After hearing that 500 Startups had formally acquired the venture capital fund he helped co-found, Mexican.vc, I reached out to David Weekly. He was kind enough to share the following insights about the deal. Thanks for your time, David!
LASB: Unless I’m very much mistaken, this is a bit unusual in the sense that 500Startups typically invests in companies rather than other VC funds. How did this acquisition evolve from your side?
DW: Dave [McClure] was actually one of the very first people I emailed about my idea for a seed fund for Mexican hackers. Literally the night I had the idea for Mexican.VC – at Celeste North’s “SG Emprende” conference in Mexico City late 2010 – I sent Dave an email with the subject like ”500 Sombreros” proposing that 500 Startups look at investing in Mexican tech companies. (Fun sidenote, Mexican.VC later ended up funding Celeste’s startup, NuFlick!) So I made sure to rope him in very early on. He was actually – rather by accident – our largest limited partner in the original Mexican.VC fund. With two of our companies later joining 500 Startups and Dave bringing Geeks On A Plane down to Mexico City earlier this year, I think – like me – Dave was pretty impressed by the quality of entrepreneurs he saw down there as well as the potential in the market. We had been talking for a while about where we might want to take the second fund and whether it would make sense to run it more traditionally or as a part of 500, and after a few months, both sides came to the conclusion that having it be a part of 500 would be the most awesome outcome possible.
LASB: What do you think we can extrapolate from this development about the startup ecosystem in Mexico and/or perhaps Latin America more generally?
DW: Well, its time has come! A lot of that is due to the “cultural seeding” work that Cesar [Salazar] and Santiago [Zavala] have done spreading DevHouses and StartupWeekends as well as Wayra’s program, the popularity of Campus Party, support from the government, and players like Alta Ventures developing the later-stage portions of the market. I think we were sitting on this enormous fuel depot of quality engineering talent and design talent and it just needed a spark.
The LATAM adoption rates for new technology like Twitter and Facebook are pretty astounding. (Half of the top 10 worldwide markets ranked by time spent on social networking sites are in Latin America! http://www.comscore.com/Press_
And there’s huge potential in infrastructure, e.g. work that needs to be done to empower consumers to buy online that doesn’t involve a walk to OXXO to actually transact.
LASB: What’s next? Does Mexican.vc stay a separate but wholly owned part of 500 Startups? Does 500 Startups open an office in Mexico City?
DW: We’re going to retain the brand, which we think has a fair amount of cache in the startup circles in Mexico. I think we’ve struck an appropriate balance between autonomy and joining a larger global team.