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The Latin American Opportunity — Hernán Fernández, Founder of Angel Ventures

Miguel Armaza sits down with Hernan Fernandez, Founder and Co-Managing Partner at Angel Ventures, one of the oldest and most active Venture Capital funds in Latin America investing in early-stage to early-growth companies with business models tailored for the Latin American market.

We talked about Hernan’s career, what drove him to leave the corporate world and launch one of the first VC’s in the region, his take on the entrepreneurial market in Latin America, and some of the trends and opportunities that get him going these days.

Hernan is also the founder of the largest angel investment network in Latin America and serves as a Board Member at the Mexican Association of PE & VC Funds. Prior to AV, Hernan got his MBA degree at MIT’s Sloan School of Management

Full interview → Spotify | Soundcloud | Apple Podcasts

When Hernan Fernandez graduated from MIT’s Sloan School of Management, he joined the ranks of a large management consulting firm in Mexico City. Although on the surface it seemed like he was following the typical path of an MBA graduate, deep down inside he could not stop daydreaming about the entrepreneurial environment he had experienced and witnessed at MIT and quickly realized his comfy job would pull him away from the world of innovation. So, just after a year into the job he decided it was time to leave and do something to build up the startup ecosystem in Mexico and Latin America.

Launching Angel Ventures

Hernan founded Angel Ventures (AV) in 2008 at a time when not only was the world undergoing a global financial crisis, but the successful startups in Latin America were few and far in between. Moreover, the Latin American culture of Angel Investing or Venture Capital was just getting started and most successful investors or entrepreneurs were not in the habit of backing nascent ventures. The local reality presented both a challenge and an opportunity for AV. On one end, fundraising was not easy and they had to stay true to their mission and stick to their guns when it came to investor and company selection, but on the other end being early meant they were there for the first opportunities of a nascent ecosystem.

FinTech in Latin America

Being an early investor has always led Hernan and his team to surround themselves with smart people with specific industry expertise — “As a generalist fund, your job is to actually be the dumbest person in the room. And that’s precisely what we’ve done”. This led them to create the first Fintech committee in the country in the early 2010s, as they recruited a group of financial services executives to help evaluate some of the startups they were seeing in the sector.

It did not take long for AV to make a few key investments, but Hernan remembers that some of their reservations revolved around the fact that these startups were aiming to disrupt large banks with multibillion-dollar budgets. Of course, the size and scale of banks turned out to be a competitive advantage for fintechs, better said by Hernan “When it comes to startups, we assume that big corporates, because of the money that they can invest and the salaries that they can pay — that they’re always going to get the right talent and they will have the talent as motivated as a startup. And that assumption is dead wrong. We have seen this over and over again. You can hire amazing people, and you can pay them all their salary and bonuses and expenses, but the guy is probably gonna work nine to six, right? Maybe he’ll give you a couple of extra hours, maybe he’ll answer an email in the weekend. But for startups and for founders, you know, it’s not a full-time job it is a full-life job.”

The Road Ahead

Although the trends of the first wave of Latin American fintech were easy to spot (neobanking, payments, etc.), Hernan argues the next wave will be less obvious. Going forward, it will be increasingly harder to recognize fintech companies and it will come down to understanding the value chain of different industries and figuring out how to embed FinTech as an integrated solution. Verticals like logistics, cargo, and mobility are more and more appealing towards FinTech and he will be following closely the evolution of the industry.

Going forward, Hernan is more bullish than ever about the Latin American opportunity and is particularly excited about the integration of smaller markets across the region. Startups and investors are taking notice of markets like the Pacific Alliance countries (Mexico, Chile, Colombia, and Peru) that represent a market of over 230 million people and an economy of $2.5 trillion. The integration of these markets results in an opportunity larger than Brazil and Hernan is convinced we will see a continued wave of innovation from startups thriving in the region.

Hernán Fernández Lamadrid

Hernan is the Founder and Co-Managing Partner at Angel Ventures, where he manages deal-flow, investor relations and shares duties in creating value for the investment portfolio. He is also the founder of the largest angel investment network in Latin America. He currently serves as a Board Member at the Mexican Association of PE & VC Funds (AMEXCAP). Prior to Angel Ventures, Hernan started his professional career as a corporate lawyer in PwC’s Mexico City and Paris branch offices, as a consultant for the Sustainable Business Initiative of the United Nations Development Program in the U.S. and Paraguay and later as a management consultant for Strategy& (formerly Booz & Company) in Mexico City. He has been named one of CNN/Expansion 30 Mexico’s Promises and the Most Influential Angel Investor in Mexico according to TechCrunch. Hernán holds a master’s degree in Business Administration (MBA) from the MIT Sloan School of Management and a law degree from ITAM in Mexico. AV has put together a strong and flexible team, bestinclass, in-house developed processes and attracted a multidisciplinary group of advisors, mentors and allies that not only provide capital, but most importantly, talent, relationships, and brain power. The managing team has extensive experience in company development and growth, private equity transactions, management and operation of venture capital funds, mergers, and acquisitions, launching startups and new business units, as well as strategic consulting and operational administration of multinational conglomerates.

About Angel Ventures

Founded in 2008, AV is one of the most active and influential Mexican VC firms in Latin America. The Firm invests in early-stage to early-growth companies by becoming a leading Series Seed and Series A investor in startups that drive innovative business models tailored for the Latin American market. We manage two investment funds (one in fundraising), and we strive to perform the best possible investments by attracting best-in-class entrepreneurs, applying exhaustive and progressive methodologies to assess opportunities and leveraging our intangible assets to boost our portfolio returns, all while being compliant with major global standards for VC practices.

AV is the official VC firm recognized by the four governments of the pacific alliance region (México, Colombia, Perú and Chile). The Company was awarded such recognition through a call of proposals organized by the Inter-American Development Bank in June 2016.

Previous Episodes You May Enjoy:

Empowering Mexican Businesses with Adolfo Babatz, Founder & CEO of Clip

Building a Customer-Centric Culture with David Vélez, Founder and CEO of Nubank

Solving Payments in Emerging Markets with Sebastian Kanovich, CEO & Founder of dLocal

Data-Driven Lending in Latin America with Tarek El Sheriff, Founder and CEO of Zinobe

Making Fintech Possible with Iñigo Rumayor, Co-Founder and CRO of Arcus

Rewriting the History of Banking — Stefan Möller, Co-Founder & CEO of Klar

Innovation for the Emerging Middle Class — Christine Kenna, Partner at IGNIA

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Miguel Armaza

Miguel Armaza

🎙Co-President/Podcast Host @WhartonFintech. Fintech investor @ Gilgamesh. 📚MBA/MA Candidate @Wharton/@LauderInstitute. Author of Fintech Leaders Newsletter✍️