Andrés Barreto is a Colombian-American entrepreneur and investor who has focused on early stage startups in Latin America and the United States. He is managing director of the Techstars Boulder Accelerator program, which is currently running a remote/hybrid model and open to global startups.
What are the biggest tech investment opportunities in Latin America that are being overlooked?
We’ve seen a model that works in the United States being applied to Latin America. “Let’s get these blue chip founders that have all the right logos — the Stanfords, the HBSes.” There’s been a lot of money made there, and it’s still great. But what about the founders from a small town in Colombia creating robotics for food delivery, like we’ve seen with Kiwi? Those are not being evaluated right now, because if you’re doing machine learning or robotics, most of the VCs and even accelerators want to see a Carnegie Mellon grad or an ex-Google employee. But there’s talent beyond those geographies and those schools and companies creating global technology from the region.
How has the relationship between U.S. and Latin American tech changed through the pandemic?
I love it that founders in Latin America no longer have to fly to Silicon Valley to raise money. So it’s really leveled the playing field for fundraising. Also, there’s been a ton of new capital entering the Latin American market. And that’s exciting as well.
How do you view the current state of venture capital in Latin America?
It is blowing up—something like $9 billion dollars in the first half of 2021. It is split between a few companies, so it’s still concentrated capital, but it’s a very large amount. There is still a gap between pre-seed and seed, so you mostly have A rounds and B rounds, but it is a night and day difference from two years ago.
What do you think the balance is between local investors and foreign investors coming into Latin America?
I think it’s completely lopsided. Most of the capital is from outside of Latin America, and that’s been the case since I’ve been in the market in 2008, even in my own portfolio. I invested in about 85 companies before joining TechStars last September. I would say, out of the $300 million these startups have raised, less than a million or two have been from local investors. Now you have VCs like Kaszek, Monashees, and ALLVP who’ve created a track record — and are seen as the local partners for global VCs.
What can local investors do to shift that balance more in their favor?
Write checks faster. I always ask what’s the time between meeting a founder and getting money in the bank — if the founder meets all the investment criteria? I would get answers of six to nine months. And then the embarrassing part was the size of the check: $25,000. Companies that are not good enough for local investors are the ones getting bid up by Silicon Valley VCs. It’s about changing the mindset and seeing that you’re competing globally. It’s also about saying No faster.
*This 3 Minutes With interview first appeared in Rest of World’s weekly newsletter. Sign up here.