Discovering ways for a venture capital firm's portfolio companies to reach potential growth
Angel Ventures is one of the leading venture capital firms in Latin America. Founded in 2008 and based in Mexico City, the company seeks to “link great ideas with capital” by investing in startups with innovative business models tailored to the Latin American market. As Angel Ventures approached the divestment period for its first fund, the company tasked MIT Sloan's Global Entrepreneurship Lab (G-Lab) with developing exit strategies for two startups in its portfolio.
“We engaged the students to interact with some of our portfolio companies that have struggled to reach potential growth,” says Hernán Fernandez, MBA ’07, who serves as co-managing partner at Angel Ventures along with Camilo Kejner, MBA ’07. “Working with a team like this gives us a very interesting tool to put forward to founders, because the students can look at companies with fresh eyes.”
The first startup, a medical financing business, was negatively impacted by the COVID-19 pandemic. The G-Lab team explored new financing options for the company, including an initial coin offering in cryptocurrency and crowdfunding, before recommending the company pursue other options such as venture debt grants and partnerships with other companies. “Thanks to the MIT team, we now have a better understanding of this company and how to raise follow-on funding,” Fernandez says.
The second startup was focused on connecting Mexican consumers with credit products and financial instruments. The team assessed this company’s value proposition and explored the potential for its acquisition. “They helped us find a roadmap for potential targets,” Fernandez says. According to the student team—Eun Ah Choi, MBA ’21; Hunjoo Kim, LGO ’22; Jesus Moreno, MBA ’21; and Aziza Sultan Ahson, MBA ’21—this project revealed the degree to which risk posture and investment type can significantly impact strategy for divesting from a company near the end of a fund’s life.
“The Angel Ventures project was a terrific opportunity for a team of students from diverse degree programs and experiences to learn about a fascinating sector, venture capital,” says senior lecturer Shari Loessberg, who mentored the student team. “The students were able to work with the host at the most senior, strategic levels while also building close working relationships with the day-to-day managers. That provides extraordinary value.”