Interview with Antonio Luck and Adriana Suarez, Managing Partners, MatterScale Ventures

Episode 2 • 19th May 2021 • ATLalts • Andres Sandate

Antonio Luck: 00:00

The big question was really what are we going to invest in? That us the first question. Great. We have a fund, let's say we raised the amount of money we want to raise, what are we going to invest in? All of us, as you pointed out, come back from this background of, yeah, we want to leave the world a little bit of a better place than we came. And that can mean a lot of different things for a lot of different people. But for us is a transformation through technology, making people's lives better through better services, better technologies, and we came up with the idea of providing better quality services for a greater number of people, so services for the majority.

Andres Sandate: 00:43

Welcome, to the ATLalts podcast. I am your host, Andres Sandate, and I have designed a podcast to interview founders, fund managers, investors, allocators, CEOs, entrepreneurs, and executives, whose stories I believe will inspire, educate and inform. All of our guests are investing capital, raising funds, executing transactions, closing deals, and serving clients, and many, perhaps like you, have overcome long odds, setbacks, adversity, difficult circumstances, and more. Through all of this, a story emerges, and it's typically the source and inspiration for why they're pursuing what they're doing today. Join us on ATLalts, where our guests will take you on a personal and professional journey that will inspire, educate, and inform.

Andres Sandate: 01:31

Our guest this week on the ATLalts podcast are Antonio Luck and Adrianna Suarez of MatterScale Ventures. MatterScale Ventures is a venture capital fund targeting industries that matter and companies that scale. MatterScale invests in early stage Latin startups with a global mindset located in the US and LatAm that apply technology to offer high quality, affordable and accessible services for the majority. Key sectors include the future of jobs, education, health care, productivity, and financial services. Antonio is a former Managing Director of Endeavor Detroit and Adrianna is a former Managing Director of Endeavor Colombia. Our discussion covered a wide range of topics, including how to find, quote, geniuses of industry, the investment process, the benefit of having five managing partners at MatterScale in four countries, including the United States, Colombia, Mexico, and Argentina. The support MattersScale Ventures provides to entrepreneurs in terms of customer centricity, culture, methodology, and follow on capital, and much more. I hope you'll enjoy my conversation with Antonio luck, and Adrianna Suarez, Managing Partners of MatterScale Ventures.

Andres Sandate: 02:39

So I'm really excited today to be speaking with Antonio Luck, and his partner, Adrianna Suarez, they are Managing Partners of MatterScale Ventures, which is an early stage venture capital firm with offices in Detroit, Mexico City, Bogota, Buenos Aires and San Francisco. So I'm going to jump right in, because I have a lot of material that I'd like to cover.

Andres Sandate: 03:03

I'm gonna go to you first, Antonio, tell us about your background.

Antonio Luck: 03:06

Well, first of all, thank you very much for calling us and inviting us to be a part of the show. And congrats for this initiative. I think it's a very cool thing that you're you're doing. My background, I'm originally from Brazil. And so I was born in Brazil, I grew up in Brazil, studied in Brazil. And when I was about 25 years old, I was working in a university in Brazil, and met the president of a university here in Detroit, and developed some good relationships and developed some agreements between the two universities. And he invited me and offered me a scholarship for my MBA. And that's how I landed in Detroit. After that, I started a fellowship spinning off technology companies and fell in love with venture capital. From there kind of built my career around venture capital, a little bit, worked in different organizations that kind of built my skill sets in that direction. Prior to starting MatterScale with Adriana and and three other founding partners, I launched the office for Endeavor here in Michigan, which was a very exciting opportunity. As you may know, Endeavor is also a global organization that supports entrepreneurs scaling throughout many, many countries.

Andres Sandate: 04:10

I'm really looking forward to digging into the Endeavor story, because I know there's common backgrounds between all the folks at MaterScale Ventures. So, Adrianna, I'd like to go to you next you're in Colombia in Bogota. I mentioned that you're you're doing this podcast remote from the mountains or the hills. And I'd love for you to tell us and our guests about yourself, your background, and why are you out on a farm in the middle of Colombia today?

Adriana Suarez: 04:38

Thank you Andres and I'm very glad to be here, I really appreciate this invitation. While yes, I'm actually in the mountains, 45 minutes from Bogota. As you know, well, probably you know that there is a big COVID issue here in Colombia with a lot of cases these days. So we decided to come to these countryside to be with the kids, they are at school but they haven't been able to, to enjoy a lot of the of the countryside, we decided to come for a couple of days. So I'm very happy to be here. And then talking a little bit about my my background. Well, I did a studied business a long time ago, more than 25 years ago. While I come from a business, family and entrepreneurial family, but I ended engaged with the working with the public sector - I wanted to contribute after I graduate for a couple of years in my country. And I decided to work in the Ministry of Trade for, I said at the time for a year, and I ended engage working for more than 15 years in the in the public sector. I worked in several positions, first, being the Chief of Staff of the Minister of Trade at that time, and then worked as a trade negotiator in the WTO in Geneva, and went back to work in Colombia after being abroad for a couple of years to work in Investment Promotion. So that was a very interesting journey. I did in my last four years of the public sector experience, I worked at doing trade negotiations, sorry, working on Investment Promotion, that means trying to bring and convince many foreigners that Colombia was a great place to be. That was where at that time in 2008 2009, stilll, Colombia was seen as a kind of a failed state. And it was very, very interesting to see how we were able to convince many multinationals to see Colombia as a very interesting place. And one of the key aspects was talent. Talent was one of those aspects that always was highlighted about how great people and great talent you can find in the country. So then, I always had in my blood, the entrepreneurship interest too. So I was invited to join Endeavor in 2013. And I ended up being the director of Endeavor here in Colombia for seven years. And it was also very interesting time, because at the time, the entrepreneurial ecosystem was quite early there were not necessarily many Entrapreneurs thinking global. And I had the opportunity to do that transition, to work with many institutions to start promoting high impact entrepreneurship in Colombia. We developed from Endeavour different type of programs, I was able to support companies and entrepreneurs like the founders of Rappi, when they didn't even had the idea of Rappi a to be a very well known unicorn in in the region. So it was seven amazing years. And at the time, also, around 2015, I started to be interested in investing. So I became an angel investor. Today, well, I have a portfolio in EdTech, FinTech, a something in PropTech. From there, I realized that there was a huge opportunity in the country and in the region to start building more venture capital with the mindset of being Latin American, but with a good practices of a venture capital firm in the US. So now I'm here with great partners and and with an amazing value proposition for entrapreneurs.

Andres Sandate: 08:34

That's fascinating. Well, thank you on Antonio, and Adriana. That's just a super compelling background to jump off of for our conversation today. A big part of ATLalts is, as we talked about, meeting entrepreneurs, meeting founders, in this case, meeting the two managers, two of the managing partners of an emerging fund. Particularly interested in identifying, as you are identifying talent, talented entrepreneurs to back that are solving real big exponential problems, i'm also interested in meeting and finding teams like yourselves who have a different profile, who have a different background. As you just outlined, just meeting two of the five members of the team, the background, I'm always so inspired because it's so much deeper. It's so much broader. And it's so much richer if people are willing to look outside of the sort of typical, common places if you will, to find talent. As it's often said, the cliche, the talent is out there - it's evenly distributed, but I think the other part of that saying is that the opportunity is not. So the point of this podcast is to have a platform to highlight organizations like MatterScale Ventures. And to give you an opportunity to talk about how your team came together. Why you are investing capital into entrepreneurs and their businesses in the areas where you're investing. What's the inspiration? And what was the source behind the decision to do this? Maybe we'll start with you, Antonio.

Antonio Luck: 10:11

So like I mentioned, when I was working at Delphi, and spinning off technology companies and sitting at the side of the the entrapreneur, and doing business development, and raising funds for companies, this is when I first really learned and understood or think I understood what venture capital was, and fell in love. So I kind of tried to build my career into venture capital, venture capital, from there on. And Endeavor was such an incredible organization for us to be able to kind of deepen our knowledge, deepen our networks and our relationships, while at the same time having a significant impact in kind of transforming local economies, regional economies, and sometimes economies of a whole country. If you look at countries like Brazil or Argentina, that Endeavor has been there for a long time, it's there, it's a it's a very, very, very impactful organization that has transformed people's lives, by creating wealth by distributing technologies, by really helping entrapreneurs be successful and hire many people. So we're working on Endeavor, I think I can give a little bit more context and Endeavor. So Endeavor is a works as a nonprofit that also has a VC arm called Endeavor Catalyst. And that VC arm is somewhat recent, when I first joined Endeavor in 2015 it was a very recent program. And now I think we're in the third fund with Endeavor Catalyst. And the idea is to be able to find the best entrapreneurs in an area and help them scale through access to capital, access to networks, access to new markets. And as the managing directors like we were, in addition to finding these companies and helping them obviously building teams and building the offices up, once we found certain companies and depending on the stage and the type of companies and they raise money, we could also pull in Endeavor Catalyst to be able to invest in these companies.

Antonio Luck: 11:52

So all of us and you'll see on all of our backgrounds, we've been able to help multiple companies successfully raise capital. In Michigan, they're quite a few to highlight as well. And from Endeavor was an incredible experience because just to give you another example, like Fernando Fabre, who was one of our partners, he was the managing director for Endeavor in Mexico for six years and then was the president for Endeavor Global for eight. And he grew Endeavor from nine countries, nine offices to about 32 - 35 offices at his time. So really global experience, and really being able to get into mostly South America to the Middle East, and then Africa, and US. US was a little bit later in, in the trajectory for Endeavor. But while we all of us were there, we had the experience of working together as well. So we knew how to work on this global platform, we knew how to work remote, we knew how to kind of get businesses done, although we were seeing each other three, four, or five times a year as well, during events for Endeavor.

Antonio Luck: 12:50

I think Gabi was the first one that left from from the group and was doing a few different things and very exciting things like Supervielle, which was a CVC that she helped put together. Adriana, I think was at the end of her tenure, she was looking at somebody to kind of start for the Colombian office. I was about in the same situation and we were just continuously talking and thinking about what we're going to do next and Fernando left at the end of 2018. And I was having conversation with him about what he's going to do next. And he's thinking about technology and how to have a good impact in the world and how to transform things. And I'm like, have you thought about venture? Is that something that you'd consider? He's like, yeah, I've been thinking maybe that could be around? I said, Well, at some point in time, and I don't know who said that at first, but like, why don't we start a venture capital fund. It's a lot of the expertise that we have, we believe we have the networks, and let's do something different. Let's do a venture capital fund that, that starts from the ground up in multiple countries, and we build it from the ground up. And then talking to Fernando, talking to one and one of our venture partners and GPs, she gave us the brilliant idea of like, Why don't like - and we believe in networks to help and make things work and happen - she was like, why don't you also think about putting a smaller partners are more passive partners around you as well, and all these different locations. And that's kind of how we're building as well. So we're gonna have about 20 GPs that extended literally from Detroit all the way to Patagonia. Right now we have people in Chile, we have folks in Brazil, and very strong, very strong, successful entrapreneurs or family offices that are part of our team, our extended team.

Antonio Luck: 14:23

The big question was really what are we going to invest in? That was the first question, great, we have a fund, let's say we raised the amount of money we want to raise, what are we going to invest in? All of us, as you pointed out, come back from this background of we want to leave the world a little bit of a better place than we came. And that can mean a lot of different things for a lot of different people. But for us is a transformation through technology - making people's lives better through better services, better technologies - and we came up with the idea of providing better quality services for a greater number of people. So services for the majority. And at the time, it was easy to see that happening through FinTech right. It was the explosion of FinTech in some ways in 2019. But HealthTech wasn't quite there yet, which is one of our industries as well. EdTech not so much as it is right now, remote work, all of these things really got accelerated doing COVID. So our thesis really got validated there. That was the the beginning of it, and then talking to Adriana and Gabriela, and all of us having these side conversations Roberto. And then at one point in time, we just decided to pull the trigger and start doing it. We talked to some of the venture partners early on, and they were on board, it just sounded like we should do a little bit of a crazy idea, but that we all should jump ship and go for it.

Andres Sandate: 15:39

Well, congratulations on all the work that went into putting it together. You mentioned remote work and the model that you guys and gals had executed at Endeavor. In preparing for our conversation, I would like to tell all of our listeners to go out and look up MatterScale on Medium because Fernando put together what I thought was a terrific post on the playbook effectively, that allowed remote work to happen and all the frameworks and tools and software, including OKRs, which I thought was - I've read the book - and it's just a terrific, you know, sort of management framework and leadership framework, and so I can see in listening to you how you were able to take the team, take the frameworks, and why wouldn't you want to have a global venture platform.

Andres Sandate: 16:28

I want to go back and I'd like to get you Adriana to talk about this because you're - the presence for you in Colombia - you have partners throughout LatAm, the investment strategy is, is in the Americas across the Americas. But I want to come to you and talk about the venture capital experience, the angel investing experience that you talked about.

Andres Sandate: 16:49

How in your career, did you make the jump from the public sector, to becoming an angel investor? Because I think there's a lot of people out there that find that very interesting and very appealing. It's like, Oh, I'd love to sit and look at really cool startups and hear from CEOs and founders and entrepreneurs, because the impression they would have of the public sector is things take so long, things move so slow. Clearly, you've worked around the world and done a lot of cool stuff in the public sector. But maybe just to back up a second, before we get more into the MatterScale strategy, and your role in Colombia, but just that public sector to sort of angel investing transition, because I'm sure there's a lot more there. And I'm really curious for you to talk to us about that.

Adriana Suarez: 17:40

Well, thank you for that question because yes, when I was the Chief of Staff of the Minister of Trade, that was 1998. She asked me I was young. And she asked me I used to have a very small business. I used to do necklaces. I love arts and crafts. And I was selling that. I worked very late at night when I arrived from from work. And it was impressive. There were no necklaces and bisuteria (trans: fashion, costume jewelry) hear in Colombia. So I was selling incredibly. So one day, the minister said, hey, Adriana, I know that you you're quite entrapreneurial. Why don't you help me build a program to help young people think on other alternatives instead of going into a job? And this was 1998? There was no ecosystem, no entrepreneurship at that time. Obviously, when you say you said no, I am an entrapreneur, people will look at you as you're a crazy person, why don't you go and work for a multinational or a company. So I did a program at that time that it became one of the most successful programs of the ministry. It was a program that for young people, people that were from school, I don't know, 16-17 years old to 35 years old. And they put together a business plan. And then they had the capacity to be connected with a mentor. That was a business person. So we created the whole project. And it was impressive to see thousands of people that joined events where we were talking and putting together these whole initiatives that ended with interesting projects around Colombia. I remember people in very low income communities, creating businesses for planting together, plant roses and selling that and trying to sell those as a as an opportunity. So that this is a program that was called Jovenes Emprendedores Exportadores with the intention that not only they create their own business, but that they could export those products. And as I was saying that was one of the most successful programs of that minister well for the minister. So after that, I will engage in negotiations, I kind of forgot about entrepreneurship. But when I did my, in 2005, I did my master's degree at Columbia University. And there being in New York, I started to connect again, with, with entrepreneurs with business, etc. And I heard about Endeavor at that time actually. There was the office in Colombia was launched in 2006 and while there, they were looking for someone to lead the office, I was well still doing my masters, so unfortunately, I was not able, but I remember a lot kind of saying, I would love to be one day doing that job. And then well, when I was hired at Endeavor, in 2000, you get to know thousands of entrepreneurs, companies, from ideas to established businesses. And in Latin America, and in particular, in Colombia, the ecosystem is still very, very nascent. There were not much, there were not many angel investors, but lots of opportunities. And there was the possibility of starting, I was convinced that one of the things that we needed to do to build it and strengthen the ecosystem was really working on the investment side, trying to change the mindset of people, high net worth individuals, and family offices that had some liquidity to start learning a little bit about the the asset class. So I engage a lot on that part, I start saying well with with my husband, which I engage him also, as a mentor of Endeavor, why we don't start doing some investments. Let's allocate some resources and start doing some angel investments. And that's how I started really.

Adriana Suarez: 22:00

Really at Endeavor, you get to, not only meet many entrapreneurs, but you have to select, and filter entrapreneurs. And that's what we learned from Endeavor. We had probably all together, we had probably analyzed thousands of companies. And in my case, in particular, every year, we saw 500 companies, and we selected 1% of those -around five to seven companies. So you went exercising that muscle of who are great entrapreneurs and what you should look at when there are in an early phase and an early stage. So I find it pretty kind of normal to start engaging in investment. And that's how I build a portfolio of 10 companies in around three years.

Andres Sandate: 22:54

That's great. Well, I wouldn't be doing a good job as a host here if I didn't ask a follow up question. And maybe I'll have each of you respond to it because I think it's at the essence, of at least from my perspective, what makes a an emerging venture firm, a seed stage venture firm, a pre-seed venture firm, successful because literally you're backing an entrepreneur, they may not have customers, they may be you know, right at the stage of getting the first one or two customers. That go to market strategy is still kind of raw, the serviceable addressable market opportunity might be big, but they may not realize they have competitors, or it's it's a space, that's got regulatory challenges. Having said all of that, however, I read on your website that you guys are looking for, quote, geniuses of industry. So as a follow up to the angel investing background, and Antonio, your background at the state of Michigan, you know, running $170 million portfolio, and Adriana, you're having looked at 500, you know, business plans and CEOs and entrepreneurs coming through the door and selecting five of them. Why don't you each talk about what that means?

Andres Sandate: 24:11

If we had CEOs and entrepreneurs like listening to this podcast, who want to go raise venture stage capital, early stage venture capital, and they believe they have an idea that fits in your investment thesis about more than ever, technology has to serve people? What are those geniuses of industries, personal characteristics? What are their professional characteristics? Antono, let's start with you.

Antonio Luck: 24:35

Thank you. So in an Endeavor, and that's kind of one of the roles that all of us did, right as as managing directors, what Adriana described. So Fernando is seeing it from a global level and we are seeing it for a country level and seeing all of these companies come through. So it was quite interesting to be able to see the differences in the sophistication of the entrapreneurs and how they're thinking about markets, how big they're thinking. I think one of the things that we learn a lot of Endeavor, at least I did, was really helping entrapreneurs think bigger, right? Many entrepreneurs even if they're growing, I don't know, 100, 200% a year like, my favorite question was, Why aren't you growing faster? Right? I know it's already ridiculously fast. But why aren't you growing faster? Or when you're really looking at venture companies, some companies were tripling, quadrupling revenues, sometimes even more, 10xing revenues in their first years, right? I still like to ask why aren't you growing faster? Right? Because that just puts a different mindset, right, a different frame of like, why are you even asking me that question? Like I would see in some some of these people's faces? And you're like, well, you have to think about your barriers. And what is limiting you? And could you grow faster? And if you could, why wouldn't you? And obviously, there are tons of limitations to growth, and we don't have to get into all of them right now. But I think that idea of like, really breaking that mindset of like, faster and speed and growth, acquiring markets, was always something that was really important to me, and I think to to all of us, and really understanding entrepreneurs that are thinking that way, the entrepreneurs, that also are thinking about the important parts of the company, I think and not not necessarily only stuck with with the minutiae. But really thinking about, alright, what is the culture that I want to implement, so that I can get the right team in place so I can really, really leverage the team to grow that I don't have, that I can, I can actually bring somebody that will help me me grow faster, and not bring somebody that will slow me down while I'm teaching them to do something, right. So all of these thought process about like, how do you shorten the time on everything that you're doing from a sales cycle, from team onboarding, from a growth of the team, from a growth of revenue, and so forth? Right? Market entries. And I think one of the things that I've also enjoyed and less a little bit in the US, but seeing in other countries, is really many entrepreneurs, thinking more of like more of a either regional or even global mindset, which has just become, for us at MatterScale, has just been done more of the norm. Is really looking and thinking about these entrepreneurs that are thinking about how am I going to get to this market, how I'm going to get to this type of individual or this type of company, and how I'm gonna win their business. I don't care if they're in Mexico, I don't care if they're in the US, I don't care if their in Argentina. Obviously with a sequenced approach. Right? I'm thinking about a geography first. And how do I enter smart into these countries building the right teams to then sell. But when they're thinking about it, they're thinking about the markets as like becoming a global company and becoming a global company much earlier than you would expect. Especially being in the US, US are really hard, big markets. But you see that happening a lot in San Francisco, you see that happening more in New York, and you're seeing that happening a little bit more even in the Midwest. So for us, we've been lucky to just develop a really great network and be able to really see these people that have very deep domain expertise in what they're doing. Either it's in the in the financial sector, or it's in human resources or healthcare, they come from plants, they really have the the industry expertise. And they're able to leverage that expertise into building phenomenal companies, right? Building the teams that they need to execute. So I think that is what we refer to kind of geniuses of industry is really people with depth of knowledge in their industries, and hopefully much more than we would have in the industries. And then we can help them with a little bit more auxiliary services, either introductions or culture or things like that. The remote work, you saw Fernando Fabre (referencing Medium post), I think the remote work, a lot of people get it and understand the tools. But the question there is like, how do you really do remote leadership? Right? How do you build remote cultures? I think those are the questions right now that we should be asking. Not what tool I'm going to use, because I think everybody knows how to use either Zoom or Google Meets or whatever their favorite platforms are. But there are a lot of other tools right now. So I think it's really thinking about kind of what is the team that can have the expertise are hungry enough, have the drive and are attacking a market that's large enough to justify a super, super high growth that will then produce the returns that we need for venture capital? Because that is the industry that we're in, right? We definitely want to leave a good impact. We definitely want to leave the world a better place. But our target is returns and we really believe that we can have returns and impact and not one in detriment of the other.

Andres Sandate: 29:22

Yeah, they don't have to be mutually exclusive. I know I've spoken to a lot of allocators and consultants and those that are really following what you know is now commonly called and referred to as the ESG and impact space, and even the DEI space, the Diversity Equity and Inclusion space. I know speaking with the private markets allocators and asset owners, they believe it's harder and in their strategy sessions and in their boardrooms. It's a lot more difficult for them to maintain their fiduciary duty to get high returns and manage risk while also supporting maybe the DEI landscape or supporting impact-oriented investments are screening for ESG. It's a little bit, seems to be a little bit more developed in the public markets. So that's a phenomenon that we're going to explore more in the ATLalts podcast.

Andres Sandate: 30:10

Let me bounce over to you. Adriana, this notion of entrepreneurs having, as Antonio said, a vision, thinking big, thinking big faster. What have you noticed? What's evolved over time in Colombia or in other parts of the world where you've invested in now that entrepreneurs thinking, has it accelerated? Have they gotten better? And how would you frame that up?

Adriana Suarez: 30:35

No, totally. Yes, I would say the last five years have been impressive for ecosystems outside of the mature ecosystem, Silicon Valley, New York, Boston, and Tel Aviv. And I think we probably this team is a master, we're masters of understanding entrepreneurs in emerging markets. What I would say is a definitely we have seen entrepreneurs that are today trying to challenge the world. This mindset, this global mindset that Antonio was mentioning, is something that changed completely. When I started in 2013 at Endeavor, our entrepreneurs were talking about, no my market is Colombia, or my market is outside of my of my city, not more than that. What we're seeing today is in Latin America, entrepreneurs are not thinking about their own countries. They are thinking about the whole region, which is 600 million people with a huge market size. And many of them are even thinking global. We have one of our companies, Torre, that is a marketplace for talent. And that's a tool that is completely global. They are trying to build the next generation of LinkedIn, with automatizing the whole process of recruiting for remote and flexible jobs in particular. And it's a platform that today they have candidates from 180 countries. So it's completely global. And it's a Colombian living in San Francisco. So I have seen definitely these change of mind, of mindset. And the other thing that I feel the entrepreneurs have realized in our regions is that they need to create and build high performing teams. They started to realize that they need to invest in talent. And they understood that for building a company, even if I have the greatest idea, if I didn't have an amazing team that surrounds me, it will be very difficult to execute and to grow. So that is another aspect that I believe the entrepreneurs in Latin America has really has started to realize is that they need to invest in talent. And that brings a lot of returns. And probably the last one that I also think is important to highlight is execution capacity. I do think that one thing is having a good having a great idea and the other thing is being able to put that idea in place and grow it and have thousands of dollars in revenue, probably thousands of employees or hundreds of employees. So having ideas, everybody has great ideas, but being able to execute those ideas and put that idea in place, I think is one of those aspects that we look very in detail. And then finally, I would say in early stage, we invest probably 65-70% on the entrepreneur. We bet on the entrepreneur. We know that the business model will change. It will need a couple of iterations and pivots. But really what you're betting at is the capacity of the entrepreneur at that stage. And there is where is the difference between private equity, where you already have everything in place and what you're looking at is growing. Here you're really betting at the capacity of the entrepreneur and and its team to make that idea a real business and transform it into a big company.

Andres Sandate: 34:18

Antonio, I want to maybe get into a little bit more of sort of your firm's investment approach. So as I was preparing for the conversation, I read multiple places where you talk about the idea is investing in seed and pre-A round companies that more fruitful outcomes as a venture firm come with a follow-on investment. So you want to invest early, but you want to be in a position to continue to support that company. But when you think about the people and this whole scale dynamic and growing rapidly, I read about customer centricity, culture and methodology, and then follow on capital. So can you talk a little bit more about what those three things mean.

Antonio Luck: 35:02

The customer centricity is one of the things that especially in the early stages, for us is really, really important, right. You have to understand what is the need of the customer. And certainly you can produce products that you're a little bit ahead, and you might not understand, the customer might not know that they still need it. And that is a balance there, if you're really dealing with really high end really edge technologies. But you're always will have some customers that will understand and will get it. So being able to talk to those people and seeing how they would use and understanding that and being able to build a product, even if it is for those very, very, very early innovators with the belief that they will be the majority on the longer run is really, really, really important. And that will dictate I think, a lot of the success. And I think the customer centricity also translates into a few other things, right? It's not just being able to sell to that customer, but making sure that the customer is taken care of that you can maybe upsell to the customer, but that they that they feel like they're treated appropriately, correctly. Customer Service works well. That's the way we believe you build a really good business. And that's tied into the culture as well, right? The follow-on capital, it depends on the size of the funds, but being able to do some follow-on and protect some of your investments from from future dilution is I think, a known thing in the in the venture capital industry. You want to be able to hold on or gain a little bit of ownership if you if you can om subsequent rounds, to be able to have a somewhat of a position by the exit of the companies to justify the returns for your fund. So it's really it's really that position of being able to continue to participate in the success of the really successful companies.

Andres Sandate: 36:42

How are you building the sourcing funnel if you will. You all obviously have huge networks. So just maybe talk about how you build relationships with entrepreneurs, how do they find you? How do you find them? You want to know about the new, compelling and fast growing startups. You want to meet these future titans of industry that are big thinkers, big visionaries. But does it just happen because of your relationships?

Adriana Suarez: 37:09

Yeah, no, that's a great question. Because I think the fact that we come from well, and our backgrounds and the fact that we have been working in the last seven, eight years, with an institution like Endeavor. That gave us access to a lot of entrepreneurs and visibility, building relations with other entrepreneurs, ecosystems, and accelerators. That is an advantage that we have. We do have very powerful network. And network meaning, I'll give you my specific example. When I was in Endeavor we built around 12 accelerating programs for others. We helped, we in Colombia from Endeavor, we were hired by Telefonica to start and build Wayra. And we were the one that created the first program of Wayra that they then took it, and they expanded to the rest of the region. And that means that we have very good relations with many of the accelerators in the country and in the region. But also the entrepreneurs know us. So many of the entrepreneurs that we have been talking to are entrepreneurs that they have passed, for example, through Endeavor. They are Endeavor entrepreneurs, and they sold their companies and now they're building their second or third company. So they come to us, they have realized, they discover that we're investing and they approach us. So that's not necessarily an advantage they have at first time funds, and first time fund managers. Because if they come from other backgrounds, they need to start building that reputation and that relation with entrepreneurs and the ecosystem. So today, the majority of the pipeline is proactive, and the nomination from the even the entrepreneurs inbound, that they come to us. And the other thing is that we have an additional founding team as Antonio was mentioning at the beginning. We put together and bring together a group of 18 venture partZners. They are part of our GP, and they are great, and very well connected people also with entrepreneurial ecosystems in our region. They are, they come from San Francisco, Detroit, Mexico, Colombia, Miami, Chile, Argentina. So all these people also refer us pipeline. So today, I would say we're seeing amazing and talking to amazing companies. And the majority of these come from the reputation and the networks that we have built in the past years.

Andres Sandate: 39:50

When you described it early in our conversation I really wanted to spend some time on this because this is different than other alternative investment asset classes in the formality of putting it out there. I'm sure hedge funds and private equity firms and real estate firms have these networks, but they definitely do not put them out there on the website and talk about them as openly, you know, you'd think that it's just like three guys sitting in a room, creating all these returns and buying these companies, when in reality, you know, that it's impossible anymore to run a global, sophisticated alternative investment organization, and generate persistent returns without advisors, intermediaries, deal sources across the world, really, especially if you're going to do it in venture. So I was glad that you, you led me into this question, which is, how do you select those folks? Is it hey, we went to business school together, because again, back to the premise of the show, I think talent is out there. But I don't think the opportunity is evenly distributed. And yes, while you said you're trying to generate returns, and you have that fiduciary duty to generate returns, you also want to leave the world a better place. Well, if my podcast is successful, I'm going to create people that say, Oh, I can go become an angel investor. And this is how I would go do it. These are the networks I would need to plug into. Or, if I want to be a part of a GP, I can go start to network with venture firms and these are the things I would need to do. I'm always interested in pushing off on this notion that you know, you have to go to certain schools, you have to have attended, you know, certain programs, you have to had worked at certain companies in order to be in the quote unquote, club, how do you select folks? Do they, is there a process? Or are these people that you've developed relationships with over many years in business? Maybe you can just talk a little bit about that, Antonio, because it is, it is fascinating, when you look at your website to see this team of global minds coming together and coalescing around this sort of common investment mission?

Antonio Luck: 41:55

Yeah, thank you. So from the VPs is a little bit easier and the GPS is a little bit easier to answer, then even the pipeline. Because the pipeline, I love people that say we have proprietary pipeline. And I'm like, what does that mean? We don't know where our pipeline is gonna come from, we really don't. We had companies that we never heard of that came through a connection of a connection, and we learned about them, and just hit it off. And it was a great investment opportunity for us. But it's because you keep those relationships alive, right. And the VPs are a lot of our relationships, either multiple of us, many of the founding partners kind of knew that one person and thought look, they've been advising us or working with us, or they work with us in the past, or it really is from deep our networks, not some are Endeavor. Some are previous to Endeavor. Some are from our home countries. Some are from the schools that we went to, or some of our from, from other jobs that we had. But it's really people that were in some ways close to us, either advisors, friends that had been successful as well, and had their own connections. And that thought that being part of a fund like ours would be something that would be interesting for for them financially, would be something fun, and then they could have some impact as well. So that's kind of how we classified and found them. And many of them were the folks that we were actually talking about really thinking it through how to build a fund. And then when we really turn into yes, we're gonna really do this. They were the first people that we invited. So that's kind of how it happens. I love these questions, too, because it's always like it just many of these things just happen. They're not necessarily like how you plan them to happen. So I'm talking about how they happen. Sometimes it's really interesting, because it's not like a strategy or a spreadsheet that you put together and you're like, okay, this is how it's gonna happen. It's kind of just starts evolving.

Andres Sandate: 43:44

I want to ask you one more question Adriana. As you look at where MatterScale Ventures is today as an emerging fund as a first time fund, what have you found from the standpoint of being a GP to be some of the big learning experiences?

Adriana Suarez: 43:59

Wow, well, I think, many aspects, but I would say, probably, I will highlight that I do think that this is probably the most challenging, and, I would say complex jobs that exist. I thought that even more than than being an entrepreneur and building your own company, I would say this is like, like a startup at the end of the day. We got together we had around seven years of working together, at least four of us. So we knew each other from from before and that, I think definitely something key, because then we had to start doing couple of things at the same time, fundraising. At the same time, we're finding companies and assessing companies and filtering and also investing and also we're putting in place processes, structure, methodologies. So it's really, really a being we have to have the mindset of a startup. I would say probably the most challenging part definitely is the fundraising. Now I understand why entrepreneurs kind of suffer when they do fundraise. And fundraising for a team that has a lot of experience, working with entrepreneurship and with entrepreneurs and invest in investing, etc. But we're seen by investors, by the majority of investors as first time fund managers, because we, as a group, we are first time fund and we're a first time fund managers. But that is probably the most challenging side is how we can explain or introduce all these experiences that we have building relations, working with entrepreneurs, helping them raise money, understanding all the challenges that they have, and supporting them and introduce them in, in all these experience to convince investors to come in on board and invest in us. So what we have realized, at the end of the day that these first funds, the majority of investors are people that in a way knows you, and then you have to build these track record for next, and future funds. This is a long term job, and you have to see it like that has to be a very long term project.

Andres Sandate: 46:25

Maybe with that, let's wrap up, I'd love to get some parting thoughts on kind of where you see the market opportunities.

Antonio Luck: 46:33

Even before we started the fund, we see this very, very strong trend. And obviously not just us, and COVID just made it really, really clear. Let's talk at a very high level, the digitization of everything, right? Talk about the digitization of everything. Everything is going to be more software. Everything is going to be more connected. Everything is going to be more integrated. Everything is going to be a little bit simpler. Everything is going to be a little bit more automated. And that's across every industry. Communication is going to be a little bit easier, is going to be a little bit more integrated. Video is going to be key. So all of these all of these trends, more mobile penetration, everybody more access to internet, all of these things are just driving kind of a lot of the trends. COVID accelerated again. Healthcare telemedicine is obvious now, right? It's something that people were kind of, maybe but everybody now that I know at least, has had one consultation or tried to use a doctor for their kids or something, used telemedicine to do that consultation. So and these I think are a little bit closer trends that are obviously still starting and have 10-15 years to go to get to some really, really, really large companies. And then you have things that are a little bit further out, right. Like blockchain, we haven't really seen a lot of we have seen some applications of blockchain. And there's a lot of early applications of blockchain, but it hasn't really taken a center stage of like how we do businesses across the world. And I think, again, at a very high level, I think there are so many different ways into the application of blockchain that we we are looking into some and trying to understand how that comes to fruition. And the big question there is obviously timing, right, because we have to be able to understand when it happens to make the right investment at the right time. And that's one of the trickiest parts of kind of trying to invest in kind of edge technologies, right? in certain ways, we're going to build a portfolio to have some of those really edgy technologies and some very early, very proven entrepreneurs that are maybe sometimes pre-revenue. So the way we balanced kind of the strategy will be more to kind of have some companies or most of their companies that really are leading the charge in certain industries that are a little bit more developed and should come to two big companies in the next 10 years.

Andres Sandate: 48:36

I'd love to give the final comment to Adriana just to characterize overall, where we're at given we just had a big election in the US, we have a new administration, maybe talk a little bit about the economy in this sort of environment on the ground in Colombia, or around the region and LatAm where you're looking for businesses and where you're talking to founders, and you're talking to, you know, potential partners in the fund, how would you characterize the environment today?

Adriana Suarez: 49:03

What I would say before COVID, what we saw, probably the year previous COVID, or six months previous COVID, was a lot of change in terms of what the population in different countries were demanding from from government. So we see all these people going out to the streets, asking for better education, better health, better jobs, probably COVID stopped a little bit of that because we have to be at home. And now there is another thing that was in our minds. But what we're seeing, at least these week here in Colombia is that again, we're seeing all these people going out even worse because COVID has bring more poverty to our region. So I do think there is more and more need to think and how to give the better quality and accessible services, basic services to the majority of the population and definitely technology is the only way to get to that. So what we're seeing is that education, and after COVID, education has been transformed. The higher education, the typical universities, that has changed and will change, I would say forever. In our countries, there is no necessarily internet connection in the countryside or great internet connection. And the majority of people in the countryside today do not have even access to education, because they're not going to school, the schools are closed, and they don't have access. So, what's going to happen with all these people in 5-10 years that they lost two or three years of not going to school. Idf you're a 15 year old, boy, that stopped going to school at 15 years old, you're not going to go back to the same. So I do think that education is definitely something that it will change and there is a huge opportunity of starting this new, well and that's why we're seeing amazing opportunities in EdTech in higher education and even for schools, and how to return students, how to engage them in class, how to build these, the same kind of experience that you have at a present school. And the same happens with health. The same happens with mobility, with many, many of the services. And I do think that governments have a lot of challenge, more even now than a year and a half ago before COVID. Because they have to address these aspects very fast. Because if not, all the populations in the world are going to start demanding and going to the streets and it will become difficult to govern or to govern the countries without giving clear solutions and real solutions to the majority of the population. So that makes me think that we're in the right track and education, health, future of work. It's something that we need to tackle and helping grow amazing companies that can impact huge majority of population with quality of services is a way of moving forward.

Andres Sandate: 52:19

Let's finish on a somewhat more, I guess less on the venture space, I like to get a little bit more of a perspective of the kinds of things that you do to counterbalance right. You mentioned this Adriana, this is like one of the more difficult and complex and maybe even stress orienting jobs that you've had or phases of the career. I know Antonio, you're a big fisherman, spear fisherman. I know you're a big reader, you have a family. What are the things that you find - I'm always curious, what are people reading? You know, what are they watching? You know, what are their hobbies? What do they do to sort of get away from the hustle and the grind.

Adriana Suarez: 52:55

I love traveling. So now that we don't have the capacity to travel, what we I am enjoying a lot is doing the short travels to the countryside. I ride bike. I'm a fan of riding bikes. With my husband, we do mountain bike, but also road bikes. So that's what we have been enjoying recentlyd, in exchange of being able to travel. And what I'm read, what I recommend is a reading a I would say, Blitzscaling, from a book that Reid Hoffman wrote recently and talking a little bit about what we think is entrepreneurs need to think to scale and create global businesses. I think the Blitzscaling is a great book to look.

Andres Sandate: 53:42

That's fantastic. Well, we'll definitely recommend that in the in the notes to to our audience. So Antonio will give it to you to wrap us up.

Antonio Luck: 53:51

Yeah, the best way for me to re energize is really getting outdoors. And I like doing something some form of activity and that most of the times is fishing, or hiking with the family. Or you mentioned spearfishing as one of my favorite things to do, because there's no way anybody can talk to you when you're like 60 feet underwater. So you really, really, really disconnect and you've immersed yourself into kind of this completely different world in which your attention and awareness has to be generally pretty highlighted if you want to be able to harvest the fish that you're looking for. On the reading side I tend to read two or three books generally at the same time. And not necessarily, I don't necessarily recommend doing that. But it's just, I sometimes don't feel to continue reading the same book. Because I always want to have I generally read something that I call some really dense type of form of material something generally in psychology or human behavior or something like that is fun for me to read. Sometimes even go as as going back as either to Freud or Bacon or Jueng are some of the the ones that I generally refer to are Joseph Campbell. I generally I'm reading also kind of a business book and my latest one was The Hard Things About Hard Things, kind of rereading it from Ben Horowitz. And then some fun, either some sci-fi or somewhat fun. I'm reading another one called How to raise an Adult. Trying to help my kid on a little bit more on the education side. Yeah, that's kind of kind of how I do a little bit about the reading. But those are the things that kind of I clear my mind. And I think it's really, really important to be able to have kind of a way to kind of reset. I like the word reset. It's like you go out for a day or a weekend and you kind of reset, and you come back and it's like, the noise from your head is gone. And you're like, oh, these are the three five things I need to focus and refocus and go - instead of all those little things that you think you need to focus all the time and get everything done.

Andres Sandate: 55:38

Well, this was a terrific conversation Antonio. I want to tell you and Adriana, thank you for giving us all a tour through MatterScale Ventures and how you think. So with that, Antonio Luck, Adriana Suarez, two of the five managing partners of MatterScale Ventures, an early stage VC firm, focused on seed and pre-A round investing. Thank you for being a guest today on ATLalts.

Antonio Luck: 56:07

Thank you so much.

Andres Sandate: 56:08

I'd like to thank this week's guests on the ATLalts podcast, Antonio Luck and Adriana Suarez. You can learn more about MatterScale Ventures at their website, matterscale.com. or you can follow them on Twitter @matterscale. You can find links show notes, and transcripts to this week's show on our website at ATLalts.com. Please tell a friend about the podcast and subscribe wherever you enjoy your favorite podcast. Don't forget to sign up for our mailing list and be the first to hear about subscriber only events and content featuring special guests. Thank you very much for tuning in to our podcast. We always welcome your questions, feedback and guest ideas, please email us at info@ATLalts.com and engage with us on social media at ATLalts on Twitter, Facebook, Instagram, YouTube, and LinkedIn.

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