“I would encourage the Series A players to collaborate more on deals and coinvest on a regular basis”
Andy Tsao (@ahtsao), Managing Director, Silicon Valley Bank
What do you do currently?
I’m a Managing Director at Silicon Valley Bank and Head of our Global Gateway team, which is responsible for certain new and emerging markets including Mexico, Brazil, Argentina, Russia, Turkey, Australia and India. SVB is the leading bank for the innovation economy in the US, we bank more than half of all US VC backed technology companies and most of the VC firms that invest in technology companies. We have been expanding internationally for more than 15 years, and our efforts on our Global Gateway team fall under our global efforts.
How and when did you get involved with the Mexican entrepreneurial ecosystem?
The Global Gateway team began to get involved with Mexico about two years ago. We started to work with a number of new and existing early stage VC funds, providing banking services through our US platform. This coincided during the time when Mexican government entities such as Fondo de Fondos and Inadem were providing capital to new Mexican VC managers. From there the VCs we worked with began to introduce us to the entrepreneur in their portfolio companies. We can also provide offshore bank accounts for VC backed Mexican technology companies. We saw a lot of early stage activity happening and decided to bring an international VC delegation to Mexico in June of 2015, where we spent most of a week meeting key players in the ecosystem. We have more than fifty Mexican companies and funds that work with us today at SVB.
How would you describe the ecosystem in Mexico?
Mexican VC is still very early in its development, but the ecosystem is evolving rapidly. There has been more capital available in Mexico for both investors and entrepreneurs in part due to government funding. Some of these companies are beginning to show real potential, even attracting investment from top investors in the Bay Area, such as Clip and Cornershop. We’ve seen this pattern develop in Brazil, which is still the most developed VC market in Latam, however Mexico is developing rapidly. Fintech is an area that we’ve seen some high potential startups.
What do you expect in the next 12 months?
I think we’ll continue to see robust early stage activity by the accelerators and seed funds, and we’ll see the top later stage and growth stage companies raise follow on financing from the US.
What are the main challenges?
Mexico remains a complicated place to do business although that too is changing with some of the government reforms. There are still funding gaps in Mexico, with a Series A crunch for entrepreneurs as there still only a handful of Series A investors. Same goes for follow on and growth financing, which is somewhat reliant on international investors. The growing number of Mexican companies raising follow on financing from the US bodes well for the ecosystem. There remain very few exits in Mexico, which would go a long way to creating a virtuous cycle for the Mexican ecosystem.
What change or result would bring the greatest benefits for the ecosystem?
As mentioned above, a notable exit, doesn’t need to be a Unicorn, but something that would suggest there is a path to billion dollar exits in Mexico would be a great result for Mexico. This would provide more role models both from entrepreneurs and investors. One other note, I would encourage the Series A players to collaborate more on deals and coinvest on a regular basis. I know this happens from time to time in Mexico, and quite frankly I think it could happen more frequently. Coinvesting brings more smart people around a company, and deeper pockets to fund a company in later rounds.
Describe your typical day.
I have been known to get on a plane from time to time. 🙂 I am traveling to Mexico and Latin America about twice a quarter, and we are doing business development with entrepreneurs and VCs, and try to help bridge these companies to our US and global platform. This usually comes in the form of providing banking services from our US platform, but also providing informal advice and extending our network for our clients and partners. We also try to help with ecosystem development by creating events such as our investor delegation, and speaking at conferences. When we’re not traveling to the markets we cover, we are acting as a resource for our US clients and US colleagues in terms of the markets we cover, and finally we are active in the local Latin and other diaspora communities in the US. You can imagine my day then is filled a lot with working with or helping entrepreneurs and investors, after all it is our mission at SVB to help entrepreneurs and their investors succeed worldwide.
Who is your favorite entrepreneur?
That’s a tough one and a bit like asking which one of your kids do you love the most. 🙂 We are seeing a lot of good entrepreneurs that are building great companies in the region. So I will go with a global entrepreneur and say Elon Musk.
A recent book do you recommend?
The Big Short.
Smartphone, tablet, laptop or desktop?
Split between smartphone and laptop.
iOS or Android?
Favorite social network?
Beach resort with the family (like Punta Mita)… with lots of great food and wine!
What are your goals for the next 12 months?
We want to continue to build the business case for the Mexican and Latam ecosystems by continuing to work with the best VCs and entrepreneurs in the region.
One word that describes you?