Iván Montoya on the Ángeles de LatAm podcast

René Lomelí Ojeda, in the latest episode of his Ángeles de LatAm podcast by 500 LatAm, interviewed Iván Montoya, Managing Partner at NuMundo Ventures, a seed and pre-seed venture capital fund.

In this interview, Iván, considered a super angel having invested in over 50 Latin American startups, shared his journey of building his reputation and personal brand within the ecosystem. He also discussed his connection with Latin America, his introduction to the startup world, and his early years as an investor.

• Who is Iván Montoya?

I was born in Colombia, but we moved to the United States when I was 1 year old. My parents came from large families, so we used to travel to Colombia for summers and Christmas until 1988 when we were there during the assassination of a presidential candidate. Still, I have the best memories of that country; it has always been very important and special to me.

My parents were doctors, and I was supposed to be one too, but I wanted to study and learn something that might help Colombia in the future. So, I ended up studying economics and wrote my thesis on the economy in Colombia. I worked for McKinsey for a while and was involved in a project in Mexico City in 1993. I liked being there, but it was dangerous at that time; kidnappings were starting to happen, and I thought my opportunity to do something in LATAM had closed. So, I went back to Stanford Business School to get my MBA, and I stayed here.

Over the next 25 years, I worked in various technology companies, from Yahoo in the first 5 or 6 years to all sorts of startups, some of which were hugely successful. I was an employee in a company that was sold for a billion dollars, but there were also others that went bankrupt. So, I've seen everything that happens in the startup world, both the good and the difficult.

I returned to Colombia in 2013 to visit an MBA classmate, and I remember things were better, but not as I had hoped. Five years later, when my eldest daughter graduated, we went to Bogotá, Cartagena, and Medellín, and there, I saw a different country.

When I returned, I called a friend of mine, Alex, who is Cuban-American. We met at Harvard, and he was the CFO of a very successful company. I said to him, 'I think the next 20 years are going to be very important in Latin America, and we should get involved and support entrepreneurs.' Six months later, I received a call from the founder of Picap, a Colombian company. It was before the pandemic; they came to Menlo Park, we met, I liked what they were doing, I invested $25,000, and I helped them raise capital. It was challenging, but they raised funds.

And that's where my journey as an angel investor began.

• Where does the ability to become an investor come from? How does someone transition from being an operator to an investor?

Firstly, there has to be some liquidity event; that's very important. But, on the other hand, I have been in this ecosystem for a long time; my wife worked for eBay and then for Coursera. So, I am learning from everywhere, and I am a part of this Silicon Valley environment.

But becoming an investor comes from being very curious. I started listening to the podcast 'This Week in Startups' by Jason Calacanis, which helped me learn about startups. I remember hearing his story about how he invested in Uber and other companies, and later, he released a book called 'Angel: How to Invest in Technology Startups,' which was very fundamental for me.

I had the idea that I wanted to do something, but I wanted to have a different thesis. Maybe I could be one of thousands of angels here in Silicon Valley, but in Latin America, I could be a bit different and see opportunities from a different perspective.

• So, in 2018, a trip to Colombia inspired you to start with this thesis, and you made that first investment in Picap. At that time, did you already plan to become what you put on your LinkedIn as a 'super angel'? How did you transition from that first investment to the 40 you have today, was it a plan or coincidence?

It was a very organic process; I can't tell you that making 40 investments was a big plan. I started reading a lot about how to be an angel. I was inspired by this book by Jason Calacanis but also by Andy Rachleff, who was the founder of Benchmark Capital and is now the CEO of Wealthfront and a professor at Stanford. He talked a lot about different types of investments and different stages. He once said that if you are going to invest as an angel, you need to have a large portfolio of at least 30 companies because that way, you have a better chance of supporting someone building a company.

So, I think I didn't make my second investment in Latin America until a year after Picap because I was learning a lot, and I had this idea of having at least 30 companies. All my decisions after that were made with very strong discipline, although I thought it would take 10 years, not that I would achieve it in 4 years.

• Why did you decide to stop being just an Angel Investor, invite others to invest through a fund with you, and now have the responsibility of other people's capital with NuMundo Ventures?

I thought I would invest in between 3 or 4 companies per year to reach my number of 30 in 10 years because I believed that being here in Silicon Valley, I wouldn't have access to companies in Bogotá, Mexico City, Santiago. But many things changed. Firstly, we had a pandemic, and I started having video calls. Secondly, I think it was the effect of Y Combinator (YC) on the ecosystem that increased credibility. That was very important. And thirdly, it was that several of the companies I initially invested in did very well; there was very strong traction, and I decided to focus full time in 2021.

I started seeing in the feedback from entrepreneurs that my way of working with them was different, and I began to see that there was an opportunity to build something bigger. Moreover, there had to be 100 Iván Montoyas in Latin America to support the level of opportunity there, especially in the early stages of pre-seed and seed.

At the beginning, putting in $25,000 or $50,000 is good, but if I can support with $200,000, $300,000, or $400,000, why not do it?

• You were disconnected from Latin America for a long time; how did you start building a network and a personal brand within the ecosystem? What has worked for you to start building that reputation?

I made the decision in 2021 that this is what I wanted to do, and from that moment, I had more focus. I didn't know I was going to have a fund; I thought I was going to continue being an Angel, but then I started, as we say in English, 'playing the long game.'

In the short term, I didn't know anyone, but I believed that in 20 years, I could get to know a lot of people. So, I started listening to podcasts in Spanish and English, anything related to Latin America. I invested in a fund, I was an LP in the early stages of Latitud. I remember Brian Requarth called me to find out who I was, and that's how I started. I met that team, I mentored with them, I went to all the demo days, and I visited them wherever they were.

I started little by little, but the funniest thing is that many people know me now through LinkedIn, which I started a year ago, with selfies with entrepreneurs and people from the ecosystem, and that helped me a lot.

For me, there are two very important things. On the one hand, my reputation with entrepreneurs, which I do through my WhatsApp channel, and on the other hand, demonstrating and creating a very large network. If you see my LinkedIn, I know entrepreneurs, other investors, other operators, etc.

• You have a very particular evaluation process; you like to work first with founders before committing capital. You once told me that you talked to more than 300 founders per year. How do you start working with them? Where does the conviction to make a capital commitment come from?

Being an entrepreneur is very complicated. I think many times in this industry, we do something that is bad, which is not talking about how difficult it is to be an entrepreneur. People talk more about those who have been successful. So, many people started to undertake, and that's good because we have more innovation and people trying to do something new.

But the reality is that entrepreneurship is more like climbing mountains; nobody thinks climbing Everest is easy; they know they have to prepare a lot to achieve it.

I say this because I have seen all kinds of people, those who have been successful and others that when you see their profile on LinkedIn, you know they won't succeed. I have supported both profiles, but I know that in the end, the person I invest in will be someone who studied in the United States, worked in a company in the ecosystem, speaks English reasonably well, and can tell a very good story. There are examples of people who have been very successful, and also many examples where it was a good idea on paper, but the reality was very different. Although, more or less, it has gone well for me.

I meet quite a lot of people, and if someone has metrics that are impressive or is doing something very interesting, I ask them if they are willing to talk to me a little more. I tell them that I would like to help them, assist them in their pitch, but I always like to understand a little more. Honestly, I haven't had anyone tell me no.

• Generally, how long does it take for you to make an investment decision? And how many working sessions with the founder?

Something I learned in this process is that if an entrepreneur needs the money tomorrow, I don't want to waste their time. They have to be willing to talk to me, have some sessions, and receive my help for free with everything I know as an investor. Because I want to understand and learn more to support them better and decide whether to invest or not.

This process can take a month or more, depending on each specific case. This process is very good for the entrepreneur, but also for me, as I learn much more about the business. If I have to make an introduction, I give that investor very valuable information.

Whenever I go into a meeting with an entrepreneur, I know that it's going to be the meeting that will change my life. I don't think that I'm going to change other people's lives; I think I'm going to be the one who is lucky enough to find the next Mark Zuckerberg a little earlier than others.

• Tell us, in summary, what is your investment thesis?

I focus on three areas in which I have been investing for four years: Fintech, Proptech, and Supply Chain.

I look for companies that I believe can have the ability to be profitable and grow very fast, and also entrepreneurs who are open to me getting involved before investing.

I think the part of my thesis that is a bit different is the focus I have on profitability because I believe that in Latin America, there are many businesses that, if they achieve Product-Market Fit, have no reason to burn hundreds of millions of dollars beforehand.

So, I like to support entrepreneurs who have this mindset of wanting to have control over their destiny.

• You mentioned a bit about the type of company and model you like to invest in. Tell us now, what is your average ticket size, in which region, and is your focus solely on Latin America now?

Yes, I focus entirely on Latin America, mainly because my network is stronger there. This year I am investing $150,000, but in the future, if I have strong conviction, I want to invest up to $400,000 in companies. Generally, I enter before they launch, but most of my investments are like pre-seed plus, a company that already has a product; we are seeing some signs of Product-Market Fit, so they already have something in the market."

•  I'm very intrigued by how your timing somewhat coincides with the hype in Latin America in your investments as an Angel, and now that you are much more convinced, raising a fund to invest much stronger in Latin America, the hype has ended, and potentially, many are investing less. What is your perspective, and what is the opportunity from your point of view?

I believe that the startup ecosystem in Latin America is similar to the United States in the late '70s, early '80s. At that time, Apple, Microsoft, let's say, their late '70s, was an explosion of entrepreneurship; I think we are in that same stage for Latin America. I'm investing as when Steve Jobs was starting Apple, that's how I see it, and I'm happy that fewer people are investing now.

There is so much friction in the most important aspects of people's lives in Latin America, and there is an entrepreneur who is going to help them with that. There are many things to do that can improve people's lives throughout this region.

• I like to close this podcast by asking you a lesson you have learned in these years of investing that might have served you to know before making your first investment.

I don't know if it would have changed or affected my investment in Picap, but something that would have helped me in the second year is that valuation, that is, the price, is super important. The reality is that when you invest in pre-seed and seed, you don't know anything, so the price becomes fundamental.

You can continue exploring this VC world and participate in NuMundo Ventures, delving deeper into Ivan's experiences and insights through his personal LinkedIn or interact with the entire NuMundo Ventures team on our website. We continue to empower and support the Latin American entrepreneurial ecosystem!