When we started in 2011, a few trends were taking place in the startup ecosystem, most notably in the US:
- The cost of starting a technology business decreased dramatically over the previous decade.
- The structure of social networks allowed for rapid user acquisition and that let companies grow with far less capital.
- Those companies’ earliest investors saw stratospheric returns by financing the most significant value creation period in a company’s life-cycle.
This created the conditions for a wave of angel funds and startup accelerators looking to partner with tech entrepreneurs in the earliest stages of growth.
NXTP FUND I: BEGINNING
The founders of NXTP come from a broad mix of backgrounds and experiences. What we share is a firm belief that entrepreneurs are the driving force in repairing Latin America’s troubled economies. Having seen the radical changes in the US startup ecosystem and seeing the gap at home, a question remained: how could we “tropicalize” the model? How could we adjust it to our region’s particular needs and start helping hundreds of startup founders?
If early stage startups in the (capital-abundant) US — where access to capital is far greater — found accelerators meaningful, imagine how attractive they are for founders in a region where capital was scarce and networks of founders and mentors even more so.
A few principles were clear from the outset:
- Founders First. They are at the center of what we do. We strive with every effort to earn the right to partner with them.
- Collaboration. To improve everyone’s chance of success, we need to help create an active ecosystem where collaboration and a give-first attitude were common currency.
- Long Term. Building a company takes time. We are long-term partners with the founding teams with whom we work.
In 2013 we raised a small fund (~$30m), which allowed us to make a series of initial investments and (keep) reserved capital for following on with the most promising. We built out offices in most major markets in LatAm (Brazil, Mexico, Colombia, Argentina, Chile) and mini soft-landing platforms to help our portfolio founders “land and expand.”
Our goal was to become the first institutional check for pre-seed startups looking to expand beyond their home markets. At the early stages we invested, the founding teams were the success factor. We put great effort into developing a structured process for spotting and nurturing that talent.
Examples of investments we made in Fund I include:
- Auth0: Founded in 2013, the company provides authentication-as-a-service to its corporate customers through its founded identity and authentication platform. After raising more than $100m in its last round, Auth0 surpassed the $1bn valuation mark.
- CargoX: Operating solely in Brazil, CargoX is a digital freight broker and logistics platform connecting shippers with long haul carriers and freelancers. It has raised $176m as of now.
- Nuvemshop: The Shopify of Latin America, the company provides e-commerce tools for SMBs via a cloud platform, lending SMBs in Latin America the tools to set up, manage, and promote their online business. The company received funding from some of the region’s most prestigious funds to help bring small vendors online.
Between 2013 and 2018, the startup ecosystem in Latin America grew rapidly. Total venture financing in the region went from $400m in 2013 to an encouraging $2bn in 2018. One side effect was a matched increase in the number of acceleration programs & pre-seed funds, and the number of true angel investors, both local and from abroad.
In July 2018, we raised our second venture fund. NXTP Fund II expands our focus from the pre-seed strategy that governed our first fund to the slightly more mature seed and Series A space where we see the most attractive opportunity to deploy capital and add value today. You can learn more about what we look for in a startup here and what our investment process looks like here.
Originally published at https://nxtp.vc on February 6, 2019.