its first year of operations. 

Magma Partners invested in Kriptos in the pre-seed round with 3 other investors including Techstars and Kruger Corporation

Kriptos previously participated in the Techstars Barclay’s Accelerator Program in Tel Aviv, Israel, and in Start-Up Chile, and was selected by India’s Future Tech Festival as one of the 10 fastest-growing startups in the world in 2018. Kriptos currently works with over 58 companies in 5 countries.

Magma Partners Invests in BEXI

BEXI provides a smart design platform for marketing teams, offering products such as video content, digital advertisements, website design. 

Using data-driven design, BEXI creates high-quality products that ensure a unique and professional brand for marketing teams. With over 5,000 completed projects, BEXI is attracting clients with its flexible plans, affordable pricing, and quality products.

The startup was founded in 2016 by Rafael Arroyo and Cuco Vega, with offices in Guadalajara, Mexico, and San Leandro, California.

Magma Partners Invests in Peruvian Startup Chaty

Chaty is an online platform that sells and processes payments across social networks, such as Instagram, WhatsApp, and Facebook Messenger, through artificial intelligence technology.

With the aim of facilitating online transactions, their chatbots enable businesses to take orders and payments from customers with ease via instant messaging services.

Chaty allows customers to browse merchandise and make online purchases across social media channels. Customers receive immediate notifications of payments and can manage their purchases online. All payments and data are secured through SMS authentication managed by the ChatBots.

The Peruvian company was founded by Oscar Orlando Giraldo Castillo, Jorge Estrada, Luis Mayta, and Jorge Paredes in 2017. Magma Partners invested in Chaty in their seed round along with several Peruvian angels.

Chaty was a BBVA Open Talent finalist in 2018 and has recently completed Start-Up Chile, as well as receiving previous funding from Startup Peru.

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