Nathan Lustig, Magma Partners | Investing In and Raising For Underestimated Founders [Ep. 25]

The audio and video are in Spanish. These notes are a translation.

In this episode we talk with Nathan Lustig, partner and founder of Magma Partners, one of the leading seed funds in Latin America. Over the last 2 years, stories of entrepreneurs who raise capital with a power point have become more and more common. This is great and shows that today, more than ever, there is more capital and interest in Latin American startups.

However, the reality is that raising capital is still quite hard for most entrepreneurs who did not have the chance to study at a renowned university, work in elite professions such as investment banking or consulting, or simply have less access to capital because of geographic or social conditions.

To date, Magma Partners has invested about 70 million dollars in startups across Latin America and its portfolio includes companies such as Albo, Kushki, and Nuvocargo.

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Origin and Thesis of Magma Partners

• [2:11] - How did Nathan get into the world of startups in Latin America?
  • Early years of university in the USA
  • Building a company with a friend
  • Start-up Chile
• [5:05] - Magma Partners and its investment thesis
  • Combining the best of Sillicon Valley with the best of LatAm
  • Early-stage investment for startups in Latin America
• [6:38] - The reason behind Magma Partners’ organizational structure
  • Supporting talent from across the region
  • Maximizing entrepreneurs’ ability to interact with the market
  • An agency model similar to that of Andreessen Horowitz

Underestimated Founders

• [17:46] - Elite entrepreneur vs underestimated entrepreneurs
  • Both are necessary for the ecosystem
  • The same chance of success for both when they reach Series B
• [21:00] - Why do VCs in Latin America and the USA invest mainly in elite entrepreneurs?
  • A simpler Due Dilligence process
  • Lower associated risk
  • Better justification for the fund’s partners
• [28:05] - What has to happen for there to be more diversity in the Venture Capital investor ecosystem?
  • More successful entrepreneurs becoming investors
  • Starting to receive the returns
• [33:35] - What does Magma Partners do differently to attract and work with underestimated entrepreneurs?
  • Spending time training the entrepreneurs
  • Helping them improve their strengths and work on their weaknesses
  • Empowering the internal team and the entrepreneurs’ teams
  • A community of founders with experience and willing to help each other
• [40:06] - Tips for designing and running a fundraising process as an underestimated entrepreneur
  • Recruiting people who strengthen the team
  • Building relationships with successful founders

Mexico and Brazil vs the Rest of LatAm

• [47:09] - Why does Magma Partners invest in Peru, Chile, Ecuador, etc instead of only in Mexico and Brazil, as other funds tend to do?
  • Prior experience investing in teams without knowing them in person
  • Beginnings in Chile
  • Potential of Peru, Chile, and Ecuador

Tweet Round

• [50:25]
  • Recommended book: Antifragile by Nassim Taleb
  • Changes in the startup ecosystem: helping more underestimated founders succeed, and increasing access to capital for new fund managers.
  • Entrepreneurs to interview: Cristobal Perdomo of Jaguar Ventures, Sebastián Castro of Kushki, and Johana Molina of Intern Group

Episode Mentions

You can find Nathan on Twitter and on Linkedin.

Article by Nathan: Elite entrepreneurs vs underestimated entrepreneurs

Recommended books: Antifragile by Nassim Taleb

Entrepreneurs: Cristobal Perdomo of Jaguar Ventures, Sebastián Castro of Kushki, and Johana Molina of Intern Group

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Follow Enzo Cavalie on X: @enzocavalie.