Managing Director at AMG Block

"Latin roots of people living in the US with Latin American backgrounds could eventually provide an entryway into the US market."

- Carlos Torres de la Cuba

Carlos outlines what he looks for in a start-up

Talk Takeaways

Carlos Torres de la Cuba, Managing Director of AMG Block, talks with (JP) Jeffery Potvin about his finance background and the huge opportunities for Fintech and Blockchain in the Mexico market.

About

Carlos Torres is a Managing Director at AMG Block, an early stage Venture Capital fund focused on fintech and blockchain opportunities in Mexico and Latin America.

Experience as a proven finance professional, entrepreneur and executive with experience in the US and Mexico giving him exposure to: venture capital, portfolio management, origination and structuring of transactions, fund raising and company valuations. He has an extensive knowledge in the Mexican and US financial markets.

Industrial engineer with an MBA, Masters in Fintech and Blockchain and post graduate degrees in Venture Capital, Private Equity, fintech and blockchain. He has worked with clients in various industries through strategic analysis, corporate finance, due diligence, valuations, negotiation, project finance, financing strategies, investment projects, credit structuring, among others; providing personalized financial solutions that resulted in cost effective resource and capital allocation.

He is very passionate about blockchain and financial technology as well as developing entrepreneurs, having been on both sides of the table, as an investor and as an entrepreneur.

The full #OPNAskAnAngel talk

Jeffery:
Well, Carlos, I want to appreciate it. And thank you very much for joining us today. And like we do, we just jump right into things. So I like to kind of casually kick off, and then we just jump right in and go right at it. So welcome to Ask an Angel. Thank you very much for joining us and the audience, as they know, that you’re in Mexico, in Mexico City, and very excited at the opportunity to dive into and learn more about the ecosystem and everything that’s going on in Mexico. But the first and the easiest way for us to start is maybe you could give us a little bit more on your background. So where you’ve come from, what you’ve been up to, where you are now and then where you’re looking to go so kind of that easy lifeline. And then, one thing about you that nobody would know.

Carlos:
Great. Thanks, Jeffrey, for having us here. So a little background on myself. I come from, you know, the traditional finance industry, working a corporate banking at HSBC here in Mexico. Then worked for a fund focused on sustainable projects, particularly in water and energy projects here in Mexico. Uh, then I continued my professional journey in corporate banking at a regional bank that’s one of the leading digital banks right now in Mexico. Then I decided to do my, uh, my MBA in the U. S. Uh, with a focus on private equity and venture capital. And after my MBA, I worked for the venture arm of a family office in Boston that wanted to tap into the entrepreneurial ecosystem. And then I returned to Mexico and joined US investor and director of finance for a Fintech startup that provides long to the underserved SME marketing in Mexico. And that’s when you know, we realized that there was a gap in this early stage funding ecosystem in fintech, particularly as well. So that’s when we decided to set up AMG block, which is a six stage, a busy fund focused on fintech in Mexico and Spanish speaking Latin. You know, Fintech. We sit across different business verticals, you know, payments, loans, wealth management and should take a Blockchain. We believe you know, technology will play a key role in financial inclusion in this region. And the Blockchain is definitely one of the technologies within our scope. Um, so that’s, you know, sort of the brief overview on how we got here and something that, you know most people don’t know about me. Uh huh. I’m so both my parents are from Peru. So, uh, my parents, they met in Peru, got married in Peru and then came here to Mexico over 40 years ago. So I was born and raised here, but I have a strong connection to other, you know, Latin American cultures. And that’s obviously one of the reasons that we’re also looking to expand sort of the Latin American opportunity through the farm. You know,

Jeffery:
I love it. I’m a big fan of Peru. I spent some time traveling through there. I’ve gone through lots of countries in Latin America, Central America. Big fan of, I guess you can say the Spanish culture and the Spanish speaking countries. But Peru was quite fun.I did some trekking through there and climbed some one, you’re only mountain that’s big in Peru, I guess. So that was fun. And overall, it’s a great experience and a lot of great people. But of course, Mexico is just as amazing too, um as we talked before. I’m a huge fan of Mexico City. It’s so active and crazy big that you can just get lost walking around there for five minutes and not know where you started. So it’s pretty amazing.

Carlos:
Yeah, it’s so it’s similar to, you know, New York and LA combined, you know, so big. But you have some, like, clusters around the city. You have to know where to move around and everything. But overall, it’s a great place to visit. You know, culturally, gastronomically — it’s amazing. So, yeah, I’m glad you’ve been a part of Latin America for a while.

Jeffery:
Yeah, big fan. I’ve been there a few times. Just from a side fact standpoint, I believe in and correct me if I’m wrong. But I think Mexico City in the last 10 years has sunk more than three inches. In the last three years, the entire city. Sorry. In the last 10 years, the entire city has dropped that much

Carlos:
Well, primarily in the city centre. Yeah, it was built on top of the lake. So when you go to the city center, you’ll see some buildings that are, you know, below ground level. I’m not sure about how much every year was safe, but, well, continue thinking for a while.

Jeffery:
Yeah, they were saying that it’s something that they can’t control. So they were actually considering at some point, building another city to offset the weight of everything that was going on in Mexico City and to see if they rebuild it in a different fashion because of it. And I think it was because it would screw up the aquifers and and everything else that’s running in the city at some point in time.

Carlos:
Yeah,. it’s a Yeah, It’s an interesting dynamics that we have here, and that’s you know what? One of the peculiarities, When when it, uh when we got some of these, uh, earthquakes right at the city center. I mean, if you’re there, which all the buildings are built on top of the water, right, you have a lot of movement. So whenever we have an earthquake here, that’s why it’s so chaotic. Uh, but I mean, we have the pros and kinds of living in Mexico City, you know?

Jeffery:
Yeah, I know. It’s pretty amazing. So I kind of want to dive back into your past because I find that a lot of what we’ve done gets as to where we are today. And, you know, you spend some time working in the banking side. And of course, oddly enough, you’re investing in Fintech and Blockchain. So I’m sure there has to be some coincidence that’s occurred there. But in that process, can you give us an idea of what that experience really detailed? Because the banking side being in numbers, it really does drive home what every startup needs to focus on, which is understanding their business, modeling, how their financial models are working and how they can drive and make money in sales. So maybe a little bit more on how you kind of explore that banking side. And how valuable was that before you went in and did your MBA?

Carlos:
Yeah, I mean, the banking sector I’d say in Mexico, in Latin America it’s a little different than another you know, more developed markets. I mean, we had an opportunity to work in traditional finance. I mean, we focused mostly on the 2% right of the SME market, for instance. So there is a huge opportunity to provide financial services and solutions to the underbanked population, to the underserved SME market. And that’s, you know, something that the fintech sector has been focused on, right? I mean, when you look at sort of the statistics in Mexico alone, less than 50% of the population is a bank, right? So but we have a lot of smartphone penetration, right? So this, uh, you know, technology definitely plays a role in reaching these unbanked populations and providing the services that the traditional finance institutions don’t provide either because it’s too catholic. It’s too much of a hassle right? Or they just don’t think it makes sense business wise, right? So I mean, it’s definitely an interesting ecosystem, and one that particularly fintech companies across different business verticals are trying to to solve, you know,

Jeffery:
And we’re finding that with that experience and then going to the US and experiencing the MBA that’s kind of shifted your mindset on how these banks were operating and maybe the time you were like that just seems reasonable. And then you’re in the U. S. You’re like, this is terrible. We need to get back there and correct this.

Carlos:
Yeah, I mean, when I mean, I was lucky enough obviously, to experience that whole experience of living out in the US, right. Uh, and it’s interesting, right? I mean, you have these one click solutions when you go out and have lunch with friends, you Ben Moh them and everything is settled, right? Pretty much the entire, you know, financial railways are already set in the U. S. But I experienced personally, So I was trying to transfer money from my Mexican account to my US account, and it took probably around two months. And at one point I was like, I don’t know where my money is because it wasn’t. It wasn’t the same bank that I was using. So obviously the the there’s triangulation in the in the transfer of funds and I had to contact my local bank, my U S bank, and none of them were able to tell me where my money was, right? I mean, at one point, it was probably somewhere in Europe because they were triangulating my transfer and this type of problems… I mean, could be, you know, uh, solved relatively easier with technology, right? I mean, launching technology obviously plays a huge role there, but the traditional sort of railways are obviously poised for disruption. Right? And that’s, you know, that experience of being able to, you know, do my everyday banking, uh, in a similar way wasn’t something that I used to experience when I was back in Mexico. And it’s something that to this day, I don’t experience, right. I mean, right now, if you wanted to open a business account, you have to go to a branch. You have to go through the entire (inaudible) process and all that could take probably a month or two, right? And if within your company, uh, say, uh, business purposes, the bank identifies something that they are not familiar with. Then you’ll go through a different (inaudible) process that’s going to take you three or four months to just open an account right. So that obviously hinders the ability of startups to start operating relatively. See, you know, so I mean, it’s definitely a space that’s gonna change in the next few years. And we believe, you know, technology will definitely play a huge role there.

Jeffery:
And you find that what is the main catalyst for banks in other countries not to accept this form of change or to accept that there are better, faster ways to transfer funds or to make things happen? Is it just a laissez faire style attitude of employees? Or is it the aggressive side that they don’t match that aggressive outcome that European banks or North American banks are pushing? Like, what is the what’s the downside? And there’s obviously a lot of upside.

Carlos:
Yeah, I think it’s a combination of factors. I mean, one of the main ones being obviously, the costs involved, some costs, right? I mean, these traditional banking systems already, you know, deployed a lot of money to build the railways that they’re currently operating right, so they don’t want to just discard all of these investments made because there’s a new technology that’s, you know, gonna change the way they operate. Another aspect is the educational gap, right? I mean, when — this is a funny story in Mexico — The new Fintech law, which was, uh, put into place a couple of years ago, initially contemplated regulating virtual assets. Right. So obviously behind virtual assets, you have Blockchain technology. But when in 2018 when the government entities had a huge change, and the new governor of the Central Bank of Mexico came out and said, you know, Blockchain is too complicated for us. We’re just going to put it on a sandbox environment and not regulate right now, the virtual assets are right. So that lack of understanding of, you know, technologies or the potential that new technologies coming out to the market could have on the banking system is definitely an entry barrier for them to adopt. Right. But we’ve seen changes. I mean, when you look at, for instance, Italy, uh, over, I think 80 banks are currently exploring, you know, working with Blockchain technology to have a more seamless banking experience in the country. There’s innovation going on but it’s, you know, gonna take some time, I’d say

Jeffery:
So do you find that, um, the banks are spending because it has to do with currency and finance? Do you think most of the time that the banks are trying to regulate internally fraud as they are externally fraud? So it’s kind of a tough way to change the model or change the ship. So it opens up for opportunities for people to kind of take and bring in new startups to bring in new customers and to manage them at a bank to just buy a company versus spending their time trying to manage and regulate their own staff. Because I’m sure fraud and I’ve heard many stories is pretty prevalent even inside the bank, because when you’re around money, I’m sure that there’s problems, and then when you’re on the outside, there’s obviously just as much fraud. So do you think it’s more of the fact that it’s been? Or part of the problem is that it’s been around for so long that they haven’t been able to just get ahead of the problem, and that the problems is built up so significantly that they can’t keep up and change it?

Carlos:
Yeah. I mean, it’s a combination of factories and obviously the time required to train the people inside, Uh, to a friend of people outside as well. I mean, as a customer, you want the whole experience to be as similar as possible, right? But the banks have to not only blanks. I mean, the entire say finance industry has to take the necessary measures to avoid this type of fraud, right? I mean, we said in in in not only on the traditional finance industry, but in crypto as well. I mean, the whole I see. Oh, boom. Proved to be, you know, uh, that a lot of companies were, you know, frauds or didn’t uh huh same or did what they set out to do, right? So a lot of money was lost. Why? Because there was a lack of, you know, KYC or a malpractices, or even a due diligence from part of the, you know, the investors, right? Or those that participated in all of these videos. Uh, so, you know, it’s a combination of factors. I mean, like you said, I mean, if you work at internally at a bank. Uh, you always have that. You know, uh, temptation to say it in somewhere, right? Uh, so, yeah, it’s a financial educational process that has to go not only inside but outside the traditional finance industry.

Jeffery:
And how much of you know, kind of currently now, And, um, now that you’ve jumped into working on your own fund and building this up, how much of that experience that you’ve gone through working in the banks is aligning up to how you make investments? Is it helping? Is it something that you’re utilizing as Thank God I have this Because I wouldn’t be doing this because it’s so complicated on how banks treat customers, how banks treat startups, how we treat startups and then how Blockchain can fit in this. It’s so new. So how you kind of evaluated that perspective?

Carlos:
Yeah, I mean, having the opportunity to work, you know, inside a bank, you get to know sort of the opportunities and challenges that you know, internal and you encounter right? So all this started trying to focus on solving some of these issues, but definitely an opportunity and something that we take a closer look at right, because why we’ve been there. We live there, right? Whenever we see, you know, started trying to solve a problem that we personally experienced. It just makes you know, a sense to consider it as part of the portfolio itself, you know? So, yeah, it’s, uh, uh, that opportunity to have the operational side of the business certainly gives us an inner edge. I’d say when evaluating some of the startups working around some of the solutions.

Jeffery:
I love it. It plays a big part. It builds credibility for the fund that you’re building, that you’ve got this experience and you’re investing in fintech, which is pretty prevalent. And if you can’t see the problem, you’re probably not going to make the investment because a lot of the times and and correct me if you see this different. But a lot of startups tend to build something that they think is a problem, but indirectly no one else does. So they end up spending a lot of time, effort, money, and they haven’t got market fit. So a lot of times you run into that issue where they build this great product. But I can’t seem to sell it through. And maybe it wasn’t validated properly. And maybe you’re able to catch a lot of that in that Blockchain and fintech space.

Carlos:
Yeah, and it’s something that happens in not only in the fintech space in the other industries as well. You know, a lot of startups start building a solution and then try to find the problem. Right? Uh, which doesn’t really, uh, make sense in depending on where? What sector or geography you operate right. But yeah, it definitely gives us. It’s a bit of an edge having been through that specific, uh, problem ourselves. You know,

Jeffery:
I like it. Is there any specific area right now that’s going on in Mexico? That’s kind of a hotbed. I know. In the past few years, there was You’re getting into regulator systems and things that are trying to a lot of the banks will feed into one area so that they can all learn from the different fraud things that are occurring. I don’t know if that’s a global fixed for every bank, but I’m assuming some banks are way more cutting edge and way more ahead of the curve than other banks. So are there things that are really hot and prevalent in Mexico and in Latin America, where, um, startups are really popping up, focusing on these specific areas in the domain that you’re servicing?

Carlos:
Yeah. So right now payments. It’s obviously a huge, you know, opportunity. I mean, when you look at, for instance, the Remittance market, this corridor between the US and Mexico is one of the biggest in the world. But it’san old process, right? When people in the US send money back home, the commissions are upwards to 10% right, so and the average amount is $300. So if you send $300 and they take $30 right out of the bat, I mean, there’s obviously a problem there and a lot of startups are trying to, you know, solve that. I mean, the issue here is you have such traditional legacy institutions like, you know, Western Union, which they are trying to innovate in the space. But it’s not gonna be that easy to move them aside, right? Uh, so payments obviously represents a huge opportunity, and it’s an entryway also to banked the unbanked, right? I mean, once you provide, you know, a payment railway, you can start offering different financial services like, you know, loans, credit cards, even insurance. I mean, insurance represents a huge opportunity in Latin as a whole, where most people don’t even own any type of insurance. Right? So that’s one particular sector where there’s a lot of innovations, a lot of stars trying to operate in to solve some of the problems. And it’s one of the business verticals in Mexico, at least that currently falls within the defender claw. So that also provides, you know, a lot of certainty to the investors and the entire stakeholders in the payment ecosystem, right, because they’re operating under a regulated entity. So that’s one of the sectors that’s definitely been growing in the past few years. Loans, you know, represent a huge opportunity. I’ve been going back to, uh, what I was saying about, you know, working banks. I mean, in Mexico, 98% of the GDP comes from SMEs, and it’s a sector that underserved by the traditional finance industry. So SMEs have to look for alternative means of financing and obviously a lot of these new fintech, uh, solutions provide this alternative resources, right? Wealth management is definitely an interesting space. I mean, the investment culture in Mexico right now, it’s not that common, but you know, this new generation of millennials that are more digital adapt are looking for, you know, solutions or easy manners to actually invest some of their incomes. So there are a few players working around that specific space. Yeah, that’s, uh, you know, some of the hot industry’s right now, Obviously, there are other business verticals that will definitely play a key role. Like you said, identity management. Enterprise resource management. You know, a Blockchain. I mean, going back to part of our specific. I mean, crypto is a huge, uh, use case right now in Latin America as a whole. You know, in, uh, countries like Argentina, Venezuela, that, given the macroeconomic environment that they’re experiencing, they look at crypto as a store of value, right? And they have to go through a centralized entity like the exchanges to get access to this type of, uh, uh, store of value of Bitcoin or ethereum. right. So that’s also involves within Fintech. You know, the use of blocks in technology and crypt as a whole defies another interesting space. A lot of the innovation is going out outside of Latin America. But a lot of users in Latin America, right? Uh, so, yeah, it’s, uh that’s what the exciting times to be in space right now.

Jeffery:
Well, you’ve got a massive population that you’re feeding, right? And one of the interesting things you mentioned was that 50% of, um, I don’t know if it’s just in Mexico or it was in Latin, uh, that don’t have bank accounts. So how does the fintech space start to attack that? You mentioned the mobile phone that’s pretty prevalent in other countries. In India. They’re having this phase with the same problem in Africa. Um, as a whole continent. Um, they’re all kind of going through the same change, but they’re using, you know, maybe mobile phones, like tap phones, um, to kind of solve some of those immediate problems. What types of businesses are trying to tackle the unbankable and are they trying to convert them into banking? Um And is it worth the effort? Or I’m assuming that means that they run bankable thereon, taxable. So is there really a value that you’re even trying to drive out of that populist even though it’s a massive number of people?

Carlos:
Yeah. I mean, is it profitable or worth it? I mean, just look at New Bank, right? New Bank from from Brazil. And I have around 30 million users, I think, and there are currently valued at $25 billion right? And they’re expanding to Mexico, obviously, because the opportunity, I mean, Brazil and Mexico, two of the biggest countries in Latin with the largest population. Obviously, uh, so I’d say, yeah, it’s definitely worth it. And, you know, being able to provide, you know, even the debit account and then start, you know, educating them and providing other financial solutions will definitely expand, you know, sort of the the the the the the solutions that some someone like new bank currently offers, right? Yes. The deputy account is just the entryway and a way for them to experience, you know, the traditional financial experience. I mean, when you look at Mexico. Most of transactions are done with cash, right? I think the it’s over 90% of business traction transactions is done in cash, right? Alright with COVID. Obviously, cash represents an additional risk, right? So there has been this massive digital adoption into, uh, tech solutions that, uh, you know, sort of minimize the risk of getting covid. Right. So, yes, Covid has had obviously a big downside on in globally and in the region. But it’s driven this digital adoption into, you know, Frontex, e-commerce. you know, even healthcare, telemedicine is right now a an interesting space to look at. So, yeah, it’s, uh, it’s a worth looking at. You know how technology has an impact on all of these different businesses, you know?

Jeffery:
Oh, I agree. And it’s another great point you made is that you’ve got a high number of users that are transacting in currency, in cash, versus using digital credit cards, loan dollars, whatever that might be. And with that high transaction, now you’re shifting that model again. So you’re pushing people to start using more digital transfers, more digital means to do something. In Canadai I think two or three years ago, I did an assessment on cash to credit card and they have been making a big push over the last five years to credit card and interact massive and it was probably sitting at about 40% were still using cash. Today it’s probably down to 5% and I’m assuming that 5% is just non traceable. And that’s probably the reason for it because most people don’t care anymore. They’re just like, transact, touch and go right. So I think the pandemic has helped elevate that process. Now, when you’re going into that, 50% of people that are in unbankable and there’s probably 10% that are in Canada, whatever that number is, and in North America it’s probably higher, too, is that there’s a lot of transactions that are happening in smaller SMEs and cash is the only way to make that transfer because they don’t want to pay for the system because they lose profit and you know they’re surviving off the dollars that they make in that transaction. So there’s probably going to be some good solutions that can offer that value, and I think from the viewership side of what we’re doing is really trying to explore and understand, like, hey, there’s some opportunities here, um that are in this market and it’s not being filled yet. So there is potential for other fintech Blockchain events to start doing something in Mexico and And what would be that process that you would recommend? It’s always I find companies that operate in a country like Mexico tend to operate and then go other places. They all want to tackle the market in America without tackling their own market and then people that are in America, they want to tackle their market in America because it’s so massive. And then eventually in a few years they will start to go out to other regions. Um, but I find that there’s never like Chile, has an amazing center and they try to hold everybody there. But then they’re all going somewhere else right away because they don’t feel the markets there. And how do you get people to stay in your market and operate it? Because I think it’s actually really smart to stay in Mexico. The amount of people there in the amount of transactions is massive. So how do you get these businesses to one stay and operate, but to build in long term plans, even if they are North American company?

Carlos:
Yeah, it’s, uh, an interesting dynamic. I mean, it’s in Latin America, like you said, Chile, for instance. It’s I mean, the population there is what, probably around 10 million Mexico were 100 and 20 million, right? So 12 times the size of Chile. So what we’ve seen in some of the Spanish speaking Latin countries is, once they prove their business model locally, they tend to expand to other a Latin countries. Mexico, being the biggest, is obviously it’s naturally their second, choice. So And we’ve seen, you know, some great successes in the region, like RAPPI from Colombia. Right? Which is now a unicorn. They got investment from South Bank, but I’d say their growth actually came from tackling the Mexican market. Right. Uh, so so this, You know, market dynamics of, you know, Latin countries expanding to other regions. Obviously, uh, Mexico, being a huge player there is because of the market opportunity, right? And when it comes from Mexico to other countries. It’s, you know, the cultural reality, the similarities between Spanish speaking Latin are so similar, obviously the language that you could see the entire region as a whole. Right? Brazil is a monster that, uh, it’s a little different, but outside of Brazil, I mean, you could look at Latin Spanish speaking Latin as as an entire market opportunity. And that’s why some of these Mexicans sort of that, you know, sort of prove their business locally. They want to start expanding to some of these tech house, like Colombia, Chile, Peru. You know, uh, so it seems just an interesting dynamic there and you know, closing this off, uh, Mexico, with the U. S. Also represents sort of an entryway into the US market. I mean, the Latin population in the U. S is huge, and it’s only continued to grow, right? So being able to, you know, provide value to, you know, Latin roots of people living in the US with Latin American backgrounds could eventually provide an entryway into the US market, which, like you said, I mean, it’s one of the biggest in the world, right? So this you know, market dynamics are interesting. And that’s why we’ve seen some of these startups go that way, you know.

Jeffery:
Now it makes sense. Um, and it sounds like it’s a very exciting time in Mexico and that, uh, start ups around the world and including, um, investors need to start looking at this market more because it is a really large market, and it’s starting to digitize and pick up and move pretty quick.

Carlos:
Yeah, and we started to see, you know, international VCs and investors tapping into Latin, but it’s still a very nascent ecosystem. I mean, the VC landscape in Mexico and Spanish speaking Latin is very small right now. So there is a huge, you know, opportunity to continue funding, innovation, entrepreneurship and at the earliest stages, right? So, yeah, it’s definitely an opportunity for some of these large institutional players to look at the Latin American opportunity.

Jeffery:
I love it. Um, one other. I guess just before we go into the rapid fire questions that have one more kind of bigger question. And that is you know, through the time that you’ve been working in across this, the networks that you’ve been involved in, of course, on the investment side, the capital side. Have you come across any real exciting stories of just one of those heartfelt stories of what it takes to be an entrepreneur? Um, and it really blew your mind how this company just went from nothing to heroes or something along those lines that just blew you away on what it takes. I always like to find that one story that just blows your mind that you couldn’t believe happened. And it was amazing to see.

Carlos:
Yeah, I mean, there are a lot in Latin, but, I mean, one that recently comes to mind is, uh, company called Albo. Here in Mexico, it’s a neobank. They’ve been in the market for less than five years, and they just raised a $42 million around one of the biggest series-A around in in Mexico. And when you listen to the founder, and, uh, he comes from a small state in Mexico. Right? So he experienced firsthand. Obviously this, lack of financial inclusion. He started building a solution around that, uh, and now Albo is one of the leading new banks in Mexico. And, you know, you listen to some of these entrepreneurs and their stories about you know how, they experienced firsthand all the problems and how they decided to tackle that opportunity to build a solution around that. And it’s, you know, there are a lot of cases like this, but that’s one that comes to mind. But yeah, it’s the beauty of, you know, uh, a country like Mexico, you know, you have such diverse population, right? From Carlos Slim being one of the richest guys in the world to, you know, people living in pretty much slumps. Right? So you’re able to get a first hand experience on all of the opportunities across the entire stack, right from the popular sector to the middle market to the 1% of 1%. Right. So this, uh, you know, dynamics across Mexico, and Latin as a whole, uh, you’ll find a lot of these exciting experiences from entrepreneurs all around.

Jeffery:
No, that’s awesome. Now that’s a good story. And I think if I remember correctly, Carlos Slim actually invested in a lot of startups they’re entity does a lot of investing.

Carlos:
Yeah. I mean, they had the amount of money he has, uh, been investing across, you know, the entire, uh, ecosystem. You know, startups. Uh, I mean, obviously, he’s a– He holds one of the biggest companies in Latin as a whole. And, uh, but yeah, yeah, it’s a mentality that started to change, right? Because Carlos Slim is, I think, 80 something years old. Uh, so you don’t see a lot of people in this age investing at the early stages, right? So it’s a family office, sort of practice that they’ve been applying in the ecosystem. And they’ve started to, you know, invest across the entire stack, So Yeah,

Jeffery:
sure. Well, I know there’s a really good ecosystem in Chihuahua, Mexico, because I spent some time there going to, uh I spoke at a pitch event and latam investment community. So shout out to the peeps in Chihuahua because it was possible to be there, but yeah, I love it. So, Carlos, we’re gonna jump into the rapid fire questions.

Carlos:
Ready

Jeffery:
All right. So first question, how did you get started in investing in startups.

Carlos:
So the first, you know, angel investment that I met was probably around 10 years ago. I had a friend come to me and tell me about this e commerce opportunity, to import goods from China. Right. So we had a common friend that was living in China at the time when he was telling us about, you know, all the innovation going on there, how cheap the products were, and enormous opportunity we represent to, you know, import all these products to Mexico and start telling them here. So that was the first time the decision was in a in a day, pretty much right and it was a brief experience. I mean, we had some great returns, but at the time, we didn’t have any of us like, specifically focused on running the business. You know, one of the early learnings that we have as entrepreneurs. So we decided to close the shop, but, uh, that was the first time, you know, I sort of came into the space and never looked back.

Jeffery:
I love it. That’s awesome. What’s your favorite part of investing?

Carlos:
My favorite part is, uh, you know, getting to know people learning about new business ideas, new technologies, new solutions. You know, being able to learn something new every day is definitely one of the exciting parts of being in the investment. A side of the table.

Jeffery:
I liked it. How many companies do you invest in per year?

Carlos:
So right now, our target is to invest in around five companies per year. To have a portfolio around the 15 companies for the for the fund one

Jeffery:
And that the fund one is going to be 10 million, Correct?

Carlos:
Yeah, exactly. That’s our target right now.

Jeffery:
Okay, Good. Any? Well, any specific verticals are going to focus on. I know the answer, but we’ll re emphasize it one more time.

Carlos:
Yeah, obviously, given our expertise right now, our focus is fintech, which encompasses different business verticals. Like I was saying, Um, but yeah, that’s where you know, we’re able to have more value to the entrepreneurs that we work. You know, our goal is to bring a cancer approach, you know, through our experience as operators, entrepreneurs in the fintech space and investor, so yeah, that’s our current focus right now.

Jeffery:
I love it. Is there any requirements that you need before you make it a commitment on the due diligence side from — it could be anything like, what’s the specific thing that you really look for to make sure you make that investment outside of it being your buddy, what’s the thing you look for the most?

Carlos:
Uh, yeah, we try to look, you know, part of traditional due diligence format. So we obviously look at, you know, the team, the market opportunity, the business timing, obviously. I mean, if you came out with a solution like Netflix in 2000, you know, timing wasn’t great, right? So that’s one — the the scalability, obviously of the business, that technology stack for us is very important. The key differentiators, obviously of the team and the startup, those are some of the key components that we try to focus on initially. I mean, part of our thesis is the best at the seed stage. So obviously a lot of the traditional I’d say due diligence materials are not there yet, So we try to focus on others. Fundamental.

Jeffery:
Okay. And you have a timeline for investment from the first conversation to the investment.

Carlos:
Yeah, we try to be as agile as possible. I mean, uh, depending, obviously on how long we’ve known the entrepreneurs or the opportunity we We try to be a agile between two and eight weeks, right?

Jeffery:
Okay. Perfect. Um, is there anything else that will help you align? You mentioned the team. Is there a focus on product service? CEO like, are those also important, Or you just want a rockstar team and you’re willing to go with that?

Carlos:
Um, yeah. It’s obviously the problem that their time trying to tackle the solution, their go to market strategies. The manifestation of the business, obviously something that we look at. But yeah, it’s a combination, how crowded the spaces, you know who your competitors are, How you plan on differentiating or, you know, uh, tackling the problem that they’re trying to solve different, right. So, yeah, it’s, uh, you know, a combination of different factors.

Jeffery:
Okay. Do you love to lead rounds?

Carlos:
At the seed stage, yeah. So I mean, the investment dynamics in the region are a little bit different. So to give an idea, our investment thesis is to invest at the seed stage. Tickets from 50 up to $250,000. That’s the state that we’re comfortable leading and co invest at early-stage and early growth. Uh, tickets ranging, uh, from 5. 500 up to up to a million.

Jeffery:
Perfect. Do you have preferred terms? So pref shares, common shares?

Carlos:
Um, yeah. I mean, so right now, obviously, you know, save some convertible notes at the seed stage are common practice. Uh, but we do like to, you know, when we do equity investments, have a for chairs with traditionally, you know, pro rata rights. And depending on the opportunity and how we’re able to add value, have a board seat as well. You know,

Jeffery:
I like it, no that’s good. And are you looking to do follow on investments and what percentage of that would be follow on?

Carlos:
Yeah. So our strategy is a 50% you know, following strategy. So if we invest 250,000 at the seed stage, we’ll usually reserve 250,000 for the next stage. Yeah, that’s currently our reserved strategy.

Jeffery:
I love it. Okay. Well, um, outside that I think you’ve we’ve We’ve hammered home all of the questions I have on the quick snapshot, I guess questions. And the last thing that I want to kind of push into is something more on the personal side. So what is your favorite, uh, sports team?

Carlos:
Any sport?

Jeffery:
Any sport, anything. Just favorite sports team

Carlos:
Necaxa. Necaxa is the soccer, we call it football. Obviously, a team here in Mexico. That’s my favorite team right now. Other Sports… The NFL. I’m a huge fan. Patriots. Obviously. I lived in Boston, so they are my go-to team right now.

Jeffery:
No, they’re okay too. They’re doing all right. So on the on the football side, I just have to ask so the team what league are they in?

Carlos:
The Mexican league.

Jeffery:
Oh, okay. Yeah. I’m not sure I’ve seen them. When I was there I catch games. I go catch games all over the world. Wherever I can, I jump in and watch a game. So?

Carlos:
So Necaxa was the team of the nineties decade. So, we’re trying to have a comeback. Okay, A bit of a tough last couple of decades, but…

Jeffery:
Sounds like it. Yeah. All right. Okay. That’s not a bad thing. Means you got some room to grow.

Carlos:
Exactly. Exactly. They’re like most start ups, you know. Yeah,

Jeffery:
Exactly. Were they? I’m trying to remember, But a couple years ago, they were in the CONCACAF Cup or something, or TFC played them? Was that — they were part of the Mexico league. I don’t know if it would have been them. Probably not,

Carlos:
Hmmm (inaudible)

Jeffery:
There was a game that was played. I went and saw it. And it was when TFC was really bad. Which is our football —

Carlos:
Uniform is, uh, white and red with lightning lightning.

Jeffery:
Okay, I’m gonna look him up. I’m gonna look them up. Yeah, All right. Very cool.

Carlos:
Google Mexico’s nineties team. You’ll see the guys are there, but for sure,

Jeffery:
it’s rare to be being referenced that your favorite team is from the nineties, that it’s trying to make a comeback, So yeah, it’s interesting.

Carlos:
I mean, the two most common are America and Chibas. Yeah, I

Jeffery:
I know them. Yeah, of course.

Carlos:
Puma’s is also big in Mexico City. Uh,

Jeffery:
I think the Chibas are the one that came to Toronto and played.

Carlos:
Yeah, I think they were. Chibas was just in the the Club World Cup. Playing against what was it forgot against who they played. Chibas are from the northern part of Mexico. They are kind of one of the best teams in Mexico, but, yeah, we have a lot of teams.

Jeffery:
Yeah, and they’ve got good soccer. I’m a big fan. Big fan. It’s soccer. Yeah. All right. Last question. Favorite movie. And what character would you play in the movie?

Carlos:
Tough question, man. But I’m a big fan of Interstellar.

Jeffery:
Interstellar?

Carlos:
Yes. I love interstellar. I love the entire concept, You know, a space travel and, you know, different. Um, you know, time concepts, everything and which character? Obviously, Matthew McConaughey’s role in there.

Jeffery:
What’s interesting is that and I have to go back to my notes, but I think you’re the third person that I’ve interviewed that has liked that movie.

Carlos:
Really?

Jeffery:
Of all movies, You’re like the third person, which is it must be that this must be. And I remember watching this movie.

Carlos:
You haven’t seen it?

Jeffery:
Yeah, I’ve seen it, but it had such an impact. I didn’t think like you know what I mean? Like, there’s so many movies out there and out of, like, 75 people, three of them all picked interstellar, So that’s pretty incredible.

Carlos:
So what’s yours?

Jeffery:
Oh, man, I I’ve never been asked. So, uh, you’re the first one, and I was I’ve always been planning to, uh I’m like, Okay, man, if somebody ever asked me, I should probably have, uh what is my favorite movie like? I’m a huge um Star Trek and, um, Jedi and all of those those movies. And I like a bunch of movies, right? Um, and one of them. And I’m just trying to remember the name right now, so it’s totally gonna, um And I literally was trying to practice this beforehand because I’m like, don’t get on the spot because you’re on the spot. You’re gonna you’re gonna screw it up because you’re gonna be all nervous. It was what I really liked about it. It was a piano one where the guy’s learning to. He’s playing the piano and his teachers, like all over them, Um,

Carlos:
And or or the drums?

Jeffery:
No, it’s It’s the —

Carlos:
Isn’t it um? Look at the forgot the name preparation, but it’s nothing. It’s got nothing to do with Star Trek, Star Wars and that sort of general man?

Jeffery:
No, it was more of the reason why I like this movie. And I picked the character, and I remember this after we’re done talking, It was the drive and the impact that the musician went through. But he never settled to not want to be the best. And he worked so hard and even though he took a beating from the coach or from the teacher and it would look like complete abuse of how this person went through it. But in the musician’s mind couldn’t see that it was abused. Just saw the fact that he had a goal and that his goal is the most important thing. And he was going to take whatever information he had to to get there. So I don’t know why can’t figure this movie and it’s gonna come to me after, So, um, maybe it was —

Carlos:
Yeah. No. Right, So it’s not whiplash?

Jeffery:
Whiplash. That’s the one. It was. It’s the drum. Yeah,

Carlos:
He’s a drummer.

Jeffery:
I don’t know why I was thinking piano, but it’s, uh

Carlos:
Yeah, yeah,

Jeffery:
Yeah. So I like that, uh, one. I love the movie, but to just the character of the guy on the drums, just what he went through and how he went through it. And literally like a week ago, I was thinking about this, and I’m like, someone’s going to ask you this question and I better be able to answer it. And then this one popped in my head. So I’m like, Oh, that’s the one. I like that one. So, the reason why I do this and I mentioned this when I do the chats is because it reflects a lot of the personality of the person, Um when they can figure out a character that matches who they are. I learned so much about it. So if I haven’t seen the movie, I go and watch the movie. And I’m, like, impressed. I was talking with a guy today JJ, out of the U. S. And uh, when we were talking, I said, I tell your story all the time because when I asked him, it might have been the first show. I asked him and he said, uh, Yoda and I was like, What? You play Yoda. I’m like, you look more like, uh, one of the other characters, and he’s like, No man Yoda. And I was like, I love it. So today, when I when we had a call, um, on the screen behind him, he had Yoda on the screen, so I thought that was pretty awesome. I’m like Yoda! Brilliant! So, yeah, I think it really depicts a lot of, uh, the character that you kind of believe in yourself. And what it does for me is allows me to match up your personality to the type of character and which I love. If that everybody is Interstellar and they’re all Matthew McConaughey, then this is going to be easy to understand. Everybody is so I won’t have to remember anything. I’ll be like everybody’s Matthew, done!

Carlos:
Yeah, exactly. Yeah, I love interesting exercise, but, I mean, there are a lot of great movies out there, So, uh, if I told you. You know that my favorite movie was the Lion King and I wanted to play Simba. I mean, then you think differently off me, right?

Jeffery:
Well, I might think they know at the end, he came through. So I’ll say that you might be a bit of a shark and a bit of a bad guy at the beginning, but at the end, you came through and you helped out. So I guess there’s a win in there in the end. But we’ve got to wait for it.

Carlos:
Exactly.

Jeffery:
Well, either way, Carlos, it was a pleasure. I really enjoyed the conversation. We learned a lot about the background, the banking and everything else. And how you guys are focused on how the funds working. Very exciting. You’re laying new ground in Mexico with this and I and we wish you all the success. I know. We’re gonna get to chat more. Hopefully, we’ll see you on the 25th. And in the fashion of our show, we like to give you the last word. So anything you want to share to other investors or to entrepreneurs? Um, over to you.

Carlos:
Yeah. No, thank you. It’s uh, was a great time Jeffrey getting a chance to do this. Uh, you know, we’re always looking to connect with people in the space. Uh, if you’re not looking at Latin America and I encourage you, obviously, you know, the market opportunity to dynamics are there. And there’s a huge opportunity to continue funding, uh, in the region and feel free to, you know, reach out. And, uh, we’re always looking to explore like this, you know, opportunities to meet people from different parts of the world and find opportunities to collaborate in this ecosystem.

Jeffery:
I love it. Well, when we get this blasted out there, hopefully we can help make lots of new connections and, uh, get those conversations going. So again, Carlos, thank you very much, and we’ll be in touch and we’ll send you the video once we push it all out. We started putting them on the podcast on the podcast channels. That’ll take a little bit longer because supporters fund website, they’re all loading in, and then the other side it takes a bit longer. So it’s all about releasing content in a nice sequence. So we’ll keep you posted, and we look forward to chatting again.

Carlos:
That’s great. Thank you very much, Jeffrey.

Jeffery:
All right,

Carlos:
Have a great day.

Jeffery:
Okay, that was brilliant. That was a lot of fun. Uh, and I can’t believe I could remember the name of Whiplash and that he was not playing the piano, that he was playing the drums one of those days, I guess. But either way, it was awesome to chat with him and Carlos’ background, really exploring that side of fintech and diving into the past experience of through the banking systems and understanding that and how much that’s going to make a difference in his drive. I think that being in the Blockchain fintech, it’s really advanced. And, you know, they’ve got a really good structure on the types of companies are looking for in that seed stage. So pretty exciting. So stay tuned, and we’ll share that soon. But thank you, everybody for joining in.

Contact us

Are you interested in meeting Carlos, we will be happy to make an introduction!

Are you an angel investor and would like to participate in an upcoming show?