Nido Ventures: Mexico Can Be a Global Technology LeaderBy Cinthya Alaniz Salazar | Thu, 02/24/2022 - 11:23
Q: Why is it significant for a nascent Mexican venture capital firm made up of young professionals to invest in Mexican technology startups?
A: Nido’s strength and potential for scalability rests on the collective experience and wisdom that each founder brings to the table, which includes software engineering, investment banking, co-founding, public policy and operations. More importantly, having navigated Mexico’s cultural nuances, market and venture capital ecosystem first hand, we understand and empathize with the challenges and barriers to entry that startups often encounter. Therefore, even though there is a great deal of investment capital and interest in Mexican technology startups, these barriers have effectively created a very monotone technology ecosystem. Nido aims to tackle this predicament by using the specializations and networks of our founders to help entrepreneurs in Mexico and Latin America from an operational standpoint, an essential starter to attract capital and build a more dynamic technology ecosystem.
Q: How does Nido want to influence Mexico’s technology ecosystem in the long term?
A: Nido chose to specialize in technology startups because of their scalability, which can allow Mexico’s technological ecosystem to continue growing. As an industry asset, we have seen the technology sector swell across global economies and while Mexico and Latin America have the potential to become international technology hubs, they are still a few steps behind. Barriers to entry are comparatively higher than in other parts of the world and, from a technology standpoint, the region has yet to adopt technology applications and solutions that are already being utilized by other global economies. These macroeconomic conditions have captured the interest of foreign investment capital, a market that totaled almost US$30 billion in 2020 according to Mexico’s Ministry of Economy. Nido is helping accelerate this process on the ground by funneling capital from our network and other resources into Latin American tech startups so the region's ecosystem becomes more dynamic, competitive and progressive. Building up these attributes is essential to Nido’s long-term objective: to make Latin America a global front-runner in technology solutions and applications.
Q: What is behind the drop in early investing alternatives for entrepreneurs?
A: It is common to see significant outside capital flow at a project’s later stages, when startups have refined their product-market fit and demonstrated their solvency. Early-stage investment is undoubtedly riskier but Nido prefers it for two reasons. First, it is where we best can deploy our operational expertise and network access, encouraging young entrepreneurs to utilize us as much as they want. Second, not many institutional investors in Latin America are not scouting early-stage startups, leaving this market potential largely untapped. Even within this existing market space there are only a handful of experienced angel investors willing to risk their capital.
Our commercial approach to this market niche has been to convey our understanding of what it means to be a young entrepreneur in this space and to reach out. Too often we have encountered talented professionals with great, transformative ideas who were essentially giving their companies away because they lacked capital capture know-how.
Q: Since institutional VCs are generally early-stage averse, has Nido considered forming partnerships with them to funnel projects with potential?
A: We have been talking to a few VCs that are working on those types of programs. Some VCs are looking to co-invest, while others provide brokerage to bring more investors to the table. We have been open to talking to VCs because we are not necessarily competing with them. If we all work together, we will get to a better place.
We have also talked with VCs that mainly invest at later stages and to multistage funds, which support all stages of a project. The latter are the largest funds. For now, we are happy working with early-stage startups, which is what we do best. But we are open to partnerships with VCs and other investors.
Q: What are the company’s immediate objectives for 2022?
A: First, we want to raise our fund. In 4Q21, we made three investments that propelled everything we will launch this year. We have invested in two other startups this year, and have others in the pipeline. Our short-term goals are to close the fund and deploy that capital in the most efficient way possible throughout Latin America.