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MIF approves equity investment in Mexican seed capital fund

7 December 2011

(MIF) December 7, 2011 – The Multilateral Investment Fund (MIF) approved a $4 million equity investment in Angel Ventures Fund I, a fund that will invest in knowledge-intensive, technology-based firms in Mexico.

Through this project, the MIF and Angel Ventures Mexico L.P., the fund’s manager, will contribute to the development of a conducive ecosystem for financing early stage companies through the creation of the first fund dedicated exclusively to seed capital in Mexico. The fund will match qualified angels’ investments in innovative projects and start-up companies with high growth potential, as well as in existing early stage companies that are relatively new and need support to to scale up.

In addition to increasing access to capital by co-investing with individual angel investors, the fund will stimulate innovation, entrepreneurship and a business culture in the country, ultimately strengthening the investment ecosystem that will lead to sound economic development.

The fund will target companies that have capital requirements of $200,000 to $2 million, and present high growth potential and a scalable model. The fund will operate as a “matching fund,” only investing in companies alongside a qualified angel investor. The capital contributed by the fund will represent between 20% and 50% of the total size of each project. Up to 25 projects and early stage companies will receive seed financing.

The fund intends to target five sectors that are the most relevant: technology companies capable of rapid growth to meet rising domestic demand from low and middle-income segments of the populations; health care; manufacturing; retail; and companies whose business models focus on benefiting vulnerable sectors of the population or the environment, giving them a clear sustainable advantage.

The MIF investment in the fund will play a catalytic role in supporting the development of the local venture capital industry, building local management capabilities, demonstrating the financial viability of these vehicles and mobilizing critical investors and other players. It will be also be an important source of learning and knowledge creation for the industry in Latin America and the Caribbean, and for future MIF operations in Mexico.

The Multilateral Investment Fund, a member of the Inter-American Development Bank Group, plays a leading role in the development of conducive ecosystems to finance entrepreneurship, and is an active investor in seed and venture capital funds in Latin America and the Caribbean.