June 18, 2013
Interviewed by: David Snow
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Developing Innovation in Latin America

Susana Garcia-Robles describes the Multilateral Investment Fund’s mission in Brazil and what fund managers must know before approaching the MIF for funding.

Susana Garcia-Robles describes the Multilateral Investment Fund’s mission in Brazil and what fund managers must know before approaching the MIF for funding.

Developing Innovation in Latin America

A Privcap Conversation with Susana Garcia-Robles of Multilateral Investment Fund, IADB 

What is the mission of the Multilateral Investment Fund?

The Multilateral Investment Fund was born into the Inter-American Development Bank in 1992 and was a bipartisan decision. Bush, Sr. created it and Clinton signed on it. The idea in the beginning was to take care of the wave of privatization going on in Latin America. But by the time all the capital was funded, we realized that Latin America had gone through that first wave quite quickly. We focused more on how to get private sector development in Latin America; competitiveness, entrepreneurship and job skills in the region. And the overriding theme was how to make them be more competitive vis-à-vis other regions.

How have you seen the ecosystem for VC in Latin America change since the MIF was formed?

When we started in 1996 in venture capital, there was one line of activity within the MIF. We were few and scarce. And it was a very young industry. There weren’t that many fund managers. There were a few investors, mainly, from government agencies. And a few there in private sector investors. Today, we see a really different landscape.

They are saying that the global crisis helped our region because we did very well vis-à-vis other countries that were considered developed and stronger than our region. So, we also have adjusted to the times. When we started, we were also learning our own lessons on how to do venture capital in an environment that was very different from the UK, from Silicon Valley.

What we have noticed in the last five years is that there are new ideas happening. And that innovation in the end is the best solution for development, which is at the heart of the reason why we are doing venture capital in all our other programs.

So, for example, let’s take last week. I was happy to take onto my board an investment of $5 million into an original accelerator program. It’s based in Argentina. But it has a regional focus. In 18 months, they have financed 75 entrepreneurs from all over Latin America. All of them are in the technology space. But some of them are doing technology with innovative solutions for the base of the pyramid. Others are doing technology for innovative solutions in green energy. Others are using technology applied to traditional sectors like other business and education. So, I would say that in the last five years, that you will see them in more increased focus.

What should fund managers know before approaching MIF for investment capital?

I love this question. First of all, they have to understand that they have to come and talk to me about their projects, not what I want to finance, because I don’t design funds with them. I analyze funds. So, they have to have a clear idea, a clear investment strategy that matches the investment skills of the team. So, there has to be complimentary between the team and their skills, and the investment strategy of the fund. They have to understand that we don’t finance private equity. Our focus and our mandate is really early stage. So, more and more, we’ll be doing accelerators. We do seed funds, early venture capital funds. And they also have to understand that we favor them. I have no shame in saying it. We favor local fund managers because we really believe that local fund managers are the ones who are going to be there in their countries and their regions no matter what.

Are there any countries in which you have not yet backed any fund managers?

Absolutely. We haven’t backed any of our managers from Ecuador, although, we have some investments through regional funds in Ecuador. We would love to be more present in Ecuador. We are trying to strengthen our presence in Panama through a small seed fund and an angel network we are operating in Dominican Republic as well. We are replicating Inovar, our program here in Brazil, in Jamaica. Jamaica and Uruguay, small countries often give you a great chance to replicate that ecosystem in a shorter time. It’s not like Brazil, a huge country. So, everybody knows each other. And there is a great interest from the government, very much like what happened here in the beginning of Inovar.

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