Greg Mitchell

Managing Partner


April 2019


2019 Letter to investors

2019 Letter to investors

Dear Investors, As we enter the second quarter of 2019, we are approaching the midpoint of the four-year investment period of AVP Seed Fund I, a pioneer fund in Peru. I would like to use this letter to provide an overview of the growth of our asset class in Latin America, share the fund’s performance and let you know what we expect for the coming year. The venture capital tide is rising across Latin America and I believe we are in a unique position to back entrepreneurs who are making a lasting impact in Peru and the region. Our fund can achieve strong risk adjusted returns by making sound investment decisions today and helping startups scale regionally in the future.

Venture capital trends in Peru and Latin America

Peru’s startup ecosystem is reaching a critical mass. Invested capital in startups raising seed stage rounds has increased from $5.6 million in 2016 to $9.1 million in 2018 (1). We are seeing more startups led by Peruvian founders reach Series A financing, including the recent $4.5 million round for Edtech startup Crehana. Venture capital is also growing inLatin America. In both 2017 and 2018, invested capital in startups across the region surpassed $1 billion compared to an average of $500 million in each of the previous four years2. New global investors are looking to invest in the region, highlighted by SoftBank’s recent announcement to raise a $5 billion venture capital fund dedicated to Latin America. This influx of capital means that seed stage startups, like the ones we invest in, will encounter more options to fund their growth and thereby increase the probability of a successful exit.

Fund strategy and investment thesis

In 2018, we set the tone for how the fund will operate and invest. Investing in startups is risky, so we aim to invest in a portfolio of startups and secure investment terms that allow us to stay informed and be involved. Thank you for participating in our selection process and actively supporting our portfolio companies as we set the standard for early stage investing in Peru. We believe we have provided investors value by (i) accessing opportunities not available to individual investors, (ii) acting as a lead investor in some investment rounds, and (iii) serving as board members for our portfolio companies. The fund has invested in six startups: SeguroSimple, Culqi, Fitco, Emptor, Rebus and Quantum Talent. These startups are led by diverse founding teams, including three female CEOs, with proven execution ability and complementary skills sets. The startups in our portfolio generate recurring revenues by providing essential technological “tools” for their clients. Local incumbents use these tools to accelerate digital transformation and maintain market share. Tech savvy new entrants need these tools to plug-in to local markets and launch. Our portfolio companies help them accomplish these vital tasks.

We aim to invest in a portfolio of startups and secure investment terms that allow us to stay informed and be involved.

Fund performance and the year ahead

Below are some of the highlights of the fund since the last letter: – We sold our participation in Culqi for 1.4x gross multiple on cash invested resulting in our first distribution to investors. – We made an investment in an Emptor, which was subsequently converted into preferred shares following an investment from Dila Capital, a venture capital firm based in Mexico. – We made investments in Rebus and Quantum Talent, two startups which achieved a regional footprint prior to our investment. As of March 31st, 2019, we have called 30% of fund capital, a total of $576,000, and have invested $300,000. We have distributed $71,738 to investors. Our portfolio’s value, currently held at cost, represents a 5.3x multiple of the annualized revenue3 of the underlying startups.

Looking ahead to the coming year of the fund:

– Our focus is to continue to build a portfolio of exceptional startups. – We expect to lead follow-on rounds in portfolio companies that are executing on growth and well-positioned to incorporate new investors. – We aim to support and monitor the portfolio by integrating advisors with specific expertise and use our board positions to promote adequate corporate governance. Please join us in following our startups’ key performance metrics each month by accessing our portfolio dashboard. We have sent you the link to this confidential information in a separate email. Thank you for trusting us to invest behind the entrepreneurs that are building Latin America’s future. Saludos, Greg

[1] PECAP, Peruvian Seed and Venture Capital Association. 
[2] LAVCA.
[3] Weighted revenue value across the portfolio calculated using Annual Recurring Revenue (ARR). ARR = Most recent month’s Monthly Recurring Revenue (MRR) x 12.