Tapping Into an Overlooked MarketBy Cinthya Alaniz Salazar | Tue, 04/26/2022 - 09:12
Q: How did Amplifica arrive at its investment thesis and what market opportunities does it look to create?
A: Amplifica Capital is looking to invest in companies that have female leaders or that offer goods and services that improve the lives of women, an investment market space that has been traditionally underinvested. Studies from McKinsey, Deloitte and Korn Ferry have highlighted the business case for investing in diversity and female leaders, including the fact that teams with women result in returns that are 47 percent higher and are 30 percent more able to reduce business risks and 20 percent more innovative. Despite these findings, this has not necessarily translated into conscientious investment opportunities for female entrepreneurs in Mexico.
On the consumer side, women dominate the market, making at least 70 percent of all consumer choices for their households. This collective picture clearly indicates that female entrepreneurs are still a largely untapped market and it is where Amplifica Capital has decided to concentrate its efforts as we see the opportunity to generate returns.
Q: Does Amplifica have partnerships or allies in Mexico and Latin America that support its vision? If so, how do they supplement Amplifica Capital’s efforts?
A: Amplifica Capital’s guiding investment thesis and fund portfolio focus on women. About 70 percent of our investors are from Mexico, 10 percent from the EU, 10 percent from the US and 10 percent from other countries in Latin America. We continue to seek and develop alliances across the Americas and beyond to support female entrepreneurship in Latin America´s emerging technology market.
US corporations, such as Victoria’s Secret, Home Depot and Costco, have shown interest in the USA market by investing in funds similar to Amplifica Capital’s to showcase their commitment to diversity and inclusion. Our goal is to capitalize on the growing relevance of ESG and we are seeking local corporations that might like to play a similar role in Mexico and Latin America.
Q: What issues does Amplifica Capital look to redress through its investment choices in terms of ESG, which is important to both consumers and investors?
A: Amplifica Capital aims to have a direct impact on the generation of opportunities for women, which also foments the country’s economic potential. To become a regional economic powerhouse, Mexico will need to increase the entrepreneurial participation of women. As it stands, Mexico ranks among the countries with the lowest gender parity, coming in at 122 out of 156 in the World Economic Forum’s Global Gender Gap report.
Beyond this immediate strategic objective, Amplifica Capital promotes its environmental and social governance goals through internal and financed initiatives. Some of our most consequential work has involved helping our portfolio of seed companies develop a baseline or roadmap to meet their own ESG objectives, while passing on the best governance practices. Cultivating these policies has become considerably important to building resilient and problem-solving companies, as demonstrated by the COVID-19 pandemic.
Q: Why focus on higher-risk seed-stage companies?
A: My experience during the past 10 years has been with seed-stage companies. With a moderately sized fund, it becomes practical to develop a diversified portfolio and invest in seed-stage companies in comparison to growth-stage companies, which require much more capital. To give our investors the best possible experience, we support a diversified portfolio covering between 20 and 25 companies over a four-year period.
This is our first fund and we are primarily investing in the seed space but we have investments in the portfolio that range from a pre-stage seed to a series B stage. As we grow and launch our second and third funds, we will optimize our funds to seek the best returns for our investors.
Q: What objectives does Amplifica have for 2022 and how will it be measuring its success?
A: In 2022, we plan to invest in more portfolio companies. To date, we have invested in eight companies, all with female co-founders or founders, and we expect to make at least two more investments this year. While having female leadership is not the only condition we consider when making an investment, we have found that our investors are aligned with our projects so far. We are happy and proud of our portfolio.
We are looking forward to supporting our portfolio companies and continuing to demonstrate the importance of being involved and driving systemic change in this industry.