Investing in Latin American Startups with Sebastian Ortega, CEO of South Ventures
Sebastian Ortega, Founder and CEO of South Ventures, IG Business Angels Club and Quanbit shares his thoughts on investing in Latin American Startups via South Ventures – a network for global investors.
Sebastian, please introduce yourself…
I’m an entrepreneur. My education was half technology and half businesses.
While I was studying Computer Science, I dreamed to help people’s ideas with technology and I’ve done this for years after my graduation. Then, we founded Quanbit, a software development company for startups. At the same time, we founded IG Business Angels Club, an organization to help angel investors investment in startups in the area.
After 5 years of startup investing and helping startups with technology, we finally launched South Ventures, the first and only latin-american platform to do investments in startups.
We blended the way of working of IG Business Angels Club, traditional Venture Capital fund ideas and some of the Crowdfunding practices, altogether with technology developed in Quanbit, to get the platform ready for invited investors.
We launched in January 2013, and as of December we have:
– More than 2,000 investors
– More than 3 million dollars invested in companies located in the United States, Brazil, Spain, Colombia, and Argentina, along with co-investing with RedPoint eVentures, Plug and Play Ventures and 500 Startups, among others.
– We have funds to invest in single startups, and a fund to invest in a diversified portfolio of startups.
– We are also now a member of the Latin American Venture Capital Association (LAVCA).
What’s the story behind creating South Ventures?
South Ventures is the first and only latin-american platform to invest in startups fast and easily .
It is the evolution of the IG Business Angeles Club, which was launched in 2007 to allow groups of people to invest in startups in an organized way. The Club is managed by its own members. There is an investment committee which is responsible for the main investment decisions, and I as the CEO and investor.
The Club has now become a leader in the venture capital investment area in the region.
Investing in startups sometimes demands a lot of effort even for professional investors. As we gained experience and built a strong network, we decided to go for the next step: to scale this for thousands of angel investors.
Today we run South Ventures along side IG Business Angels Club, and they are complement each other: members of IG Business Angels Club are now using South Ventures’s platform to invest.
South Ventures is the tool we would have liked to have when we started to invest in startups in the region.
What is the process of becoming a portfolio company with South Ventures?
I actively search through the startup ecosystem meeting founders and I also receive introductions from people in our network. Experienced founders usually don’t post their business plan or investor’s deck on the web, they usually do some research about the investor profile, and contact investors using their personal email.
We then start meeting to understand the company and team on a deeper level. If everything is great, startup becomes a portfolio company.
What is the process of becoming an investor with South Ventures?
We only accept investors by invitation. Investors ask us for invitation and we will research their profile. We are committed to building a high value investor community.
Do you personally invest your own capital in the investment rounds, or do you solely rely on third party investors?
Yes. I personally invest in startups putting money through our own funds. I do that in every venture fund and I post the amount I’m investing in the fund profile on our platform.
What size investments are we typically talking about here?
We have two different kind of investments. A seed fund to invest a typical amount of USD 50k and an early stage fund that typically invest around USD 200-300k to each startup. Some startups have received investments from the two different kind of funds.
What startups and opportunities are you getting excited about right now?
We love startups that make things easier, cheaper, and beautiful. That could come from any kind of startup: B2B, B2C, E-Commerce, E-Learning, etc. We are focused on great teams in huge markets with wonderful business models.
We are specifically building a global portfolio so we really like to invest in startups from different countries.
How does the investment scene in Argentina differ to the US and elsewhere in South America?
Actually, the big step in the investment scene in Argentina was that this region now has a global approach for investments. Entrepreneurs in Argentina are presenting their pitches in English and the material is available only in English.
Startups are sourcing funds from Argentinian investors as well as European in the same round. I think Argentina is now seen as a valuable chapter of the global startup ecosystem.
What are your thoughts on Angel List syndicates?
I think Angel List syndicates is really great. We are following a similar approach to invest. I think Angel List have had a very good impact on us. It educates and facilitates tools to investors. We do this and we also globally for great startups – sometimes not based in the USA (ie, Brazil). I think there are synergies there.
What advice can you share with entrepreneurs wanting to expand their startup in Argentina?
Argentina is a very attractive hub for entrepreneurs. Founders can meet very talented people from all around the world that could be their next partner, client or investor. It is an ideal place to grow a strong business network.
It is useful to stay in Argentina for a couple of months to learn the ecosystem. For those who can, I think it is worth while going through a local accelerator program.
A useful tip: lot of startups build their operation teams in Argentina to coordinate their regional businesses from a unique place because of the people they can find, and a lot of very valuable government benefits (sometimes there are also competitive advantages in terms of costs).
What advice can you share with angel investors wanting to look at opportunities in Argentina?
Argentina has plenty of great investment opportunities but sometimes it is not straightforward to structure an investment.
South Ventures is seemed like the most optimized tool to do investments easily. South Ventures is not only used by angel investors (or professional investors wanting to diversify their startup portfolio) but also is used by their own employees of the startups South Ventures invests in.
It would be useful to see how South Ventures works for investors to get access into the best startup opportunities in the easiest way.
What’s next for you and South Ventures?
We are working for the long run: our next step is to develop a market for startups by this year and scale South Ventures up to global investors in the near future.
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