500 Startups is increasing its commitment to global investing witha new Latin America fund, targeting $10 million, going by the name ofLuchadores II, the Spanish word for wrestlers. The fund is 500s second aimed at the region and one of a growing number of its seed investment vehicles targeted at underserved markets across Europe, Asia and theAmericas.
The accelerator has been investing in Latin America in one form or another since 2010.Santiago Zavala, managing partner of the new fund,is targeting approximately 120 companies for investment with the fresh powderin hopes of pushing the number of Latin American unicorns into the double digits.
Dave McClure, founding partner of 500 Startups, has long been bullish on the arbitrage opportunities made available through international investing. Deals in the United States, particularly in Silicon Valley, are often priced at a premium because of their competitiveness.
Were seeing tento one leverage on additional capital Invested, said McClure of some international bets.500s investments in Latin America have gone on to raise more than $95 million in follow-on capital.
But the challenge of investing in Latin American startups is that they lack strong ecosystem support. Larger B, C and D rounds are hard to find in the region, and local acquirers that anchor an entrepreneurial ecosystem are limited.
This is why the International Finance Corporation (IFC) is joining 500 as a limited partner in its new fund. The IFC has traditionally invested in later-stage companies, but over the last two years ithas been involving itself in seed-stage funds as a limited partner.
Were trying to find a best of breed microfund managers in all developing markets, saidNikunj Jinsi,global head of VC investments for the IFC.
McClure points toAccel Partners, Index Ventures, Sequoia Capital and Tiger Global as funds that are doing their part to create international pipelines for startups from inception to exit.
Other funds arestarting too late and expecting developed companies, addedMcClure.
Some regions within Latin America have grown faster than others. Mexico City, where 500s operations are located, has matured, but other cities still lack strong mentor networks and other necessary resources.
500 Startups tries to maintain a strong relationship with its international affiliates through seed programs. The firm regularly sends partners to different geographies to mentor startups and offers foreign companies the opportunity to visit the Valley.
ThoughMcClure wouldnt commit to it, todays Latin American fund announcement hints strongly of things to come in Asia. The firm recently rekindled its presence in China, though it has yet to announce a dedicated fund in the region.