Mexico City — News about investment rounds in startups has become a constant in the Mexican business world, and each announcement is perceived as a milestone in the growth and value generation of startups. But, in general, little is known about the initiatives prior to reaching a Series A investment round, by which time startups already have a completed and operating project.
Usually many of the institutional investors in Mexico participate in rounds subsequent to pre-seed or seed capital, since the risk of investing is diluted as entrepreneurs advance from development to implementation of their ideas.
In recent years, the growth of the entry of new investment vehicles in Mexico focused on early-stage startups has slowed, according to data from Mexico’s private equity association AMEXCAP.
This complicates the procurement of capital for entrepreneurs and the expertise needed to get their ideas off the ground, and specifically those who have not proven their capabilities within the startup space.
Despite this risk, there are initiatives such as Nido Ventures, which seeks to accompany the initial stages of investment in Mexico and Latin America.
“The earlier the stage, the more risk there is, but that does not mean it isn’t a stage that should be explored, and we want to change that,” said Emilio Rivero, co-founder of Nido and former regulatory strategist of the cryptocurrency platform Bitso, in an interview with Bloomberg Línea.
Nido Ventures is made up of a quintet of young people, which in addition to Rivero, includes María Gutiérrez, Renato Picard, Ana Carolina Mexia and Javier de la Madrid.
The team brings together experience in large international technology companies such as Tesla, Apple and LinkedIn. The team has also experienced being entrepreneurs first-hand , founding companies such as the mass transit app Urbvan, or seeking to bring investment to the mass market through platforms such as GBM+.
According to three of its co-founders, Nido seeks to provide a platform for investors who wish to explore and participate in the entrepreneurial space, and also seeks to collaborate with larger funds that wish to make earlier stage investments.
Nido’s idea is to “take the adversity out of risk” by accompanying investors, and to enable entrepreneurial growth.
“If capital comes in at the grassroots, you start having more companies. You start to have more investment, and that makes it snowball,” Rivero said.
Nido aims to have smaller participants so that individuals can gain exposure to these companies, but the model also considers encouraging the participation of larger funds.
Entrepreneurship is Everything
Nido Ventures is on the lookout for entrepreneurs who may not have the background, which others do, to access capital, and the entrepreneur’s knowledge is one of the foundations for making investment decisions.
“There is a very strong barrier to entry,” said Maria Gutierrez, co-founder and managing partner of Nido Ventures. “Our thesis is economic, but also social, we want more people to dare to launch ventures.”
The company openly seeks to encourage the participation of women and engineers in its teams; both Gutiérrez and Mexia are software engineers.
In addition to capital, the five founders also provide advice and support for the diverse needs that companies have.
“More heads that can serve as advisors. We all have an entrepreneurial spirit,” said Nido co-founder Ana Carolina Mexia.
One of the main pain points they have identified is, for example, recruitment. “We are there for what the company needs, and every company is different,” said Gutiérrez.
Demystifying the ‘Tech’ Moniker
So far, Nido has three companies in its portfolio.
Cheaf, a platform that seeks to put an end to food waste in stores and restaurants; Palenca, an application programming interface (API) to validate employment data; and Konta, that provides accounting solutions for small and medium-sized businesses.
All three have technology as a common denominator, Mexia said.
Nido’s search is focused on businesses that are being built in a digital way, that are scalable, that require engineering teams, and that seek to solve some of the big problems that exist in the region in a novel way.
“It’s not just about grabbing an operational scheme and putting up a website,” Rivera said.