Bloomberg Línea — Despite having pursued a multifaceted professional career, Marcos González felt he was not having a real impact on society. The US citizen of Mexican parents has been an entrepreneur, a high-level manager and a key player in an investment fund, but he wanted more, and came up with the idea of creating Vamos Ventures, a venture capital fund focused on the Latino community in the US.
González decided to invest in “a human asset that has a lot of value, that is very capable and that other investors don’t know about,’’ he told Bloomberg Línea about how he targets Latinos.
When he launched the fund in 2016, his goal was to raise $25 million, but he doubled his expectations and raised $50 million, an amount that is already in the process of being invested in Latino entrepreneurs, some of whom are immigrants.
Gonzalez was born in Los Angeles, to Mexican parents.
“My parents were humble, but they were always focused on education,” he says, adding that they gave him the impetus to study business at Brown University and pursue a master’s degree at Harvard.
A mix of tech and business, with a Latino identity
After completing his master’s degree, González settled in Mexico as part of his work at US firm Boston Consulting Group, and later moved to Buenos Aires in the 1990s, experiences that enabled González to reconnect with his Latin American roots.
After that experience, Gonzalez began working at an investment fund in Washington, DC focused on investing in the US and Latin America, in countries such as Brazil, Argentina, Chile, Colombia and Mexico.
With that background, he co-founded an e-commerce platform for industrial and heavy construction equipment rental in the early Internet era of the late nineties and early 2000s.
“In New York we raised some capital and after four years we sold the company to Phelps Dodge Corporation, the largest mining company in the United States, which was our investor,” he recalls.
He then returned to Washington to join Darby, a private equity investment fund, which was later acquired by Franklin Templeton.
It was then that he asked himself what his purpose in life was. Gonzalez wanted to make an impact with his work, so he blended his experience in the investment world, as an entrepreneur of a technology company and as a Latino of Mexican origin in the United States, to launching Vamos Ventures.
Recognizing and fostering Latino entrepreneurial talent
Thanks to his Latino roots, González has worked in a more egalitarian and diverse entrepreneurial ecosystem. As both a US citizen and a member of the Latino community, he knows the social and economic importance of Latinos.
“Of the 60 million Latinos in this country, a large percentage of that number were born here,” González points out, but adds that the community of US-born Latinos struggles for recognition.
“Even though we try to speak Spanish and we like Mexican music, we are not immigrants, we are not something different from Americans, we are equal and, what’s more, we are the future of this country,” he says.
According to a 2021 Bain & Company study, Latino-owned companies receive less than 1% of funding from leading venture capital and private equity investors.
“Investment funds in the US don’t invest in this community because most investors in the US are not Latino,” González says.
But González is working to make a difference in that regard.
The Latino community in the United States cares more about climate change than non-Latinos.”Marcos González, founder of Vamos Ventures
So far, he has invested in 25 startups, around 12 of which were founded by immigrants, with funding of between $500,000 and $2 million.
González sees underinvestment in US Latino startups as an advantage in finding the best entrepreneurs in any given area.
Latinos in the US who found startups, he says, are capable, creative, innovative and feisty, which is very important for an entrepreneur in founding a company.
And, for the most part, they have a connection to Mexico.
“They are of Mexican parents or grandparents, and others are of diverse origin; Peruvian, Dominican, Puerto Rican or Colombian”.
Vamos Ventures’ investment model is to inject capital in early stages, seed rounds or Series A, in four sectors: health, financial, the future of work, and sustainability.
In the latter sector, González says, “it turns out that the Latino community in the United States cares more about climate change than non-Latinos”.
And although Vamos Ventures does not invest in all the startups that apply for funding, the firm maintains a certain relationship with their founders, offering feedback and the opportunity to connect with other more experienced entrepreneurs.
“Yes, we are investors, but we are more than that, we are part of the Latino community and leaders in this country,” González says.
Combating risk in times of crisis
In times of crisis in venture capital, Latin Americans are among the most-affected entrepreneurs, González says, as when capital becomes scarce it is more difficult for a Latino to raise the desired amount to grow his or her startup business.
“Normally, if a non-Latino raises $5 million in a seed series, a Latino is going to raise $3 million,” González says, based on his experience.
This has a direct implication on what can be achieved, he points out.
“Those who raised $5 million have more runway to reach their milestones, to prove that the business really has possibilities, but the Latino has a shorter time, so that hurts them,” he says.
“When risk investors are more cautious, they prefer to make safe investments, he explains. But a Latino is more or less new to the technology industry, and is riskier, because his surnames are different, his customs are different, and maybe he didn’t go to Harvard or doesn’t have family working in transnational companies,” according to González.
In Vamos Ventures the challenge of risk is also latent, as in any investment fund. But González is developing an internal process to effectively evaluate and make investment decisions that yield positive results.
Vamos Venture will soon raise a second $100 million fund with which it will start investing in startups in Mexico by 2023, he says.
González believes that, although there is a lot of capital entering Mexico today from investments and investment funds from the United States, in two years, many of them will probably not invest any more because they will prefer to return to invest in the United States where they know the market and the risk.
The abundance of investment for startups in Mexico and Latin America in 2021 will not last forever, Gonzalez warns, and “there will be a correction there and it will be dramatic”, and, at that time, more investment funds like Vamos Ventures, by Latinos for Latinos, will be needed, he says.