The Mexican background risk capital Angel Ventures began raising its third fund Latam Fund III and will open an office in Brazil, as part of a redesign of its investment thesis, which now includes the South American giant in the Latin American region and opens financing options to startups that are part of the Latin market in the United States.
Despite an adverse economic environment, with inflationary pressures and an increase in the reference rate of central banks, which has made the price of many technology shares ─a determining factor in the venture capital investments─ drop considerably, the new Angel Ventures fund will have a target size of $120 million.
“We believe that despite the environment, those who really know how to read between the lines will know that Venture Capital is a long-term countercyclical asset; that if you build a portfolio well, you resist the onslaught of exchange rate fluctuations and a whole series of macroeconomic adversities,” said Hernán Fernández, managing partner of Angel Ventures in an interview.
After confirming many of its partners from its two previous funds to raise this third one, the directors of the fund want to have a first closing of the fund in the third quarter of 2022 and close it definitively in the first half of 2023.
Pioneer
Angel Ventures is a pioneering fund founded by Fernández and Camilo Kejner in 2008 and since then it has been one of the leading venture capital funds (venture capital) most active in the region. In its 14-year history, the fund has invested in more than 80 Latin American startups.
Its first fund for 20 million dollars and 53 investors ─three institutional and the other 50, independent─, keeps its investments active in startups that have become unicorns, such as the Mexican clips. According to Fernandez, the AV Latam Fund Yo It is one of the funds with the best performance globally, which is why it has already returned capital to all its investors.
The portfolio of his second fund, the AV Latam Fund Iis also made up of popular companies in Latin America, such as man, Urbvan, ByHours, I value, Mall, Miituo, Digitt. Unlike its first fund, which was focused on Mexican companies, the second was aimed at startups from countries that make up the Pacific Alliance: Mexico, Colombia, Chile and Peru.
An evolution of the investment thesis in the raising of this second fund, according to Camilo Kejner, is the participation of corporate funds, as is the case of Nestlé, which gave them greater flexibility to participate in different rounds and made them the main supervisors of foodtech startups in Latin America.
Brazil and Africa
The investment thesis applied to this fund adds the Brazilian market to the countries that make up the Latin American region and for this reason, Angel Ventures will open an office in this country, due to the enormous size of the market. A second target market for this new fund is where entrepreneurs of Latin origin who live in the United States operate.
South to South adds to AV’s investment thesis as a strategy for the startups in its portfolio to expand to emerging markets outside of Latin America, on the African and Asian continents. The transportation vertical, for example, is much more replicable in African countries than in the United States or Europe, according to Kejner.
“There are many verticals where, for a manager who is not from the United States or Europe, it doesn’t make sense to look at these two markets. These verticals have gigantic markets that are in emerging countries,” he said.
Fernández and Kejner are aware that, being so broad, not all the companies in their portfolio are having a good time. However, they warn, many other startups are in good shape and some more will become leaders in their respective verticals. Despite the economic storm that hangs over our heads, they admit to being happy with how the current situation has found them.