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Angel investing in Latin America

Angel investors--individuals who invest in and mentor entrepreneurs and their early-stage companies--have become established players in the risk-capital markets of highly developed economies. Across Latin America, individual private investors are beginning to explore how they can help nurture young ventures, adapting best practices from other parts of the world to fit the region's conditions and developing entirely new approaches.

From the back-flap of Angel Investing in Latin America. Chapter two is available online.

Comments

Quite frankly, the main take-away was uninspiring: the MIF (IDB) should work to sponsor a wide range of angel networks throughout Latin America. I would argue that successful angel networks are likely to arise spontaneously, in areas of high concentrations of entrepreneurial spirit and innovation, and that a central planning approach to fostering innovation is a broken model. The key barriers to angel investing in Latin America, as I see them, are poor minority rights, lack of follow-on venture capital, and uncertain exit prospects. These issues can be mitigated by entrepreneurs (and angel investors) who take an enlightened view during the labor of business and capital formation. We are seeing successful angel investors (like Humbeto Zesati of Latin Idea in Mexico) provide seed capital to ventures which incorporate the best practices of business planning and corporate governance of the U.S. and Latin America. In addition, because of the low likelihood of an IPO exit, angel investors should focus on backing ventures in which the entrepreneurs' goal is to exit the business at the first opportune moment. Angel investing, like many other concepts, is unlikely to be successful exported from the U.S. to Latin America without significant adjustments to its formula. Local groups, operating without the constraints of the World Bank, IDB, and MIF, are probably best suited to for that job.

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