How is Magma's investment process?

We try to make the Magma investment process as efficient for founders as possible. We also try to make the process efficient for our investment team so that we can review the more than 1500 startups that we meet each year.

The goal of this post is to help you understand our process, and give you the best tips to stand out and increase your chances of raising money with Magma at each step. Even if you don’t raise money with Magma, many of these tips and strategies will help you with communications and raising from other investors.

The Magma Partners Investment Process

First Interaction

We almost never do a call 100% cold, without having received a Magma Memo, or an intro or a cold reach out that includes your deck or enough information about your company for us to decide if there's a decent chance we’ll invest, so we don’t waste your time. If you’re expecting a call without sending us information, it’s very unlikely to happen.

We generally fund startups via three channels:

Magma Memo - Our online channel that’s open 24/7/365.

~30% of successful investments come 100% cold from the Magma Memo. A higher % of successful investments come via referrals + a Magma Memo. It’s the absolute best way to get in contact with our investment team.

We respond to 100% of Magma Memos. We feel it's our duty: if you spend the time to tell us about your startup, we will give you feedback.

Read more: How to stand out when creating your Magma Memo

Read more: The Albo pre-seed Magma Memo: Why we invested after 100% cold outreach
If you’re a consultant helping startups, the Magma Memo is the best way to pitch us. See why here.

Referrals - From Magma founders, non-Magma founders, our Venture Partners, Series A VCs, our LPs, and Latin American family offices

We love meeting founders at any stage who people in our network tell us we should meet. We generally take first introductions via email or whatsapp, then ask for either a Magma Memo, a deck, a one page summary, or bullet points that give us enough information to decide if it makes sense to do an intro call. We sometimes ask additional questions via email, and then make a decision on whether it makes sense to do a call. 

Don’t feel bad if we don’t do a call. If we think there’s a low % chance we will invest, we want to tell you quickly so that you can prioritize your time with higher % VCs. Most of the time, we pass because your company might not fit our thesis, or that we’ve already funded a competitive company.

Relationships with founders - Founders we’ve developed a relationship with via asking good questions, writing good content on social media, or similar

Some of our investments come from founders who we’ve been in touch with for a long time before we fund them. We love to brainstorm startup ideas with entrepreneurs who are thinking about just getting started, and giving advice to founders who are in need of help.

The best way to start a relationship with us, even if you’re not raising money, or haven’t even gotten started yet, is to use this format to ask for help, or tell us about how we can help. We respond to 100% of all contacts that use this format.

First Call

After you create a Magma Memo or we’re introduced and we get some information about your startup, some startups progress to a first call with our investment team. Our entire investment team has check writing ability, which is not common in most VC firms. At pre-seed and seed, we’re generally pretty convinced in the first or second call if we should invest and spend the time on our DD process. Series A investments and some seed investments will require more conversations.

Preparing for your first call can be daunting, especially if you’ve never done it before. We created some tips that help us understand your startup efficiently, and even if we don’t invest, we hope will help you communicate your ideas more clearly and increase your odds of getting an investment from Magma or another firm.

Please be sure to read this article before our first call:

Check out NFX guide on storytelling, which is the best guide so far and has helped many founders approach fundraising in a better way.

Investment Process Post Call

Pre-seed - We commit in the first call fairly rarely, but it happens. Most of the time we need to have a conversation with the rest of our team, or ask for follow up information. We generally don’t do more than 2 meetings at pre-seed: if we’re not confident in the team at this stage, we won’t invest. We’re generally looking for amazing teams that we think can build a $1B+ business in Latin America. Anyone on our investment team can make a pre-seed investment, so this process is quick.

Seed

We sometimes commit in the call, but generally do our team meeting to review, and send more questions. Many times we will do a second call to get to know you/your team, and build a longer term relationship. Generally, our process can be done within 1-3 weeks, but for larger seeds it may take longer.

Series A

We generally lead Series A rounds only for portfolio companies we’ve already invested in, or startups led by underestimated founders that the rest of the market is overlooking. We love to participate as followers in Series A’s of companies we missed at an earlier stage, but are unlikely to lead. We will do more follow up calls, and many times an in person meeting for bigger checks, along with a more involved DD process.

If you’d like to get in touch with our investment team, please fill out a Magma Memo and we’ll be in touch!