Jose Miguel Cortes, Fondo de Fondos: Supporting the venture capital industry in Mexico and Latin America, Ep 137

A fund of funds raises capital from different investors to invest in Venture Capital or Private Equity funds. These investors –mostly institutional– pick funds of funds so that they can trust a professional manager to pick the best VC funds to invest in. 

Jose Miguel Cortes is the Head of Venture Capital and Impact Investing Strategies for Fondo de Fondos, a leading Mexican private equity and VC fund of funds and co-investment alternative investment management firm. 

I sat down with Jose Miguel to talk about what a fund of funds model entails, from their investment criteria to what it’s like raising capital. We also discuss the impact of COVID-19 on the VC market in Mexico and Latin America and the vision behind Fondo de Fondos’ new impact fund.

“I have a lot of respect for VCs”

Raising capital as an entrepreneur can be challenging, but raising capital as a VC is a lot harder. Jose Miguel understands how painful it can be to raise money in a region where capital is very scarce for these asset classes. However, though similarly challenging, Jose Miguel explains that raising capital for a fund of funds has its own peculiarities. 

Learn about why the fund of funds model makes sense for certain investors in this episode of Crossing Borders.

COVID-19 aftermath in Latin America

When COVID-19 hit in late March, Jose Miguel along with other investors in the fund became concerned about their companies’ performances. They were surprised by the industry’s resilience through the hardships brought on by the pandemic, with several industries like e-commerce and last-mile delivery advancing by three to eight years.

Listen to this episode of Crossing Borders to find out why Jose Miguel thinks Latin America’s VC industry will come out stronger after the pandemic.

Fondo de Fondos’ impact fund

Jose Miguel explains that they launched the new impact fund to find investment opportunities that are tackling some of society’s most pressing problems. Most funds that receive institutional investment must comply with ESG requirements when evaluating potential investments. According to Jose Miguel, issues like polluted oceans, deforestation, climate change, and even social protests can be partially addressed with conscious investments.

Find out more about Fondo de Fondos’ impact fund in this episode of Crossing Borders.

Through Fondo de Fondos, Jose Miguel is finding the best fund managers in the region to invest in that are creating economic value but also have the capacity to create environmentally and socially conscious investments.

Outline of this episode:

• [1:25] - About Fondo de Fondos
• [3:06] - From engineer to investor
• [6:27] - Goal behind Fondo de Fondos
• [9:49] - Investing in funds
• [11:55] - Raising money for a fund of funds
• [15:36] - Ticket sizes at Fondo de Fondos
• [16:40] - Insights on the VC market in Mexico and LatAm
• [21:09] - Attracting local and foreign investors to the region
• [23:27] - The importance of impact investing
• [26:28] - Advice to Jose Miguel’s younger self
• [27:36] - Books, blogs, and podcast recommendations
• [28:49] - What’s next for Fondo de Fondos?

Resources & people mentioned:

• Jose Miguel Cortes
• Fondo de Fondos
• LAVCA
• AMEXCAP
• Diego Serebrisky
• ALLVP
• Dila Capital