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How a Mormon VC ended up betting everything on Mexico

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What’s a Mormon white guy from Southern California doing running a tech fund in Mexico? Paul Ahlstrom, the founding partner of one of Mexico’s rare venture capital firms Alta Ventures, says he gets that question all the time. It’s no doubt on the minds of the 40 plus Geeks on a Plane group, a traveling tour of entrepreneurs and investors organized by the 500 Startups tech fund, that stopped through Mexico City last weekend to learn about what — if anything — is going on in Mexico.

Back in 2005, Ahlstrom, who was running a successful venture fund in Salt Lake City, Utah, asked himself and his investing team the question: if you could invest in any country in the world, where would it be? The group started collecting and crunching data points, like it needed a high growth potential, a large market size of over 50 million people, a GDP per capita of under $14,000, political stability, a decent history of human rights, and it needed business and entrepreneurship indicators like a small number of days needed to start a business.

At the end of the analysis the country that was spit out was Mexico. “We didn’t believe it. We were completely shocked,” says Ahlstrom, who told his team to go back and scrub the data and recrunch it. But again, the answer fell on Mexico. “Our image of Mexico was dusty, sombreros, drug problems, immigration issues. Not high tech,” says Ahlstrom. Nevertheless, a few years later Ahlstrom led a private equity growth fund in the region, and opened up Alta Ventures, based in Mexico City.

Alta, and Ahlstrom’s efforts, have really been one of the first major pushes to create an entrepreneur and investing community in Mexico. The ecosystem is still tiny compared to the Valley or even its Latin American counterpart Brazil, but it’s now growing. On the Geeks on a Plane tour through Mexico we participated in a Startup Mexico Weekend, which included a dozen teams pitching interesting ideas like RockMob, a Rockband for regular instruments, and Legal U, a startup creating online legal documents for landlords and small businesses. 500 Startups plans to focus more on the region, founding partner Dave McClure tells me.

Ahlstrom has worked tirelessly to kick start the industry. One of the problems with Mexico has been that pension funds were only recently able to invest in venture firms, and Ahlstrom began working on that problem as soon as he identified it. He also personally helped organize a conference in Mexico’s city of Monterrey in 2010 that he says was “a watershed moment and the launch of the venture capital industry in Mexico.”

Ahlstrom has done so much work that he has essentially helped clear the barriers for everyone else to come in. The pioneer is the man with a lot of arrows in his back, face down in the mud, says Ahlstrom.

For Ahlstrom, bringing his family down to Mexico, was actually more like coming home. His great great grandfather was a polygamist Mormon who brought his family down to Mexico to be able to keep the family together, and Ahlstrom tells a group at the U.S. Ambassador to Mexico’s house that the Romneys lived down the street (not exactly sure if that was a joke or not). Ahlstrom’s family (no longer polygamists) were driven out of Mexico for various financial and political reasons a couple times, but continued to return to Mexico over the years. Ahlstrom says creating the venture capital community in Mexico is “huge for my family.”

Image courtesy of Arturusoft.

12 Responses to “How a Mormon VC ended up betting everything on Mexico”

  1. Hello Mr Ahlstrom,
    Very interesting article about what you have started in Mexico with your VC firm.

    I am based in Monterrey and I’m selected for the ceremony of the E100 Top 100 Enterpreneurs on next week. It is great that ALTA Innovation Institute is sponsoring this kind of initiatives, thanks!

    Are you assiting to this event? We’re in contact with the team of “The HUB DF”, friends of Rafe Furst, because I have the project (with some other friends) to open “The HUB Monterrey” and we would really like presenting it to ALTA Ventures.

    Your slides are very interesting, thanks for posting them!

    Efrain Gutierrez

  2. Paul Ahlstrom

    Katie thanks for the write up. Thanks Dave for the kind words. Yes my mom lived in little town called Colonial Juarez in the state of Chih MX, the Romney’s lived down the road.

    Dave McClure and many others have requested I put my slides up on Slideshare. So here is a link to the market research slides. (I will leave them up here for a couple of weeks.)

  3. Katie thanks for the write up. Thanks Dave for the kind words. Yes Katie it is true, my mom lived in little town called Colonial Juarez the Romney’s lived down the road in the next town called Colonial Dublan it is just outside of Casas Grandes Chihuahua Mexico.

    Dave McClure and many others have requested I put my slides up on Slideshare. So here is a link to the market research slides. (I will leave them up here for a couple of weeks.)

    • Thanks Paul, I appreciate the slides–very interesting! I follow much of the logic with the exception of how you made the transition from the ‘Narrowed Field’ (slide 17 & 18) to an analysis of BRICs vs. Mexico. Wondering if you could help me fill in the blank a bit.

      Thanks again for posting!

      Fellow BYU alum running a VC focused on Indonesia.

      • Paul Ahlstrom

        Brian – glad to answer. (The voice over helps a lot.) We looked at it as a combination of attractiveness/readiness of the market for VC/PE versus the underserved nature of the market (lack of capital). There are slides later in the deck that probably should be up front to better walk through the logic. For example, if you look at slide 51 it compares the relative attractiveness of Mexico (slides such as 18, 44 & 48) and the fact that there is limited institutional capital available -(slide 43, 54, 74). Mexico is relatively attractive in compared to other regions because of its strong entrepreneurial ecosystem support, aligned government, regulatory initiatives, etc.. It was astonishing to us that a trillion dollar economy sitting next to the worlds largest economy was missing the VC asset class and the PE was significantly underserved.

        I am fascinated to learn what you are doing in Indonesia. (Reach out to me directly when you get a moment.) We are tracking several up-and-coming regions that are growing in attractiveness– Turkey, Indonesia, Columbia, Peru and Argentina are on our radar. Best – Paul

  4. Mr. Ahlstrom's son

    The Romney family lived in Colonia Juarez, Chihuahua near my grandmother. George Romney, Mitt’s father, left at the age of 5 along with many other Mormons after Mexican revolutionaries threatened the colony. My family stayed until my grandma left for college.

  5. Sam Haseltine

    I’ve literally just returned from my honeymoon in mexico. And having visited a couple of smaller cities and met many individuals with an innate entrepreneurial spirit, I left with the exact same sentiment…superb move!

    • Rafael Solis

      Having visited Mexico several times over the last 6 months, including my wedding in San Miguel de Allende, I was amazed to meet several folks in the tech community. There’s already a vibrant “nearshore” sector that will certainly feed into the entrepreneurial ventures as capital flows in. What a change from when I lived/interned there 10 years ago. Great work!

  6. Dave McClure

    Paul Ahlstrom is one of those rare individuals who really deserves the title “visionary”… but more than that, he’s put money where his mouth is, and he’s enabling real change on the ground by putting dollars into new tech ventures.

    kudos to paul & his partner Rogelio de Los Santos along with the rest of the Alta Ventures team for making a big difference to entrepreneurs in Mexico.

    500 Startups has already made 3 investments in Mexico and we hope to be even more active in the future, through our partnership with Mexican.VC as well as with other investment groups such as Alta.