Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Hernan Fernandez was recorded in May 2019.
Hernan Fernandez is Managing Partner at Angel Ventures Mexico, a firm that invests in Mexico, Chile, Peru, and Colombia. This is an excellent discussion on trends in Latin America.
Sramana Mitra: Let’s get to know you and let’s get to know Angel Ventures Mexico. Tell us about the fund. Tell us about your activities. Where do you invest? What size fund do you run?
Hernan Fernandez: Our story started in 2008. At that time, I and my partner were in MIT. We just got completely sucked into the amazing venture ecosystem there.
Sramana Mitra: What prompted you to get going with this? Were you studying at MIT in 2008?
Hernan Fernandez: I was studying at MIT between 2005 and 2007. I engaged with the venture mentoring ecosystem. It was a such a dynamic ecosystem that I completely and absolutely fell in love with. I started helping Mexican entrepreneurs to raise money. I loved being part of that.
Then in 2007, I came back to Mexico. I took a job in consulting. I was a miserable consultant. I had been receiving emails from founders and even investors. I decided to start the first angel investing in Mexico.
Sramana Mitra: When did you start?
Hernan Fernandez: In 2008. We ran the angel network exclusively from 2008 to 2013. In 2013, we raised our first fund. It was a $20 million fund with 56 limited partners. There were three institutional investors. We got some follow-in investments.
We were in a bit of a FinTech wave which was absolutely amazing. We’ve had some very successful companies coming from that. Now, we’re managing our second fund which is a fund for Mexico, Colombia, Chile, and Peru. They’re great untapped opportunities. They have 230 million people and an economy of $2.2 trillion, larger than Brazil and even Canada.
We’re big fans of comparable markets. We travel extensively to other countries like India or Southeast Asia. We see just see the trends that we’re seeing now. We’re in the brink of something in terms of global emerging marketplaces.
Sramana Mitra: Which is absolutely our mission as well. Let me ask you a few questions to understand the dynamics of the Mexican ecosystem. You started in 2008 with the Angel network in Mexico. I presume that, at that point, you moved from Cambridge to Mexico.
Hernan Fernandez: That is correct.
Sramana Mitra: Who are these angel investors? Does that include technology investors or is it more of people who have made money in other industries and are interested in investing in technology?
Hernan Fernandez: That is an amazing question. You’re spot on. We learned the hard way that angel investors are very different than the ones you will find in the US, Europe, or developing countries. In the US or Europe, 80% of angel investors have been successful entrepreneurs.
In Mexico and Latin America, that is certainly not the case. These are people who have been wealthy all their lives. Their fathers and grandfathers have been wealthy as well. What we found was that there is an emerging trend of successful businessmen.
We’re starting to see entrepreneurs as an investment opportunity. You go from real estate and franchises. We’re talking about 25 to 55. Our first fund was a co-investment fund. Tickets were significantly smaller from what you would see from an angel in the US.
The key insight is that this was smart capital. By having the Country Manager for Google, we were now able to do some smart investments in many of these verticals. Our job is to empower these individuals to become successful investors. Angel Ventures has produced funds that co-invest with these individuals.
We leverage many of these individuals and their expertise to our fund screening and fund sourcing. We see ourselves as a real-time co-investment mechanism of sorts to fund the entrepreneurs that we can find in our countries.