ImpactAlpha, April 10 – Angel Ventures is executing an impact thesis for a large market along the Pacific coast of Latin America.
Nimble financial technology startups in the Pacific Alliance – Mexico, Chile, Colombia and Perú – are lowering the cost of banking products and services.
The same impact-driven disruption is underway in healthcare, education, agriculture, media and retail. Such ventures need early, risk-taking capital to build, test and scale their products, Fernández says. Angel Ventures is mobilizing the region’s high net worth investors to deliver the money.
“The region is changing dramatically,” Angel Ventures’ founder and managing partner Hernán Fernández told ImpactAlpha’s David Bank in February at the Foro Latinoamericano de Inversión de Impacto, or FLII. Take financial inclusion, he says. “Bringing goods and services to the unbanked population is a massive opportunity.”
Hernán Fernández founded Angel Ventures as one of Mexico’s first angel networks a decade ago while completing his MBA at MIT. Now comprising 400 angel investors, the firm has investing in 21 companies from its first, $20 million venture fund and is raising and deploying a second fund, with a target of $120 million.
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The firm has also expanded beyond Mexico to include investors and investments in the “Pacific Alliance.” Mexico, Chile, Colombia and Perú have a combined population of 230 million people and a $2.2 million economy – a market larger than that of Brazil. The four countries are relatively stable democracies with independent central banks, steady exchange rates and a common language.
Another commonality: Growing venture ecosystems ripe with startups delivering basic goods and services for the region’s emerging middle classes.
Mexico alone has more than 230 fintech startups. Angel Ventures has backed Clip, which has grown to become one of Mexico’s largest digital payment providers. Others with traction include Konfio, the online lending platform for small businesses that uses data for quicker credit assessment and Kueski, a digital micro-lender.
In the U.S. and Europe, four out of five angel investors have been successful entrepreneurs. “In emerging markets, that trend is broken,” Fernández says. “We see high-net-worth individuals or successful executives who are investing their year-end bonuses in startups.”
Angel Ventures doesn’t call itself an impact fund, but Fernández says about half of its 400 investors are open to impact investments.