In this episode, Fernanda Assesto from The LatAm Venture Capital podcast, interviewed Ivan Montoya, Managing Partner of NuMundo Ventures a pre-seed and seed venture capital fund. Ivan is considered a Super Angel and has invested in over 50 Latin American startups. He previously worked at McKinsey and Yahoo, and received his MBA from Stanford and Bachelor’s from Harvard.
You have been really active in the LatAm startup ecosystem for years. What was your motivation to start investing?
It was kind of a personal motivation. I’m from Colombia and with my family we used to go back and forth during the summers and christmas time up until 1988, and I was there when the presidential candidate was assassinated. So when I finished my first year of college, both of my parents are doctors and I was supposed to be a doctor, but I told my mom I was going to finish pre-med requirements and then I wanted to learn something that maybe down the road could help Colombia. So I ended up doing economics and my thesis on the Colombian economy. Then I worked for McKinsey for a while and I was involved in a project in Mexico City for 6 months, that was kind of my way of getting back to LatAm, but the late 90s started to get very violent and I thought my window for Latin America had shut. So I went back to Business School in Stanford right when the Internet was booming. I end up doing all this stuff in technology.
24 years later in 2013 I came back to Colombia for the first time to visit a classmate of mine. And I remember thinking things were better, but not the way I had hoped. Five years later I came back when my eldest daughter graduated and we went to Bogota, Cartagena and Medellín and it was night and day. I remember coming back and talking to a friend of mine, a Cuban-American guy who was the CFO of a company then and I just felt that maybe that window that I thought was closed it suddenly opened again, and that my experiences and my growing up professionally in Silicon Valley over the last 20 to 30 years were an opportunity to give back. So I told my friend Alex, “I think the next 20 years are gonna be very big in Latin America, we should get involved” and maybe six months later, he gets a call from a founder in Colombia from a company called Picap. And I’ll tell the rest of the story later, but that was sort of the beginning.
I invested 25,000 into that company and that sort of began my journey of doing stuff and Latin America.
While listening to you I realized you were right there in Silicon Valley where the internet started
Yes, but it was so new and there were no social networks… The Internet really wasn’t there, right? I mean, it was there, but it was a very rough version of the Internet. It was basically magazines put online with super slow bandwidth. And maybe for the first year it was hard to tell what was going on. But by the time I graduated, eBay had gone public and all of the sudden our classmates and people we knew were founders. It seemed crazy at the time but also we knew we were in the middle of something special and realized that sometimes when there’s a window you have to go for it.
What your Angel investing method is like? and how your experiences as angel investors shaped your perspective now as you have your own fund?
I’m going to note two people who I believe created some inspiration in my career. The first one is the podcaster and investor Jason Calacanis. I remember listening to This week in startups, hearing his story of how he angel-invested in Uber and other companies, and later on came out with a book called The Angel that was very fundamental for me. By then I remember that when Picap came up, I didn’t have to think much about it. I saw the opportunity and I went forward. Another person who inspired me I believe was Andy Radcliffe. He was the founder of Benchmark Capital, and he’s now the CEO of Wealthfront and a professor at Stanford, and he once said that if you’re going to angel invest, you need to invest in at least 20 to 30 companies, otherwise the risk profile is too high.
I ended up between the two of them. I realized that I needed it to be systematic. So, I knew from the beginning, I wanted to invest in at least 30 companies and I knew I wanted to have a deliberate process. Have you heard the term “the fund size is the strategy”? Well, it’s the same thing for an angel. If you say you’ve got a budget of 100k dollars, right then, one way you figure out your check size is 100k divided by 30. Another way to think it is asking yourself what is the outcome that you want in the case one of them hits. I remember one angel investor told me It’s hard enough to find one that takes off that at least you want to put in enough capital, so that if it does take off, it’s worth something to you. So between all of these ideas I defined my strategy. I ultimately settled on 20k per investment to keep consistency.
Regarding my investing approaches, I think very similar to a VC. So I looked at a lot of companies, tons of deals and I basically look for four or five things. One general philosophy I have is that it’s not just the founder that matters everybody talks about. I think that the mythology of the great founder and no doubt the founders are important but I prefer to focus on what is the problem they’re solving. Is it really painful? How well do they solve it? What did your customer do and after a product, what was the impact? I also think the funding environment in Latin America is very difficult. So I like to invest in companies that have a potential to be cash flow positive before Series A. And I really admire founders who bootstrap. A lot of founders that I back either have been bootstrapping or bootstrap for a while, and I tend to work with them, anywhere from a month to three months, helping them before I invest. That’s an opportunity for them to evaluate me, but also for me to understand how they operate and get more conviction on what they’re doing.
I see that you focus on fintech, proptech and logistics. So how is your process of defining that and what aspects did you take into consideration?
It was a very organic process for me. When I did that first investment in 2019, I was open to investing in being an angel investor in Latin America but by no means I had a day job. I was working at a startup and so I didn’t have a master plan that says “hey these are the three sectors I’m going to go after”. But I would say the first year was very informative for me, because the more founders I met the more obvious it became to me certain areas of the economy that had tons of friction.
Regarding logistics, the first company I invested in was Picap and through Picap, I learned how bad traffic is in Latin America on a global level. And this company was focused on helping people with less income who get on a bus in Medellin and maybe it takes them two hours to get downtown because of all the stops and the traffic. If they took an Uber, maybe they cut out 20 minutes of that commute because they don’t have all the stops, but it still takes them a long time due to traffic. And then, for the price of a little bit more than a bus, they could get in the back of a motorcycle and be downtown in 20 minutes.
So that started the initial spark and I thought, if it’s that tough to move people, how terrible is it to move goods? how do people actually get goods from Point A to Point B? Is there an equivalent infrastructure? That’s when I met a company called 99 Minutos in March of 2020 and their whole idea was to build a commerce/delivery platform, an industry that was growing already, I remember hearing about MercadoLibre by then. So when you start doing more and more, you understand that the supply chain at all levels had friction.
A similar thing happened to me with proptech companies. I remember hearing the story about somebody from the US who moved to Mexico City and they said it was a terrible experience to rent an apartment because It was hard to tell what was available, compare prices, and specially get somebody to bachelor them, because there was this scoring system based on credit. That sounded like a nightmare to me, and It’s housing, one of the most fundamental human needs. So I thought let me start with the things that are most fundamental that have a lot of friction and where there’s lots of opportunity and as an angel. I needed to focus on something so that’s what I did. It was a little bit bottoms up and then some self-reflection.
Proptech and commerce are all related to the fintech industry, which is the largest vertical in Latin America. Which do you think is the next vertical that will have this amount of growth in LatAm?
This is somewhat speculative because I feel, especially as a solo GP and as an angel before, that I need to focus and there’s still so many opportunities in the three areas I focus on. But one area where I’ve been open to meeting founders and it’s somewhat out of my scope but it seems like a big trend is I guess we would call vertical SaaS, people building software for specific industries. I talked to a company from Mexico a couple days ago, Matilda, that is supporting private schools by managing tuition payments, so one could argue it’s fintech. So you start going into some of these markets and it’s like “wow”, that’s a big market.
One example related from the US is Toast. It was a point-of-sale software for restaurants and then they just expanded and started doing payments. So I think the vertical of software for specific industries is already growing and I’m guessing it’s going to grow a lot and it overlaps with fintech, because you have some fintech that start off as a fintech. There’s a company that I’m familiar with in Colombia called Finkargo and they focus on trade finance. They do some financial products so that the shippers/carriers get paid better but then it turns out they can build some software around it and get more into the workflow, like scheduling shipments and so on. So yes, you can sometimes start with a fintech product and start adding software around it, it overlaps, but I think SaaS is going to be a bigger trend in Latin America.
I also learned that recently that the Creator economy is actually growing us a lot as well in Latin America because Latin Americans are one of the largest consumers of social media content. Do you know anything about that?
I really don’t play in that space and it’s not to say anything negative about it, but I think in my perspective there’s value in getting some level of specialization so that you see enough companies in the space you can actually help founders because you’re seeing a lot of trends. But more as an investor, you can realize what’s an outlier versus not right. So regarding this you could say “Wow, I’ve seen 15 Creator tools companies and this one is different”. It’s not my thing but I’ve been pitched a lot of creator and economy related things, and I’m sure there’s going to be, hopefully, some really interesting companies in Latin America.
Following that interest for LatAm which are some characteristics you see in Latin American founders that you don’t see in the US?
I guess I can answer that in a cynical way and I could say that maybe founders in Latin America are having to deal with more hardship and that the funding environment is always been less uncertain so they are more resilient and all that. But while I think there’s some truth to that I also think the really great teams look more similar than they look different. I invested in a 20 year old founder who hadn’t gone to college and was just phenomenal. A founder who was super thoughtful, very competitive but humble and that just got stuff done. And the reason I ended up backing them, aside from understanding the market opportunity and the product that they had, was that he reminded me of a founder in the US with a totally different background, who went to Stanford, who had in theory, all of these privileges that this founder in Latin America did not have, but yet to me, they were very similar. And that’s what gave me the confidence to back this young person.
So I would make the argument that oftentimes strong founders and executives are more similar than they are different. When you work with very talented people, you don’t care where they are from. I think there are some countries where you see a disproportionate number of entrepreneurs because they have had to deal with a lot of uncertainty at a young age, but apart from that I think that strong executives are strong executives.
The reason I’m asking this is because sometimes if you have a not so privilege background and you may have your own bias about how people are gonna perceive you. And that can sometimes, not encourage you to take risks or start things.
I think one of the benefits of operating in Silicon Valley for so many years is that here at some point It’s about the numbers. Whether you’re an Indian founder, an American founder, or a Latin founder, if you’re solving a problem that is very interesting and you’re doing it in a unique way the business will take off.
But I think in the earlier stages when you don’t have those signals, you don’t have the five years of revenue and metrics, that’s when bias creeps it, because if your frame of reference in Latin America, the only big exit let’s say 10 years ago, in Latin America is MercadoLibre and the Founders all went to Stanford. So I do think that there is still a ton of bias, but I think this is where, hopefully, we’ve got some new investors coming to the ecosystem like myself. And I don’t want to sugarcoat it, because I think during the bubble period there was the idea that everybody could be a founder. And that’s absolutely not true. I could never be a founder, it’s hard. It’s like saying everybody can be an athlete, everybody can play an Olympic sport. And how many people make it to the Olympics? So whatever your field is, it’s hard work. And I think it’s more about performance.
Last question, as you don’t really come from a family of investors as you mentioned your parents were in medicine. What state would you give young people who are interested in investing in America working and with founders?
There’s two ways I would come at this. Number one is you got to make sure you really want to do this, and why are you doing it. There’s some glamorization of this and it’s actually not that glamorous work. I think you need to make sure you’re doing it for the right reasons because startups are very unpredictable, so I would encourage young people to get a few experiences in the space, whatever that is, if you want to work at a startup go work at a startup, or if it’s doing something with finance, do it and make sure you enjoy finance.
But assuming you do that, and this is an area of true interests and curiosity, I encourage people to network. Get to know other people, go to events. Because a lot of what happens in this space is serendipitous. And if you’re an investor, the best way to make better investments is meet a lot of founders, because maybe you meet this founder, and it’s not the right one, but you learn something from that one and they say, “Hey, let me introduce you my friend who’s doing this” and then that’s the one that ends up working. Same thing in VC, I’ve seen young people who start in one area of finance but they want to get into VC. So they meet a lot of people, they get involved in all this stuff and then somebody says “there’s an analyst position opening up, you should apply” and you don’t even know that analyst position is even available if you don’t meet people. So I would encourage to network a lot.
I think it has a lot of power, but also I think a lot of people feel a little bit awkward in networking. So I guess it’s about trying to think of it more like a learning experience.
I’m actually quite an introvert and the definition of introvert I think is that you get your energy within, maybe from ideas, thoughts on somethings you read, as opposed to maybe an extrovert who gets an energy through other people primarily. But in what I do, it’s non-stop meeting people, and I think for me, you have made a comment that I think is super important. This is general life advice unsolicited, but I think you’re happiest when you’re doing something that you’re inherently curious about, and you think “I want to learn more about that”, and so for me, in terms of networking meeting founders or meeting other investors, you want to learn about them. “What do you do?” “how did you get started?” and being curious gives you energy. That’s a very genuine thing.
To finish…
In closing, we invite you to continue exploring the dynamic world of venture capital and entrepreneurship. If you’re interested in participating in NuMundo Ventures or learning more about Ivan’s experiences and insights, we encourage you to connect with him and the NuMundo Ventures team. You can find more information on our website.
Thank you for tuning in, and remember, the journey of a thousand startups begins with a single investment. Embrace your curiosity, network, and stay passionate about making a positive impact in the world of entrepreneurship. If you have any questions or would like to be part of the conversation, don’t hesitate to reach out. Your journey in the world of venture capital and startups awaits!
