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Hernan Fernandez is the founder and co-manager of Angel Ventures, where he manages the deal flow, investor relations and equity responsibility for the value creation of the investment portfolio. He is also the founder of the largest investment network of angels in Latin America.
He is currently a member of the Board of Directors of the Mexican Physical Education Association. & V.C. Fund (AMEXCAP). Prior to Angel Ventures, Hernan began his career as a corporate lawyer with PwC Mexico City and Paris, as a consultant to the Corporate Sustainability Initiative of the United Nations Development Programme in the United States and Paraguay, and as a management consultant to Strategy& (formerly Booz & Company) in Mexico City.
According to TechCrunch, it has been identified as one of the 30 CNN/Expansion commitments in Mexico and the most influential of the Mexican Angel Investors. Hernan holds a Master of Business Administration (MBA) from the Sloan School of Management of MIT and a law degree from ITAM in Mexico. The A.V. has put together a strong and flexible team, world-class processes developed in-house and a diverse group of consultants, mentors and allies who provide not only the capital, but above all the talent, relationships and intellectual resources.
The management team has extensive experience in business development and growth, private equity transactions, management and operation of venture capital funds, mergers and acquisitions, the creation of start-ups and new business units, as well as strategic advice and operational management of multinational conglomerates.
In an exclusive interview with the AsiaTechDaily, Hernan states
I make sure I meet interesting people every day. One day it may be an entrepreneur, the next day an investor or an ally. It’s really a job where you never stop studying. You can have breakfast while listening to a presentation on the travel comparison site and have lunch while talking about medical equipment. It is important to understand your own limitations. Somehow I feel like the Wizard of Oz, many people come to me for answers and often I don’t get them. You have to be modest and surround yourself with people who are smarter than you. Each time you succeed, you raise your own bar and get better at what you do, but you must always show empathy and humility towards the contractor who gives his life for a project that you will approve or discredit in 60 minutes of your time.
Never take yourself too seriously, but take your own happiness very seriously. You don’t have to be the best at anything. It is enough to be kind and humble to find people who are better than you in a certain area to advise you. Luckily there are people who work very hard for that.
Read on to learn more about Hernan Fernandez and his career.
What kind of training and experience do you have in this field?
Hernan Fernandez: Already in 2008 we launched the first professional network of angel investors in Mexico. The asset class was still in its infancy at the time. Our experience includes managing the network, pipeline and investments until 2013, when we launched our first co-investment fund.
When did you get the idea to set up a fund?
Hernan Fernandez: After several years of managing the pipeline and investing in the network, we realized that investors were interested in accessing industries outside their area of expertise. Because we were (and still are) generalists, we were the right choice and had to make sure we had best-in-class processes and that we could use the network to provide the portfolio company with excellent business opportunities.
In which start-ups/sectors have you invested so far?
Hernan Fernandez: Our portfolio is highly diversified and includes industries such as Fintech (including many new industries such as Proptech or Insuretech), Healthtech, Foodtech, Media/IT, E-Commerce, Smart Cities and others. In general, we are looking for companies that are well suited to Latin America, taking advantage of its huge population and rapidly growing middle class.
In which companies would you like to invest? And what is your mental investment model?
Hernan Fernandez: Founders Founders Venture Capital is a well-functioning team that can do its job. You will be resilient and inventive to get through the hard times and get the best out of the good times. Venture capitalists need to expand their support network and help you get the most out of your team.
What is your typical investment range and how many start-ups do you invest in total in a year? Can foreign starters also be supported by you?
Hernan Fernandez: Normally we make the first notes from $1 to $3 million, but we can also make smaller transactions from the reduction fund. We make 10 to 12 investments a year, and yes, we can invest in foreign companies as long as there is a Latin American perspective. We’ve invested in B2Link. Kbeauty e-commerce/e-marketing is very successful and is currently expanding into Mexico, as the Latin American market for beauty products and cosmetics is now huge and even larger than China. So it’s a matter of figuring out where Latin America makes sense for a good founder, and we have a huge population that goes global and gets smarter every day.
What is the Key Performance Indicator (KPI) you usually look at for the growth of a start-up?
Hernan Fernandez: It may vary by sector, for example LTV, CAC, MoM etc., but it will be useful to learn more about your additional investment factors. Certainly, all of the above is always looking for a strong unitary economy. In our markets it is naive to think of continuous growth and bottomless financing, so we want all KPIs to be combined to tell the story of the ladder with a clear path to profitability.
How do you manage the COWID 19 epidemic to ensure the continued existence of your foundation in the future?
Hernan Fernandez: Fortunately, most companies that use the technology do that pretty well. Approximately 30 to 35% of the portfolio benefited from the COVID dynamic (Edtech, e-commerce), 50 to 60% was affected but not seriously (Mobility, Proptech), while 10 to 15% suffered most (Travel, Luxury Goods). We quickly intervened in all our businesses to save money until we could see what it would look like.
As soon as you become an investor, as in the beginning, there must be some difficult moments in the creation of the first fund, as well as in the creation of a second fund or the realization of good profits by this LP. If there are such difficult moments, let us know and tell us how you (or your team) overcame them.
Foundation 1 is the sale of a dream – a thesis, a team of stars that will appear, an untapped market or opportunity. To retrieve Fund 2, you need several winners of Fund 1 (ideally profit made), but of course good holding companies will make these calls. There will be no discussion about Foundation 3 if you cannot get an outing from your Foundation 3. All this implies balance, understanding of your main assets, constant communication with the main stakeholders (entrepreneurs and investors) and above all transparency.
Do you have any advice for setting up a fund?
Hernan Fernandez: Stay strong, Jay. Even when you start small, you have to like the work you do. A good RC is not necessarily a financial guru. You must be a coach, a cheerleader, a friend, a mystery shopper, a bitter critic, an ambassador. I think more of a good VC in the sense of a talent agent for a movie star (like the character of Ari Gold in a family movie). You need to become one with your entrepreneurs and help them solve their problems, not become one of them. A good contractor knows he won’t have any money in six months. In order to understand this model it is not necessary to have the skills of a financial model. He needs your help to solve the problem.
What mistakes do you think founders make when raising money?
Hernan Fernandez: Too much or too little money. Have faith. Launch of more than one project. Not open to possible conflicts of interest
What advice do you give to entrepreneurs who have the opportunity to meet investors like you? What are the 3 most important questions you always ask the founders?
Hernan Fernandez: I’ll tell the contractors to do their homework. Visit the website, view our investment thesis, find out more about our portfolio companies and how you fit in.
My three questions: – Why you and why now? What kept you awake at night while you were building this company or solving this problem? Who joins this company (The desire to hear from other team members and investing family and friends – the fact that your support network invests in your start-up says a lot about you and who you are).
What is your general opinion about the global concept and what are the important factors (criteria) that local start-ups should take into account in international expansion?
Hernan Fernandez: The markets are very similar. I think we see a new opportunity to move from the south to the south. We founded the Alliance South/South Venture with the Iliad partners in Dubai. Setting up a business in Mexico City solves the same problems as in Bangkok and Jakarta, probably more than in Amsterdam or Tokyo. There are many business models that are well received in similar countries with similar problems, and it would be interesting to explore them.
Which start-up or technical industry do you think will influence the world in the future, for example within 2 to 3 years at local level?
Hernan Fernandez: I’m a big fan of mobility and especially of shuttle systems. There’s public transportation in New York or Tokyo. You can complain that it is tight, that there are small delays, etc., but in general it is safe and efficient. An employee’s car journey to Mexico City, Cairo or Bangkok can take up to 4 hours a day. Moreover, it becomes a nightmare if this has to be done in the context of dangerous and uncomfortable decisions (heavily subsidised public transport). They now have companies like Shuttl, Volt Lines, SWVL and, in Latin America, our portfolio companies like Urbvan, MiAguila and Viapool. These are real problems for large groups of people who may not be able to afford a car or a car/taxi, but who may pay more than a cheap and subsidized means of transport. An emerging middle class in emerging markets is a great opportunity to do good and make serious money.
What are the three most popular books or movies (series) that changed your life and why?
Hernan Fernandez: Ben Horowitz is a classic in my work. It simply describes the difficult decisions we will have to make to build a business. Tim Burton’s Big Fish tells us the importance of good stories in our lives, and no matter how mundane your life may seem, if you look around you you will always find magic. I love that movie. I love The Simpsons for their humour and pragmatic approach to life. There’s so much wisdom in every episode if you know how to find it.
How do you maintain your motivation on a daily basis?
Hernan Fernandez: I make sure I meet interesting people every day. One day it may be an entrepreneur, the next day an investor or an ally. It’s really a job where you never stop studying. You can have breakfast while listening to a presentation on the travel comparison site and have lunch while talking about medical equipment. It is important to understand your own limitations. Somehow I feel like the Wizard of Oz, many people come to me for answers and often I don’t get them. You have to be modest and surround yourself with people who are smarter than you. Every time you succeed, you raise your own bar and get better at what you do, but you must always show empathy and humility towards the contractor who gives his life for a project that you will approve or discredit in 60 minutes of your time.
What are the three most important life lessons your (future) sons and daughters need to know?
Hernan Fernandez: Never take yourself too seriously, but take your own happiness very seriously. You don’t have to be the best at anything. It is enough to be kind and humble to find people who are better than you in a certain area to advise you. Luckily there are people who work very hard for that.
Why do you want to be remembered?
Hernan Fernandez: A good grandson, a son, a father, a husband, a cousin and a friend who was a pioneer in the industry he loved, in a country he was always trying to improve.
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