Magma Partners invests $25,000 to $5M from first check to Series A. While we’re best known for fintech, insurtech and prop tech, we’re a generalist firm at heart, looking to partner with the best founders in Latin America.
Stage: From First Check to Series A
Don’t be afraid to contact us early! We love to partner with founders as early as possible and are very happy to be the first check into your business, even before angel investors, or right alongside angel investors.
We’re very happy to write a small check to get to know you, or a larger check if it makes sense for you and your team.
We generally follow on from our first checks at Seed, or we can invest directly into a Seed stage company that we didn’t get to meet, or missed at first check stage.
We generally lead Series As for portfolio companies we’ve invested in at Pre-Seed or Seed, or underestimated founders with significant traction that we didn’t invest in early. We can lead with $1M-$5M checks.
We like to follow at Series A for non-Magma portfolio companies that we missed previously. When we follow, it's generally $1M-$3M, but we can be flexible on amounts both up and down if it makes sense for the company.
Types of companies
At our core, Magma is a generalist fund. While we’re best known for investing in fintech, insurtech, prop tech in companies like Kushki, Albo, Billpocket, Guros, R5 and Houm, we invest in startups across industries.
Our main core industries are:
- Fintech: Read our deep dive into how we think about fintech lending
- Insurtech: Check out how we think about Latin American insurtech
- Prop tech
- Marketplaces (especially vertical marketplaces): Why we think vertical marketplaces are going to boom in LatAm
- APIs - Truora, Prometeo: Why APIs might be the gateway to Latin America
- SaaS that could scale globally
- Amazing founders in other industries
We save a portion of the fund to invest in amazing founders that don’t fit these core industries, where we think we can add value, or things we’d like to learn about. Don’t be afraid to reach out if your startup isn’t in our core industries.
We generally shy away from physical products and things like biotech which we just don’t understand well.
What do we look for in a startup?
We look for: amazing teams, solving big problems, with a solid foundation (cap table) to scale.
We look for founders who share our values and have founder market fit: they are the best people to solve the problem they’re trying to solve. We like to see founders who have experience, either as founders, employees or life experience that shows us that you can build something and get over adversity. We love grit. We’re in this for 7-10 years, and hopefully a lifelong relationship even if we don’t get the outcome we all want, so optimizing for amazing people is really important to us.
Solving Big Problems
Big problems generally = big markets. We’re motivated by founders trying to make life better for Latin Americans. As Latin Americans, former founders and immigrants to the region, we generally have the same problems that founders are trying to solve for their users. We believe that if founders focus on a big problem they’ll likely be well compensated for it.
A Solid Foundation
A skyscraper (or a house) built without a strong, solid foundation will collapse, or only be able to be 1 or 2 stories. A startup needs to be able to scale, and a strong foundation is a key part of it. Things like inactive founders who have left the company and still retain significant equity, advisors who didn’t invest money with large stakes, and family offices/investors who own high % of the company are all yellow and red flags.
If we love you and your company, but your cap table is a mess, we’re willing to get into the weeds to help you fix it. But a messed up cap table will make us pass if we’re not 100% convinced that if you didn’t have the messed up cap table, we’d be able to expand.
How much money do you invest?
We invest from $25,000 to $5M. We like to lead rounds if we can, but we are also comfortable writing small checks to get to know companies and then follow on with larger checks in the future. We can be flexible with founders around allocations and check sizes, both up and down.
Do you only invest in Latin America?
Yes. We invest most of our capital in Spanish-speaking Latin America, and devote a smaller percentage of our capital to early stage Brazil-based companies.
We invest in companies that are either based in Latin America, do business in Latin America, or will be expanding to Latin America imminently. We also invest in Latin American immigrants or US Latins who may do business in Latin America in the future, or would like to have some of their team in Latin America.
What industries do you invest in?
Magma is a generalist firm, investing in all things technology. We’re best known for fintech, insurtech and prop tech, but we invest in anything that can solve a big problem and scale quickly. We generally avoid biotech and physical products, but we do make exceptions for amazing founders.
What is your investment process?
The best way to start talking with us is by creating a Magma Memo. It shouldn’t take more than 5 minutes to complete. This allows us to save you time and find out if you might be a fit for our investment thesis. You can read a detailed article about our process here.
Why won’t you meet me in person for a coffee? Why won’t you take a cold call?
We invest across all of Latin America and are comfortable investing via digital channels. We generally only meet founders before we invest at Series A, or if we happen to be in the same place at the right time when we’re evaluating startups.
We don’t take cold calls without knowing about your business because we don’t want to waste your time and our investment team sees 1500+ startups each year. It's impossible for us to meet with everyone without having more information ahead of time.
Does Magma Follow on?
Yes. We expect to follow on either doing our pro-rata or increasing our position if you’re growing and are successful. We follow on through Series A via our fund, and continue to follow on from Series B and later via syndicates with our LPs.
What investment documents do you use?
SAFE, Convertible Debt, Equity. We generally use SAFEs at early stage and equity at Series A. We may ask for equity from day 1 if we’re writing your first check and are restructuring your company at the same time as raising money.
What legal structures do you invest in?
We usually won’t invest in Latin American local entities and prefer to invest in the usual structures most regional VCs understand and are comfortable with. At Pre-Seed or Seed, we can sometimes invest in local entities especially in Chile, Colombia or Mexico, but 99% of the time, we invest in Delaware, Cayman or UK.
We wrote a deep dive into the most common legal structures of Latin American startups. Check it out to learn more about what might work for your startup.
What’s the best way to get in touch with Magma?
Create a Magma Memo and/or have a Magma portfolio company, LP, entrepreneur or later stage fund make a warm intro.
I’m a banker helping a startup raise money, how do I get in touch with you?
The best way to help your startup is to tell them to contact us directly via the Magma Memo. We did a deep dive into why it's best for startups to reach out to us directly, rather than rely on bankers or consultants.
Our entire investment team has check writing ability. Don’t disrespect Alexa, Laura, Francisco and Pedro. They have all led or co-led Magma investments. We work together to help do investments. Don’t disrespect the rest of our team.
How does Magma Help Founders?
In addition to investing money, we generally have a standing meeting with portfolio companies at the frequency that they choose. In addition, we have a services team of 15+ people who help startups grow. We also help through our LP network.
If Magma doesn’t invest, should I keep sending you information about my company?
Yes! Especially if we tell you to keep in touch. Around 10% of our investments are in companies we initially say no to, either for a lack of traction, a messed up cap table, or just because we were wrong!
We’d like to get updates every 1-3 months. Make sure to include what your startup does and the key metrics right at the top so we can dig back in.