Show Notes:
- How Marco’s education and career path led him to venture capital
- Why Marcos created VamosVentures and their investment thesis
- The role failure plays in the success
- The importance of curiosity
- VamosVentures ideal investment, typical involvement, and exit strategy
- Investing in All Up and how it came together
- The mindset Marcos looks for in founders
- An overview of where VamosVentures is with fundraising and investing today
Background and Education
Marco’s parents were immigrants from Mexico and put a strong emphasis on education. Marcos tells us that is what led him to graduate from both Brown University and Harvard Business School. At Brown, he started in Pre-Med, but ultimately received his degree in Urban Studies before he went on to receive a General MBA from Harvard, and eventually went on to found VamosVentures.
From Harvard to VamosVentures
It’s traditional for Venture Capital Investors to have a nontraditional career path, and Marcos is no exception. After graduating from Harvard, he started at The Boston Consulting Group as a Project Manager where he did strategy work in the US and Latin America. Then he moved into the private equity world where he worked for a Global Environment Fund as an Investment Officer focused on Hispanic-related business and cross-border opportunities. After working in private equity for a number of years he left and founded a start-up in the early internet days. Eventually, he came back to private equity as the Senior Vice President at Darby Private Equity where he focused again on the Hispanic consumer market.
Eventually, he decided his future was not in private equity or late-stage brick and mortars businesses. He wanted to be involved in the tech industry like he was with his start-up and invest in venture capital. That’s why he founded VamosVentures. VamosVentures is a venture capital fund for early-stage technology companies led by diverse founders with a focus on Latin founders in the US. Marcos says having such a specific focus was a newer idea back in 2016 so it was an uphill battle, but he knew he wanted to blend his personal and professional interests, and the result was VamosVentures.
Why Venture Capital over Investment Banking
Marcos recognizes the critical role investment banking plays in the economy, however it is not the role for him. Marcos prefers to be the one taking the risks investing directly in young companies over being at a distance as the broker facilitating the deals. He doesn’t want to be transactional but instead wants to be involved in planning and future success.
Failure is Inevitable
Marcos is very upfront about his failures because he knows failure is a pathway to success and the only way to truly learn. He tells us he has experienced failure on two levels with VamosVentures, fundraising and investing.
Marcos started VamosVentures in 2016 and didn’t finish fundraising till 2021. It took him about 5 years because for the first 2 he was approaching it in the wrong way. He was still thinking about fundraising as he did for private equity or an established business. However, with venture capital, he was fundraising for an idea, something that is still new. It took him a while to learn that and become thoughtful about who the idea will resonate with and who will buy in early. Making the wrong decisions at the start resulted in a lot of learning, but not much money.
Before VamosVentures was officially established, they made several investments that didn’t work out. One specific example failed due to macroeconomic reasons. Marcos says even then when it wasn’t the company that underperformed, that he still learned and grew from it. He learned to ask more questions, what kind of questions to ask, and which economic drivers to pay attention to.
What Lessons have been Learned
Starting a fund isn’t just raising money and writing checks. It’s building a business, and with VamosVentures being a relatively new fund with a relatively new team, there is a lot to do on that front. But in the meantime, they still have learned valuable lessons along the way. Specifically in asking better questions. For example, not just asking “how many users”, but also asking “how do you define a user”, and “what are your users like”. When you start digging in you can see if your partners are curious and really understand the numbers or if they just have flashy metrics.
The Importance of Curiosity
Marcos knows being a founder and entrepreneur is hard because he has been there. However, there are things that he cannot go without in his due diligence. He often has founders coming to him without all the information they need. Either they don’t have enough users and data to prove product market fit, or they do have enough users and data but they aren’t checking in with them frequently enough. Engagement with the customer base and curiosity is a major thing Marcos looks at for investment partners.
Marcos admits that he asks a lot of due diligence questions, but also says he would like to be able to ask more if he weren’t limited by the timelines. The venture capital world moves very fast and discussions are typically made in two to four months. Marcos says because of the tight timelines sometimes you have to narrow your focus on the most important questions.
More Detail Around VamosVentures Ideal Investment
Marcos and VamosVentures are ideally investing in Business to Business (B2B) or Business to Business to Consumer (B2B2C). The reasoning for this is that Marcos says it is relatively easy for founders to find 100 individuals to use their product in a B2C setup. However, when a founder can sell to another business that has more weight because they know the industry and know the competitors better than standard consumers typically would.
VamosVentures also focuses on Latin entrepreneurs based in the US with consumer-oriented enterprise businesses in the early funding stages. Marcos looks for founders that have unique insight into the problems they are trying to solve and have a solution that can be articulated in a very simple way. VamosVentures doesn’t have hard requirements on metrics like monthly revenue, but instead, they care more about the founder, the problem, and the solution.
What an Investment Look like with VamosVentures
Typically, to avoid negative signaling, VamosVentures doesn’t follow on investments. Instead, they try to avoid the need for it all together with substantial initial investments anywhere from $500,000 to $2 million. Because VamosVentures invests so early, when it comes to exit strategy and return of capital, it’s all about portfolio companies positioning themselves as appealing acquisition targets. They do this by hitting a critical mass for revenue and/or users. The critical mass changes based on the use case, but then after they hit it the goal becomes private transitions.
VamosVentures Exit Strategy
Marco’s methodology for working with founders to position themselves for acquisition is “complicated”. He tells us he does have conversations with founders around what looks like being well-positioned. Before VamosVentures even makes an investment, the team considers what a company needs to achieve, what the comparable cases are, and what is reasonable to expect based on past transactions. Marcos says all of the founders in his portfolio are working on that goal because they want to realize value as well. He and his team can give guidance and advice, but at the end of the day the founder makes the call and the investor’s role is to support them.
The Story of All Up
Marcos had heard of a successful Latino serial entrepreneur for years but was never able to connect with him. Until one day, a mutual connection invited this entrepreneur to a dinner VamosVentures was hosting. The entrepreneur had successfully sold a company before and was starting another, All Up. However, the current funding round was oversubscribed and there was no space for VamosVentures. He and Marcos kept talking anyway, hit it off, and eventually, the lead investor increased the round size. He asked Marcos if VamosVentures would like to join. By this time, the whole VamosVentures team liked the entrepreneur, he was proven and had a vision, and was a professional but also involved with the community. This was the perfect investment opportunity for VamosVentures. Marcos tells us it wouldn’t have happened without networking, patience, graciousness, and timing.
Tenacity is Key
Not every relationship can start like that because Not everyone has a reputation that precedes them or gets a warm introduction. Marcos advises founders in that situation to do everything possible to find a mutual connection first but recognizes that is not always an option. He says the second best way is to find an event or panel the person will be at, show up, and wait for an opportunity to introduce yourself in person.
Just like any other, there is a courtship to this relationship. You have to introduce and then follow up, and eventually, after the investor is familiar with you, send a short email. Marcos says as an investor, he would want to know, in a brief email, the market conditions, the problem you’re trying to solve, how you know about it, how big it is, what your solution is, and why you are the person to solve it. At the end of the day, tenacity is what it takes and Marco’s advice for everyone is “you are in the sales business”. That means you are developing relationships and understanding strategy.
Mindset
Marcus tells us he has given a lot of thought to the type of mindset he is looking for in founders he invests in. For the past year, he has been looking for athletes. He says that because an athletic person can do many different things “pretty well” like throw a ball around or swing a bat. Marcos knows when you are starting a business you have to do a lot of things “pretty well” until you can afford to hire the specialist. Marcos is looking for an entrepreneurial athlete. He is looking for a founder that can articulate the big picture and be a leader, while also monitoring the details and executing the day-to-day tasks. He is looking for a founder that is coachable in all the traditional ways and has the ambiguous qualities of an “adult”.
Hard skills vs Soft Skills in Realizing your Dreams
Soft skills make up a big portion of the ambiguous qualities of an adult, and soft skills are what Marcos and the team at VamosVentures look for in the founders they invest in. However, when asked about the importance of hard skills, like education, versus soft skills when it comes to running a successful company over time, Marcos says that would create a graph of changing composition. Over time as the company grows you are building a culture and that is when soft skills become most important.
Where VamosVentures is in fundraising?
Marcos tells us VamosVenture’s first fund closed at 50 million, and they are launching fund 2 next year around March. He is planning the first close around midyear, then reopening and fundraising for another 12 months. Many of VamosVenture’s limited partners are institutional, meaning they are foundations, endowments, or corporations.
Even though they are not currently fundraising, VamosVentures still has capital available for investments. They are looking to deploy checks of $500,000 to $2 million, to founders in the seed stage or A round. The four sectors are interested in our health and wellness, financial services, future of work, and sustainability. VamosVentures invest in diverse teams, with an emphasis but not exclusivity towards Latin entrepreneurs.
Connect With Marcos and VamosVentures
You can get in contact with VamosVentures by visiting their website, Medium, Twitter, Instagram, or LinkedIn.
You can get in contact with Marcos through his Twitter, LinkedIn, or direct email.
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