Bloomberg Línea — It is not only companies that were founded by former employees or investors of Colombian startup Rappi that are strengthening the Latin American entrepreneurial ecosystem, as a group of experienced entrepreneurs are acting as angel investors, sharing their knowledge with the new generation of business founders.
Venture capital fund Bridge, the brainchild of the founders of Bitso, Ben & Frank, Zubale, Yalo, Fitpass and Cultura Colectiva, among others, is such a case in point.
“It all stemmed from the idea of entrepreneurs supporting other entrepreneurs. A couple of years ago, each of the partners of Bridge LatAm was making angel investments on their own, and we got together to make them together,” Patricio Aznar, Bridge’s managing partner, said in an interview with Bloomberg Línea.
Aznar says that they started investing in 2020, with a small fund, in 11 early-stage startups such as Quinio, Acasa, Mendel, Elenas, Aplazo, and Cubo, to name a few.
And today Bridge has a second fund of $15 million to invest. Part of those funds have already been distributed across investments in startups such as Kukun, Ozon, Plenna, Mox, Nuestro, Lang.ai, Sima and Refurbi.
“The concept of entrepreneurs investing in entrepreneurs was great, in the United States and Europe it is common, but not in Mexico and Latin America,” Aznar says.
With the outpouring of venture capital brought in by record-breaking foreign funds in the last two years, Latino entrepreneurs of fast-growing startups began the practice of becoming angel investors.
More angel investors in a more mature market
Ricardo Weder, CEO of Jüsto, is one of the entrepreneurs who has become a regular angel investor. The founder of the online supermarket told Bloomberg Línea that he has already invested in more than 40 startups, especially in Mexico, which is the market he is most interested in developing, although he has not ruled out investing in startups in other countries.
Weder said that whenever he invests, he always invests in startups where he can contribute with his experience and where he perfectly understands the problems they need to solve.
Some of the startups in which he has invested are Meru, Cargamos, Welbe, Jeeves and Clara. The latter two have already become unicorns, with a valuation above $1 billion.
The Latin American entrepreneurial sphere is growing very strongly, he says.
“Imagine, 15% of foreign investment last year was investment in startups, it’s crazy, and for those of us who have been in this for longer, five years ago it wouldn’t have been 0.1%,” says Weder, referring to the Mexican market.
And as for entrepreneurs investing in entrepreneurs, “two years ago there were very few of us investing, you could really count us on one hand”, Weder says.
Bridge is one of the first funds in Latin America made up of entrepreneurs, Aznar says.
What Daniel Vogel (CEO of Bitso), Eduardo Paulsen (CEO of Ben & Frank), Allison Campbell (CEO of Zubale), Federico Ranero (COO of Kavak), Liza Schvartzman (CEO of Fitpass), Javier Mata (CEO of Yalo), Miguel García (CEO of Infosel), Alejandro Maza (CEO of Analytics) and Luis Enríquez (CEO of Cultura Colectiva) did was to institutionalize the idea of entrepreneurial angel investors in a fund.
In Argentina, entrepreneur Pierpaolo Barbieri, CEO of the unicorn Ualá, is another angel investor who decided to form an equity fund called 17Sigma. The $30 million fund targets companies in the region focused on digitization.
Under the management of Bianca Sassoon, 17Sigma has already invested in early stage startups in Mexico, Chile, Colombia, Brazil and Argentina, such as the unicorn Jeeves, as well as Foodology, Ontop, Flevo, Buk, Trela, Truora, Pixel, Tarken and BHub.
Sophisticated entrepreneurs seek out the more experienced
A new generation of entrepreneurs is attracting more experienced entrepreneurs to invest in their talent. Not only is the startup ecosystem now more mature in the region, but also the talent.
“There are entrepreneurs, who already had one or two companies, then we invested more in that knowledge that eight years ago was not there, because entrepreneurs were just starting out,” says Aznar.
When choosing where they will place their investments, Bridge’s focus is 90% on the team, he says.
“We believe that at the moment we enter a company we have a lot to contribute, but at the end of the day these entrepreneurs are the ones who really know what they are doing, what their vision is, what their knowledge of the market is, and their differentiator.”
A large part of the new generation of Latin American entrepreneurs are former employees of the region’s big startups. Mainly from Rappi, the second most valuable unicorn in Latin America, with a value of $5.25 billion, which has given rise to the phenomenon known as ‘the Rappi Mafia’.
But, in addition, the founders of the Colombian app have also dedicated themselves to being angel investors. In recent months, Simón Borrero invested in e-commerce brand incubator Riogrande, and Sebastián Mejía in Chilean home medical services startup Examedi.
The co-founders of Kavak, the region’s most valuable unicorn worth $8.7 billion, have also invested in startups.
Loreanne Garcia Ottati recently invested in Mexican fintech Paisa, Carlos Garcia Ottati in Chilean fintech Xepelin, and Roger Laughlin in accessible medical procedures platform Tani Salud.
Engaged in the same trend, Aznar says Bridge aims to eliminate the idea that the investor and the entrepreneur are on separate sides. “We are one and the same, working for the same goal,” he says, adding that the goal is to build a stronger Latin American entrepreneurial ecosystem, more connected by a bridge between entrepreneurs and investors, hence the fund’s name.
The list of entrepreneurs who have become investors is long, and Jüsto’s Weder points to the great investment opportunity and the development of startups in the region.
“Despite the change of sentiment in the markets that we are now experiencing, in the long term the opportunity is very great, there are big problems to solve in our economies and our societies, and I believe that technology entrepreneurs can contribute a lot,” he says.
Translated from the Spanish by Adam Critchley