Mexico's Fondo de Fondos plans direct seed-stage tech investments within a US$200M, three-year plan

Fondo de Fondos, a Mexican private-capital institution whose main shareholders include the development bank, reached its 20th year with a new objective: to take part in earlier stages and seed rounds of technology companies. Director general Liliana Reyes described the plan in an interview with elceo.com elceo.comelceo.comelceo.comOpen source ↗. Until now the institution invested in funds that analyse companies and projects. It will now also participate more directly and is strengthening its internal structure for that purpose.

Seed-stage selection of technology projects

"Besides being a fund of funds, we are going to play a little more as managers. That is, to evaluate directly the companies in which we want to invest at earlier stages," Reyes said. The first step is a nationwide call for technology-based projects that could be eligible for investment, provided they are at the seed stage.

The call was launched jointly with the Digital Transformation and Telecommunications Agency (ATDT), headed by José Antonio Peña Merino. The Secretariat of Science, Humanities, Technology and Innovation (SECIHTI) and Nafin, one of the main shareholders of Fondo de Fondos, also take part. Reyes, who previously headed the Mexican Private Equity Association (Amexcap), said several projects are already identified. She added that they need an innovative component to attract high-risk investors.

The fund already has the investment vehicle for these operations, as well as authorizations from the National Banking and Securities Commission (CNBV) and other authorities. Reyes said an announcement on where resources will be invested or committed at these stages could come very soon elceo.comelceo.comelceo.comOpen source ↗.

US$200M plan and track record

Fondo de Fondos also announced a three-year investment plan of US$200M, aimed at stimulating the private-capital industry in Mexico. About 25% is intended for innovation and venture capital, and another 25% for growth capital, meaning funds that invest in mid-sized companies with a proven business model that are already profitable. A further 20% goes to private credit, and 30% to special infrastructure and energy projects. No specific project is targeted yet, and Reyes said opportunities exceed the available resources 11 times.

To align with the Plan México, the fund applies a scorecard when evaluating managers, with parameters such as regionalization, the share of investment in Mexico and the participation of Mexican managers.

Fondo de Fondos was created in 2006. Over 20 years it has invested more than US$1,100 million through 123 funds and 62 co-investments. According to the institution, this has supported more than 1,460 companies and generated 806,600 direct and indirect jobs elceo.comelceo.comelceo.comOpen source ↗.