José Ortiz, Mercado Libre | The startup that invests in startups [Ep. 20]

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

In this episode, we talk with Jose Ortiz, Director of Corporate Development at Mercado Libre, to learn how the most valuable technology company in Latin America invests in startups. Mercado Libre started as a marketplace startup and managed to expand successfully into other businesses such as payments, financing, and logistics.

To date, Mercado Libre’s Corporate Venture Capital fund, also known as MeLi Fund, has invested in more than 34 startups, including Simetrik, Digital House, and Sirena.

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Origin and History of Mercado Libre Fund

  • [1:07] - How did José Ortiz arrive at the world of startups?
    • Creating a company in university
  • [2:52] - What is Mercado Libre Fund and what role does it play?
    • Investing in technology companies that democratize commerce and access to financial services
    • Staying in constant contact with new trends and technologies
  • [6:05] - The evolution of Mercado Libre Fund’s Corporate Venture Capital strategy
    • Investment in early-stage startups to develop integrations around Mercado Libre
    • Investment in growth-stage startups that are not necessarily integrated with Mercado Libre
  • [9:26] - The implications of being a startup that invests in startups
    • Collaborating with the ecosystem to obtain a financial return
    • Maintaining a culture of technological development and internal innovation

Mercado Libre’s Investment Thesis in Startups

  • [11:44] - Mercado Libre Fund’s investment thesis
    • Commerce and financial services
    • Startups at the Series A and Series B stage
    • Investment focused on Latin America
  • [13:20] - How does Mercado Libre Fund work with other funds?
    • Sharing information and ideas with other investors
  • [14:17] - Advantages of raising capital from a corporate venture capital fund like Mercado Libre instead of a traditional fund
    • Specialized in e-commerce and fintech
    • Greater regional presence
    • A better regional and global network
    • Greater experience in business management and in problem solving
  • [19:06] - José’s opinion on the right stage for a startup to raise capital from a corporate
    • Complexity when it comes to achieving synergies at the seed stage
    • Uncertainty and lack of structure of a seed-stage startup
    • Long sales cycles when selling to corporations
  • [23:03] - How does Mercado Libre evaluate whether it is better to invest in a startup, acquire it, or develop the product or technology internally?
    • Synergy between the startup and Mercado Libre
    • Analyzing the team and the technological implications
    • Evaluating the case and the opportunity cost with the investment committee
    • Fit with the investment thesis

Startup Acquisition Strategy

  • [28:46] - The profile of the startups acquired by Mercado Libre Fund
    • Looking for a fit between the startup’s technology and Mercado Libre’s vision
    • The complexity of acquiring and integrating startups into Mercado Libre
  • [33:36] - Mercado Libre’s position when a startup it has invested in receives acquisition offers from other corporates
    • Sirena’s acquisition process
    • Keeping the process confidential
    • Avoiding interference when there is not a good fit
    • Controlling FOMO (fear of missing out)
    • Being transparent with the team
  • [38:20] - Mercado Libre’s position on companies that help e-commerce sellers consolidate a business
    • Always looking to support the ecosystem and small businesses
    • Supporting the growth of the ecosystem and Mercado Libre’s business
    • Keeping communication with all sellers and supporting one another
  • [40:50] - The future of Mercado Libre
    • Great growth potential in the e-commerce and fintech sector
    • Listening to the customer and creating relevant products around Mercado Libre

Tweet Round

  • [45:22] -
    • Verticals/trends where José would like to see more startups: edtech and environmental impact
    • Recommended books: The Lean Startup by Eric Reis
    • Changes in the Latin American startup ecosystem: greater gender diversity
    • Entrepreneur to interview: the Kazsek team

Episode Mentions

You can find José on Linkedin, on Twitter, and on his Blog

Recommended books: The Lean Startup by Eric Ries

Entrepreneurs to interview: Nicolas Szekasy and Hernan Kazah of Kazsek

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