KITE Invest and Alta Ventures Mexico examine the growth of Mexico’s venture capital industry – “capital emprendedor”
Alta Ventures Mexico is an early-stage venture capital fund providing seed, venture and growth capital to entrepreneurs and companies targeting high-growth markets in Mexico and Latin America. Alta invests in opportunities in Internet, SaaS computing, mobile computing, consumer, security, communications and health care, and has helped launch more than 30 companies since opening its doors. KITE Invest spoke with Alta Ventures Mexico’s Co-Founder and active VC player, Paul Ahlstrom, about the dynamic market that Mexico and other emerging markets are offering investors.
KITE Invest: As an American and a former Founder of an American venture capital firm, what was the catalyst behind the formation of Alta Ventures Mexico, and why Mexico specifically?
Paul Ahlstrom: I began researching an international investment strategy in 2006. At the time I was Founder of a series of venture capital funds in the United States and investors showed interest in investing outside of the United States. We began deep research,looking at countries around the world demonstrating growth and stability. We noticed was that the global contribution of GDP growth by emerging markets was increasing, while the GDP growth contribution of advanced economies was decreasing, and foresaw the growth contributions crossing over within a few years’ time.
Many emerging markets demonstrated some interesting stability due to the low debt-to-GDP ratios and the deficit-to-GDP ratios. Countries like Mexico, Chile, and Peru showed great macroeconomic profiles while many advanced economies in Europe, the United States and Japan were upside down in terms of long-term stability.
We looked at hundreds of variables, but were mainly focused on long-term growth, encouraging demographics, country stability and equity availability. Mexico was very promising and very underserved. From this point we conducted over a hundred face-to-face meeting with different players in the ecosystem, starting with former President Vicente Fox. We developed a market-entry strategy and created a middle-market growth equity fund in Mexico. We launched the fund, Alta Growth Capital, in 2007 and began investing in early 2008 in middle market, profitable, and growing companies in Mexico.
At this point I received invitations from NAFIN in Mexico and the IFC, World Bank, to help establish and grow the venture capital industry in Mexico. Our primary research in growth equity uncovered a significant opportunity for earlier stage investing. In Mexico, the venture capital asset class was completely non-existent, despite Mexico’s trillion-dollar economy. I accepted the invitation, moved with my family in 2009 to begin creating a new venture capital industry in Mexico. In 2010 we hosted the first venture capital conference in Mexico, ‘The Monterrey Venture Capital Conference’ and created the first high-tech venture fund raising $70 million. Read more on KITE Invest