Overview of the Venture Capital Industry in Mexico 1

OVERVIEW OF THE VENTURE CAPITAL INDUSTRY IN MEXICO 2017 2

BOARD MEMBERS Executive Team

Alonso B. Díaz Etienne, María Ariza President Gerbera Capital CEO [email protected] Mauricio Basila Basila Abogados - Secretary Diego Armenta Research Director Alejandro Diez Barroso [email protected] Dila Capital Juan Pablo Migoya Alfredo Alfaro Research Analyst Northgate Capital [email protected]

Cipriano Santisteban Pablo López-Lachman Linzor Capital Research Analyst [email protected] Diego Serebrisky Dalus Capital Martha Terrés Logistics and Communication Associate Felipe Vilá González [email protected] Fondo de Fondos Carla Arrangoiz Germán Ahumada Public Relations and Memberships Associate Artha Capital [email protected]

Hernán Fernández Santiago Salinas Angel Ventures Institutional Relations Associate [email protected] Jaime García ST Capital Daniela Piña Technical Committee Associate José Fernández [email protected] Chévez, Ruiz, Zamarripa Sergio Margalef Jorge Dickens Venture Capital and Investors Associate Acon Investments [email protected]

Juan A. Leautaud Brenda Aguilar BlackRock Project Analyst [email protected] Ricardo Elizondo Ideas y Capital Andrea Tavera Logistics and Communication Analyst Raul Gallegos [email protected] Credit Suisse Ivonne Castelazo Rodrigo Fonseca Office Manager EMX Capital [email protected]

Sandor Valner Monterrey Walton Street Capital Zita Horváth Regional Director [email protected] Overview of the Venture Capital Industry in Mexico 1

ABOUT AMEXCAP

AMEXCAP is a non-profit association whose mission is to foster the deve­lop­ment of the private equity industry in Mexico. The Association was crea­ted in 2003 and currently rep- resents over 118 Private Equity, Venture Ca­pital, Real Estate, Infrastructure and Energy funds that actively invest in Mexico and over 82 advisory service companies involved in the areas of corporate law, tax advisory, financial services, and consulting. The private equi­ty industry in Mexico has raised a cumulative USD$ 51.4 bn, over the past seventeen years. These funds invest in a broad range of sectors including consumer products, healthcare, transportation, financial servi­ces, media, telecommunications, real estate, infrastructure and energy.

Our Mission

The AMEXCAP works under the following objectives:

• Developing and strengthening the relationships with institutional investors. • Generating the largest number and frequency of transactions. • Developing and maintaining relations with authorities and regulators, lobbying with them to improve the competitiveness of the industry. • Promoting and disseminating the Private Equity and Venture Capital industries at national and international levels.

To carry out these objectives, identify key challenges and propose initiatives­ which will encourage the development of the industry, AMEXCAP’s Board of Directors is com- posed of a President, a Secretary and ten Committees:

• Venture Capital Committee • Growth and Acquisitions Committee • Real Estate Committee • Infrastructure Committee • Family Offices Committee • Institutional Relations Committee • Promotion Committee • Research and Education Committee • Diffusion and Communication Committee • VC & Seed Legal Committee Overview of the Venture Capital 2 Industry in Mexico

content

1. About AMEXCAP

3. A Letter from AMEXCAP

5. Methodology

6. Executive Summary

7. More allies for your startup in Mexico

9. Industry Profile and Evolution

17. Fundraising

19. Investment Outlook

20. Investment sectors

22. Startups with a woman Cofounder

24. Why is everybody talking about FINTECH?

27. Mexican Startups that have raised more than USD$4 million

28. Exit Transactions

38. Evolution of the legal system for VC investments

Copyright notice: When disseminating the content contained in this document, reference “AMEXCAP – Overview of the Venture Capital Industry in Mexico – 2017”. Note: All materials contained in this document were prepared by AMEXCAP and are made for use by members of the association and select organizations engaged in the private equity industry. Overview of the Venture Capital Industry in Mexico 3

A LETTER FROM AMEXCAP

Today the industry for Private Equity in Mexico reaches USD $51.4 Bn of committed assets with over 176 active funds investing across sectors. AMEXCAP had registered 2,000 Private Equity transactions over the last 26 years, of which 86% occurred in the past 7 years. From the total transactions accounted, 38% belonged to the Venture Capital, 20% Growth and LBO deals; 34% related to Real Estate; 5% to Infrastructure and 3% to Pri- vate Debt.

Within the VC sector, we have seen great activity and relevant development towards the attraction of foreign capital either in co-investment deals as well as on direct deals. On 2015 10 foreign VC funds started to invest on Mexican startups; 95% of their investments were in seed rounds and 5% in series A rounds. In just two years we have increased for- eign participation to 50 funds investing alongside 63 domestic funds, mainly in rounds A, rounds B and later stages. Afluenta with Elevar Equity, Clip with General Atlantic, Mission OG; Cornershop with Accel and Jackson Square Ventures, Konfio with Kaszek Ventures, QED Investors and Accion Venture Lab, Apli with Social Capital, Compara Guru with Nova Founders Capital, Struck Capital and QED, Kueski with Quona Capital, QED Investors and KaszeK Ventures, are some of these investments.

Despite this dynamic activity, fundraising has experienced a decrease since its record high in 2013 with USD$ 233 Mn to USD$ 165 Mn in 2016. We should expect a further drop this year as well, potentially drawn by factors such as the new U.S. trade and immi­ gration policies passed in 2017 affecting institutional investors’ demand for Mexico-fo- cused vehicles, the uncertainty of next year presidential elections, the uncertainty of the NAFTA agreement, and the fact that INADEM and other multilateral banks have decrea­ sed allocation for Mexican VC funds.

On the other hand, we are seeing little more activity from local pension funds in the in- dustry. Three CKDs have been raised so far for Venture Capital investments with total commitments of over USD$190mn: LIV Capital (2012), IGNIA (2015) and Dalus Capi- tal (2016) and LIV Capital (2012). And we are expecting another two or three to come out in 2018. We hope this interest from local pension funds continue its trend and poten- tially attract further allocation from other foreign institutional investors to the country.

Mexico has been able to maintain its position as a major source of promising startups on top of other important LATAM economies. As a result, Mexico is now seen as one of the most favorable emerging markets to invest in and top in LATAM according to different LPs surveys (LAVCA 2014, 2015, and EMPEA 2015, 2016 and 2017). More foreign funds are now attracted to our great talent, and filling the gap of those later stages rounds, so we should expect Mexico’s Venture Capital industry continue to flourish attracting new funds and investors to these great opportunities. Overview of the Venture Capital 4 Industry in Mexico

I would like to express my gratitude to all the GPs who contributed their valuable time, data and information to AMEXCAP to assist in the production of this report.

I would also like to thank AMEXCAP Chairman Alonso Díaz Etienne, Venture Capital Committee President, Ricardo Elizondo and the whole Board for their support and trust, and to Diego Armenta our Research Director and long-standing member of my team for the fourth year running, for his valuable input and support of our organization and the industry we represent.

Finally, we hope you enjoy this publication, as long as we tried to provide a fresh per- spective on a richly diverse economy. As venture capital remains an opaque asset class, we encourage readers to review our data methodology.

Cordially, María Ariza CEO

1 According to LAVCA in 2017 LAVCA Industry Data & Analysis Report Overview of the Venture Capital Industry in Mexico 5

AMEXCAP Methodology

This report provides an overview of trends in fundraising and investment among venture ca­ pital (VC) funds investing in Mexico (includes Family Offices and Corporate Venture Capital Funds that invest in VC). The statistics presented here are drawn from AMEXCAP´S funds and transactions database. The main data sources used were: press-releases, trade publications, crunchbase, funds’ and company’s websites, AMEXCAP communication with industry partici­ pants and members. This overview covers from January 2000 thru September 2017.

Reported fundraising totals reflect only official closes (interim and/or final) reported by public ­ sources and by the firms. Capital commitments accruing prior to, or between, official closes are not included. Investment totals included in the report reflect total equity amounts for transac­ tions in which financial details have been reported. For both fundraising and investment data, amounts have been confirmed wherever possible through information provided by the fund managers themselves. The total number of investment transactions includes both new and follow-on investments and is determined by the moment in time that the investment was initiated we consider the number of funds contributing capital.

Any discrepancies between the aggregate statistics published by AMEXCAP and the consti­ tuent data files can be a ttributed to confidential information that has been omitted from public reporting.

We continuously strive to gather as much information as possible to better reflect the current VC industry in Mexico, so our data may have some adjustments year over year, this is due mainly to more public information from historic investments and capital raised from funds we have not tracked before.

Disclaimer: This information is intended to provide an indication of indus­ try activity based on best information available from public and proprietary sources. AMEXCAP has taken measures to validate the information presen­ ted herein but cannot guarantee the ultimate accuracy or completeness of the data provided. AMEXCAP is not responsible for any decision made or action taken based on information drawn from this report. Overview of the Venture Capital 6 Industry in Mexico

EXECUTIVE SUMMARY

Mexico´s Venture Capital Industry is composed by 63 Mexico based fund managers plus another 50 foreign firms that have done at least one transaction on the past 4 years. In sum, they have committed over USD$ 1.64Bn to be invested in the venture space, distributed over a diverse pool of VC stages and industries. As many of 46 funds are focused on seed capital, leaving the rest for later stages.

Regarding deal activity, AMEXCAP has record of 782 VC transactions for a total of USD$834Mn invested from 2010 to September 2017. We have witnessed a year-on-year increase on the number of deals since 2010. Actually, according to LAVCA, in 2016 Mexico led the region regarding PE/VC deal activity surpassing Brazil.

The industry saw its best year in its history in 2016 with the largest number of transactions with 182, representing USD$ 209Mn of capital invested. 55% of all deals were in the seed stage, 40% in series A and B and 5% were in later stages. This year however we have seen that 21% of transactions have been in this later stage, which accounts for the natural growth of our startups looking for further rounds of capitalization.

The fintech sector was the most active in 2016 with 66 transactions and over USD$ 87Mn capital representing a 42% of the total invested capital. We saw 39 different funds investing in 23 different fintech startups. For 2017 the amount invested to date is USD$ 62.9Mn in 35 transactions.

Interesting to mention that the number of startups with a woman cofounder operating in Mexico is increasing. There are 33 Mexican startups with a woman cofounder, which have been able to raise USD$31Mn since 2011 to date. 50% of these startups belong to the consumer services sector with USD$ 9.8Mn capital invested.

Our latest research conducted by KPMG and AMEXCAP regarding successful PE/VC backed companies in Mexico, which will be published in November 2017, demonstrates that VC funds have encouraged growth and improved the investees’ performance, showing the following results:

For Venture Capital Investments For Venture Capital Investments (Seed Capital): (series A and B): Revenue growth of 2.17X Revenue growth of 6.22X EBITDA growth of 1.46X EBITDA growth of 1.28X

Lastly, on the liquidity side, we have accounted 37 exits within the VC industry. There were 3 exits in 2016 and 4 in 2017. Soldiers Field Angels fund (SFA) sold its stake in Now New Media Adobe Capital sold its stake in NatGas Accion Venture Lab, sold its stake in Clip Enture Smart Business sold its stake in Grupo La Alegria Enture Smart Business sold its stake in Xnax Enture Smart Business sold is stake in Ambar seguros

2 2017 LAVCA Industry Data & Analysis Report ”Private Equity as a driving force for Mexican businesses: 12 success stories – Third edition”, AMEXCAP and KPMG, - 2017. The paper analyses 12 companies of those 3 received seed investments and 3 early stage investments, it will be published on November 2017. Overview of the Venture Capital Industry in Mexico 7

MORE ALLIES FOR YOUR STARTUP IN MEXICO

Ricardo Elizondo President, AMEXCAP’s Venture Capital Committee

In México, for many years, the possibility of starting your own business and growing it past friends and family (F&F) funding was close to impossible. If the business venture wasn’t able to reach breakeven with F&F funding, there would be no other sources to finance growth. This led to a huge bias towards business models for entrepreneurs who’d only seek a lifestyle hedge.

An inflection point came when in 2012 the Mexican government created the INADEM (National Institute for Entrepreneurship) in an effort to accelerate the development of the entrepreneurial ecosystem. Academic institutions established departments to train potential­ entrepreneurs and to channel their research to the market through the incubation of startup companies. New incubators and accelerators were launched and a new entrepreneurial culture­ started to permeate into the minds of society.

Mexican entrepreneurial projects in different industries became examples of success (e.g., Cinemex, Proteak, KIO Networks, City Express, Metros Cúbicos) and a new breed of entre­ preneurs, tech savvy, eager to change the world, with a global vision, ready to compete, started to emerge from Universities and corporations.

Also, new Venture Capital funds focused on early stage surged to provide much needed financing in the so called valley of death. From 2013 to 2016 more than 57 VC funds were created. These funds helped Mexico obtain a leading role in Latin America in terms of share of investments. According to LAVCA, from 2014 to 2015, Mexico grew from representing only 15% to 33% of the total amount of VC invested in the region.

Moreover, many of the institutional investors are in the process of raising more capital for subsequent funds. A clear example of the opportunities perceived in our ecosystem is the fact that Mexican pension funds backed at least three VC firms that are filling the inves­­t­­ ment needs of startups raising Series A, B and late stage.

Overview of the Venture Capital 8 Industry in Mexico

Percent of Total Amount Invested Percent of Total Number of Deals

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Ϭй Ϭй ϮϬϭϰ ϮϬϭϱ ϮϬϭϰ ϮϬϭϱ ƌĂnjŝů DĞdžŝĐŽ ŽůŽŵďŝĂ WĞƌƵ ŚŝůĞ ƌŐĞŶƚŝŶĂ ĞŶƚƌĂůŵĞƌŝĐĂΘĂƌŝďďĞĂŶ hƌƵŐƵĂLJ ƌĂnjŝů DĞdžŝĐŽ ŽůŽŵďŝĂ WĞƌƵ ŚŝůĞ ƌŐĞŶƚŝŶĂ ĞŶƚƌĂůŵĞƌŝĐĂΘĂƌŝďďĞĂŶ hƌƵŐƵĂLJ

The size of the deals is also growing. To date there are more than 30 Mexican startups that have raised over USD$5 mn through venture capital. Just in our portfolios at Ideas & Capital we have Prolade, NextU, Fruitex and Pro Organic Growers which were all funded­ from grass roots after 2013 and now they belong to this new category of startups that have been able to scale up under the new VC environment.

In the fintech industry there are also many companies in this category. Some examples of them include: Kubo, Laudex, Kueski, Afluenta, Mimoni, Clip, Conekta, Sr. Pago, and Alkan­ za. The list of startups that have been strongly backed goes on in other industries like healthcare and e-commerce. Even though the VC market in Mexico is young, many startups­ are growing fast and are becoming great opportunities for investors seeking larger companies, and exits are starting to accumulate.

Mexico is ready for international investors eager to partner with Mexican funds. The foundations are there. Although the amount invested by VC firms presents a steady increase and is now over USD$200 mn per year there is huge room for growth. It would only make sense to get our ecosystem at the level of VC investment as percentage of GDP that we see in other economies like Israel, India and the UK… from 0.08% to more than 0.15%.

Industry Profile and Evolution On September 2017 Venture Capital Industry, has achieved over USD$ 1.641 bn in ca­pital commitments over the last seventeen years, growing at a CAGR of 12.14% for the last 7 years. And 63 funds these funds are stablished in Mexico or have strong attachments for the Mexican Industry.

3 2015, 2016, 2017 EMPEA’s Global Limited Partners Survey and Latin American Private Equity Survey 2014 and 2015 Overview of the Venture Capital Industry in Mexico 9

Industry Profile and Evolution

By September 2017 the Mexican Venture Capital Industry has 63 active funds operating in the country that have raised over USD$ 1.641 Bn in capital commitments growing at a CAGR of 12.14% for the last 7 years.

Accumulatted Capital Commitments in VC Accumulatted Capital(USD$ CommitmentsMillion) in VC (USD$ Million)

$1,800 $1,641 $1,597 $1,600 $1,480 $1,400 $1,272 $1,200 $1,035 $1,000 $788 $800 $736 $600 $500 $515 $372 $400 $200 $0 2000 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2008

Capital Raised Fig. 1

Acummulated ParNcipaNon per Round of FinancingParticipation per Round of Financing 82% of all the capital raised is being invested in seed and early (2008 - 2017*) (2000-2017*) stage, this is a problem for a startup that is aiming to raise late VC; 82% of all the capital raised is being invested in seed and early Early VC Fund [NOMBRE DE stages. For later stages, Mexican startups are also looking and rai­ 37% CATEGORÍA] sing funds from foreign investors. i.e. Yogome closed a round with [VALOR] European Fund Seaya Ventures among other investors, FINAE and Kubo Financiero received capital from Bamboo Capital Part­ [NOMBRE DE ners and Cornershop got commitments from Accel. CATEGORÍA] [VALOR] [NOMBRE DE CATEGORÍA] Classification: [VALOR] Seed investment less than Seed Later Growth USD$ 0.5 Mn Stage VC 45% [NOMBRE DE Early VC: refers to round A and B 15% CATEGORÍA] investments from [VALOR] USD$ 0.5 to USD$ 5 Mn Debt Later growth stage: investments of Fig. 2 3% more than USD$ 5 Mn

Overview of the Venture Capital 10 Industry in Mexico

Active Fund Managers (Number of GPs)

70 63

60 57

50 46 41 40 35

30

20 15 11 10 5 5 2 0 2000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Fig. 3

There are 63 VC funds with headquarters in Mexico of them 46 already making their firsts investments: Aleb investments on Pay- just focus on seed stage, 14 for early and 3 late stage. book, and Gubler, E Capital in Rescata, Trebol Capital in Sell- fone, XB Ventures in If Only and Just Fab, GC Capital in Rocket. 2013 was a particularly interesting year regarding the appear- la, Sky Alert, Tu Canton. ance of VC Funds in Mexico. Instituto Nacional del Emprendedor, INADEM started an aggressive program to launch Mexican VC INADEM has moreover supported Mexican Firm AVM for a USD capital funds committing about USD$ 130Mn for this purpose $100Mn Pacific Alliance Fund that right now finishing its fund- over the following three years. It contributed with the creation raising period. and co-investment of more than 40 new funds. Some of these are Overview of the Venture Capital Industry in Mexico 11

Later Seed Early VC Growth Stage Stage Ticket size < 0.5 0.5< 2 2 < 5 > 5 (USD$ Mn)

Sample Sectors Sample Portafolio USD USD Min. AUM Max. Invested Venture Venture Late VC Round B Round A Seed Capital Accumulated Capital Firms

Fintech Transportation Tourism USD USD USD$ 25 Mn Education $0.05Mn $0.5Mn Ecommerce Enterprise Civic Tech 500 Startups Health

Digital & Mobile Health USD USD Technology USD$ 2Mn Disruptive business $0.2Mn $0.3 Mn ideas Diverse high growth & innovative business

USD USD$ USD$ 12 Mn $0.05 E-Commerce 5Mn Mobile Mn

Big Data USD$ USD$ 5 Fintech USD$ 33 Mn IoT 0.05Mn Mn SaaS Virtual Reality

Consumer goods and Retail Business services USD$ USD$ USD$ 14.57Mn Information 0.05Mn 0.1Mn Technology Telecommunications Entertainment Agroindustry

USD$ USD$ USD$10 Mn Consumer Services 0.05Mn 5Mn

NA NA NA Fintech

USD$ USD$ Utilities USD$ 5Mn Consumer Services 0.025Mn 0.5Mn Technology

IoT FinTech USD$ USD$ USD$ 5Mn Retail 0.025Mn 0.5Mn Insurance Media Health & Wellness Health (Pharmaceutical USD$ USD$ 1 product) USD$ 5.5Mn IT (Algorithms) 0.1Mn Mn Green Materials Entretaiment (robotics) Overview of the Venture Capital 12 Industry in Mexico

Later Seed Early VC Growth Stage Stage Ticket size < 0.5 0.5< 2 2 < 5 > 5 (USD$ Mn)

Sample Sectors Sample Portafolio USD USD Min. AUM Max. Invested Venture Venture Late VC Round B Round A Seed Capital Accumulated Capital Firms

Fintech Agroindustry USD$ USD$ Organics USD$ 1.5Mn Digital Media 0.1Mn 0.25Mn Transport General Services IT Technology USD$ USD$ Startblueup USD$ 2.5Mn Telecomm 0.02Mn 0.25Mn Software Energy USD$ USD$ 1 Healtcare USD$ 5Mn 0.5Mn Mn Education Sustainability

USD$ USD$ Software USD$ 5Mn 0.05 Mn 0.1Mn Mobile

Biotech IT USD$ USD$ USD$ 5n Health 0.025Mn 0.35Mn Renewable Energies Internet and mobile applications Financial technology USD$ USD$ Digital marketing USD$ 3.1Mn 0.05Mn 0.125Mn Internet of things Smart cities Education Cyber security Machine learnig Big Data

NA NA NA FinTech

Marketplaces Fin-Tech USD$ USD$ USD$ 10Mn Ecommerce 0.2Mn 1Mn Ed-Tech Smart Cities

Retail E-Commerce Innovative USD$ USD$ Transportation USD$ 13Mn 0.25Mn 0.75Mn Marketplaces Technology Based Services Mobile

NA NA NA Fintech

Overview of the Venture Capital Industry in Mexico 13

Later Seed Early VC Growth Stage Stage Ticket size < 0.5 0.5< 2 2 < 5 > 5 (USD$ Mn)

Sample Sectors Sample Portafolio USD USD Min. AUM Max. Invested Venture Venture Late VC Round B Round A Seed Capital Accumulated Capital Firms

Fintech FinTech Agroindustry NA NA NA Organics Healthcare USD$ USD$ USD$ 1.5Mn Digital Media 0.1Mn 0.25Mn Transport General Services Fintech USD$ USD$ IT USD$ 5Mn Technology 0.05Mn 1Mn Technology USD$ USD$ Software Startblueup USD$ 2.5Mn Telecomm 0.02Mn 0.25Mn Software Consumer Services Energy NA NA NA USD$ USD$ 1 Healtcare Energy USD$ 5Mn 0.5Mn Mn Education Sustainability FinTech USD$ USD$ USD$ 8.5Mn SaaS USD$ USD$ Software 0.5Mn 2Mn USD$ 5Mn Big Data 0.05 Mn 0.1Mn Mobile

Fintech Biotech NA NA NA Saas IT USD$ USD$ USD$ 5n Health 0.025Mn 0.35Mn USD$ USD$ Software Renewable USD$ 38.5 Mn 0.03Mn 2Mn Mobile Energies Internet and mobile USD$ USD$ Various industries USD$ 10Mn applications 0.25Mn 3Mn IT Services Financial technology USD$ USD$ Digital marketing Education USD$ 3.1Mn USD$ USD$ Healtcare 0.05Mn 0.125Mn Internet of things USD$ 30Mn Smart cities 0.25Mn 2Mn Economic Education Development Cyber security Consumer Services Machine learnig USD$ USD$ and Products USD$ 10Mn Big Data 0.25Mn 1Mn Healthcare IT NA NA NA FinTech Fintech USD$ USD$ USD$ 25Mn E-commerce 0.2Mn 2Mn Marketplace Marketplaces Fin-Tech Software USD$ USD$ USD$ USD$ USD$ 10Mn Ecommerce NA E-Commerce 0.2Mn 1Mn 0.5Mn 1Mn Ed-Tech FinTech Smart Cities Health Retail Education E-Commerce Alternative Innovative Energy USD$ USD$ Transportation USD$ 13Mn Waste 0.25Mn 0.75Mn Marketplaces Management USD$ USD$ Technology Based USD$ 20Mn Recycling 0.1Mn 3Mn Services Housing Mobile Financial Services Organics NA NA NA Fintech Sustainable consumer products Overview of the Venture Capital 14 Industry in Mexico

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! "#$%&' () *+&*,- . &"' /0- *

Sample Sectors ' ! " #$%$%&%&' ( $)%$* +&$( &, - . / 0&1* 2&%3&4 * 5&( +&" #&+( 67)5)* &)#8( 96%3& : " ( &5* #( 58%&%&; %5)( #8( +&5* #& Sample Portafolio &1* 2&%3&4 * 5&8)( #( &5* ' * &* <=( 8)7* &5%' <)%6&3%&>* 6' %&( #& USD USD Min. 3%&: " ( &3* +&; %5)( #8( +&2&$ &%&" #&$* 58* 60&? %+8%&( 3&; 6* 5( +* &$( &%9( #$%6&" #%& AUM Max. Invested 5)8%@&& Venture Venture Late VC A6%$" %3' ( #8( &; 3%#( %' * +&( B8( #$( 6&3* +&+( 67)5)* +&: " ( &* >6( 5( ' * +&; ( 6' )8)( #$* &: " ( &3* +&; %5)( #8( +&; %9" ( #&; * 6& & Round B Round A ' 2&: " ( &8( #9%#&%55( +* &%&$( +5" ( #8* +&( #&+" +&5)8%+@&C#&( 3&5%+* &$( &3* +&$* 58* 6( +0&1* 2&%3&4 * 5&3( +& ( ' )8)6&3%+& &$( &3* +&; %5)( #8( +&$( &>* & Seed Capital Accumulated Capital Firms L " I '$?'P" %' E>#@&%&" B' 1* 2&%3&4 * 5&* >6( 5( &%&3* +&; %5)( #8( +&3%&; * +)<)3)$%$&$( & D$)5)* #%3' ( #8( 0&3( &; ( 6 <'H>=" %&" ' USD$ USD$ Smart Cities ' ' E " ( +86* &#( 9* 5)* & & F* +&$* 58* 6( +&: " ( &5* #86%8%#&#" ( +86* &+( 67)5)* &; %9%#& USD$ 42Mn M éxico ' ( #+" %3& ; %5)( #8( +0&2&3( +&$%&%55( +* &%&? ( 66%' )( #8%+&5* ' * &" #& 5)8%+&2&$%8* +&$( &+" +&; %5)( #8( +@&D$)5)* #%3' ( #8( 0& 0.4Mn 4Mn Consumer Internet 6( $&$( &$* 58* 6( +&2&( #&( 3&5* 68* &; 3%G* &8( #( ' * +&; 6* 2( 58%$* +&)#96( +* +& && Enterprise Digital ,- GAB.#&$8B9' F >#%$G" 'I 'J K" #.A- &G$G>B' Salud e internet F* +&' ( 65%$* +&* <=( 8)7* &$( &1* 2&%3&4 * 5&+* #&8%#8* &; %5)( #8( +&5* ' * & ' ( B)5%#%&$( &H#8( 6#( 80&? %2&%; 6* B)' %$%' ( #8( &I - & Energy & Q.$K$'G>'?$'QC K#>B$' & Startup

; %5)( #8( +& & QRA&K" 'G>' ' Fintech A na Paula A zuela ' %$&2&; * 6& R o drig o H ütt Retail >" #5)* #%3)$%$( +&<" +5%#&: " ( &( 3&; 6* 5( +* &; %6%&( 3&" +" %6)* &+( %&( B86( ' %$%' ( #8( &)#8" )8)7* &2& &D$)5)* #%3' ( #8( 0&3* +&; %5)( #8( +&: " ( &3* & 1$K&.$?'&- @>#.&G"' &5%33&5( #8( 6 2&( 3&5%33&5( #8( 6&5* ' * &3* +&; 6)#5); %3( +& E-Commerce ' ( 5%#)+' * +&$( &) &! )#%3' ( #8( 0&( #&( 3& $* 58* 6( +&2&; %5)( #8( +J& USD$ USD$ $10.5 M D P #" ( +86* &; 6)#5); %3&5%#%3&( +&H#8( 6#( 8&2&3%+&6( $( +&+* 5)%3( +@& USD$ 20Mn IT QB.#A%.A#$'G>'1$K&.$?' 1" C K>.>- %&$' #)& 0.1Mn 2Mn A na Paula A zuela (17.78% ) &F* +&( 3( ' ( #8* +&: " ( &$)>( 6( #5)%#&%&1* 2&%3&4 * 5&$( &* 86* +&+( 67)5)* +&+)' )3%6( +&( #&( 3& Health R o d rig o H ütt (17.78% ) ' ( 65 ( &3* +& Fernand o Saiz (17.78% ) & @&& V enture Partners (12.44% ) BoP L >- . $M$B'1" C K>.&.&@$B' N ala Investm ents (8.88% ) D36( $( $* 6&$( &KI 0- - - &7)+)8%+&' ( #+" %3( +&%&3 / - L & &( +& @& Agro Jaim e G arcia (1.78% ) Ed uard o H ütt (2.49% ) D3)%#G%+& &5* #&%39" #* +&$( &3* +&; 6)#5); %3( +& $( & Jo rg e R o m o (1.07% ) &M%36( $( $* 6&$( &/ &' )33* #( +&$( &7)+)8%+&' ( #+" %3( +N&2&: " ( &>* 6' %&; %68( & Sto ck o ptions en teso rería $( &A6" ; * &H' %9( #@& (20% ) Agribusiness & 5* #* 5)' )( #8* &$( & ' * &5* #&5* #8%58* +&53%7( &( #&( +8( &+( 58* 6@& O%33&5( #8( 6&2&( ' %#( =%$* &)#J?*"+( & & ' Forestry 4 ( +%66* 33* & &5* #&%' ; 3)%&( B; ( 6)( #5)%&( #&( 3&$( +%66* 33* &$( && S7*'F P2 & IT Service NB" 'G>'O" - G" B' USD$ USD$ / - L &' ( 65%$* 8( 5#)%& 2#>TF " - >I ' & USD$ 23Mn Platforms . - L &9%+8* +&%$' )#)+86%8)7* +&

0.25Mn 5Mn PQI &R 4 S . KL & & & Digital Media +& ' & Education C: " )82&

Shared Economy ' Tied to Mobile:

Al, Machine ! " #$%&" '( ) *+',- ./) 0 ' ' '1/2/'3345* ' Learning 6 47'8449'4744( : ; 3' '<<?@>- .A#>BC >D&%" /%" C ' Blockchain Lot,Connected USD$ USD$ USD$ 1Mn Devices 0.10Mn 3Mn Fintech Entrepridrd, Saas E-commerce Edtech / Medtech IoT (Internet of Things) Biotechnology Artificial USD$ USD$ USD$ 40Mn Intelligence 0.15Mn 2.5Mn Information Technology Saas E-commerce

Multisector USD$ USD$ Tech USD$ 25Mn 0.1Mn 2Mn Real Estate E-commerce

Real State Healtcare Financial Services Wellness USD$ USD$ USD$ 40Mn Tourisim 0.25Mn 10Mn Organics Sustainable Consumer Product Housing Leisure Overview of the Venture Capital Industry in Mexico 15

Later Seed Early VC Growth Stage Stage Ticket size < 0.5 0.5< 2 2 < 5 > 5 (USD$ Mn)

Sample Sectors Sample Portafolio USD USD Min. AUM Max. Invested Venture Venture Late VC Round B Round A Seed Capital Accumulated Capital Firms

Agribusiness Rubber plantationes Shrimps hatcheries USD$ USD$ USD$ 15Mn and farms NA 0.5Mn 5Mn Cashew nuts Tourism Energy Infrastructure Biotech IT USD$ USD$ USD$ 10Mn Multiedia 0.5Mn 5Mn Videogames Software Fintech USD$ 5Mn NA NA Saas Software Technology Media USD$ USD$ Tele- USD$ 155Mn 2Mn 20Mn communications Business Service sectors Education USD$ USD$ Energy USD$ 50Mn 1Mn 10Mn Health Care Finance Financial Services Manufacturing USD$ USD$ USD$ 50Mn Consumer goods 0.5Mn 5Mn Energy Entertainment

Software Saas Internet Fintech USD$ USD$ High-Value USD$ 80Mn 1Mn 10Mn Service Healtcare Education EnergyTech Security Food Retail Digital Media Software as a USD$ USD$ Services (Saas) USD$ 50Mn 1Mn 20Mn Energy Medical Devices Fintech Real Estate Healthcare (Retail) Housing Basic Services USD$ USD$ USD$ 192Mn (water) 2Mn 10Mn Financial Services Consumer Goods Overview of the Venture Capital 16 Industry in Mexico

Later Seed Early VC Growth Stage Stage Ticket size < 0.5 0.5< 2 2 < 5 > 5 (USD$ Mn)

Sample Sectors Sample Portafolio USD USD Min. AUM Max. Invested Venture Venture Late VC Round B Round A Seed Capital Accumulated Capital Firms

Beverages Consumer USD$ USD$ USD$ 50Mn Durables 2Mn 20Mn Food Products Manufacturing

USD$ USD$ NA Venture Lending 2Mn 5Mn NA

USD$ USD$ USD$ 5Mn Financials 0.5Mn 5Mn

Commercial USD$ USD$ NA Services 3Mn 10Mn Software

USD$ USD$ Software USD$ 10Mn 0.5Mn 5Mn E-Commerce

Healthcare Education Financial Services USD$ 5 USD$ USD$ 50Mn Telecom Mn 20Mn Food & Beverage Consumer Goods Real Estate Software USD$ 5 USD$ USD$ 50Mn EdTech Mn 20Mn Mobile Overview of the Venture Capital Industry in Mexico 17

FUNDRAISING

As commented at the beginning, fundraising activity decreased difficulty. Less participation from INADEM, multilateral banks and from high record in 2013 at USD $233Mn to USD $47Mn by family offices have accounted for part of this shortage, but also pen­ September of this year. First time funds are struggling to achieve their sion funds are not yet very active and international investors have target size funds but also more seasoned funds are experiencing also shown less activity.

Annual Commitments Allocated to Mexico Annual Commitments Allocated to Mexico (USD$(USD$ Million) Million)

$250 $233 $221 $208 $200 $179 $166

$150 $128 $102 $100

$52 $47 $50 $15

$- 2000-2 2009 2010 2011 2012 2013 2014 2015 2016 2017* 008 Seed $- $80 $15 $19 $41 $68 $68 $53 $102 $47 Debt $- $21 $- $- $- $20 $- $- $- $- Later Growth Stage VC $- $2 $- $105 $- $- $100 $90 $50 $- Early VC Fund $102 $25 $- $56 $11 $145 $53 $65 $14 $- Total $102 $128 $15 $179 $52 $233 $221 $208 $166 $47

Fig. 4

Annual ParQcipaQon per Round of Financing

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000-20 2009 2010 2011 2012 2013 2014 2015 2016 2017* 08 Seed 0% 62% 100% 10% 79% 29% 31% 26% 61% 100% Debt 0% 16% 0% 0% 0% 9% 0% 0% 0% 0% Later Growth Stage VC 0% 2% 0% 59% 0% 0% 45% 43% 30% 0% Early VC Fund 100% 20% 0% 31% 21% 62% 24% 31% 8% 0%

Annual Commitments Allocated to Mexico (USD$ Million)

$250 $233 $221 $208 $200 $179 $166

$150 $128 $102 $100 Annual Commitments Allocated to Mexico $52 $47 $50 (USD$ Million) $15 $233 $250 $221 $- $2082000-2 $179 2009 2010 2011 2012 2013 2014 2015 2016 2017* $200 008 $165 Overview oSeedf the Venture Capital$- $80 $15 $19 $41 $68 $68 $53 $102 $47 $150 18 $128 $102 Industry inDebt Mexi co $- $21 $- $- $- $20 $- $- $- $- $100 Later Growth Stage VC $- $2 $- $105 $- $- $100 $90 $50 $- $52 Early VC Fund $102 $25 $-$47 $56 $11 $145 $53 $65 $14 $- $50 $15 Total $102 $128 $15 $179 $52 $233 $221 $208 $166 $47

$- 2000-2 2009 2010 2011 2012 2013 2014 2015 2016 2017 008 We saw 6 funds raised in 2016 and 4 in 2017. Funds raised in 2016 and 2017 are mainly for seed capital stages. Seed $- $80 $15 $19 $41 $68 $68 $53 $102 $47 Debt $- $21 $- $- $- $20 $- $- $- $- Later Growth Stage VC $- $2 $- $105 $- $- $100 Annual$90 Participation$50 $- per Round of Financing Early VC Fund $102 $25 $- $56 $11 $145 $53 $65 Annual ParQcipaQon per Round of Financing $14 $-

Total $102 $128 $15 $179 $52 $233 100% $221 $208 $165 $47 90% Seed Debt Later Growth Stage VC Early VC Fund Total 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000-20 2009 2010 2011 2012 2013 2014 2015 2016 2017* 100% 08 10% 90% 29% 31% 25% Seed 0% 62% 100% 10% 79% 29% 31% 26% 61% 100% 80% Debt 0% 16% 0% 0% 0% 9% 0% 0% 0% 0% 70% 63% 9% 62% 60% 59% 79% Later Growth Stage VC 0% 2% 0% 59% 0% 0% 45% 43% 30% 0% 43% 50% 100% 100% 45% 100% Early VC Fund 100% 20% 0% 31% 21% 62% 24% 31% 8% 0% 40% Fig.5 30% 16% 62% 20% 30% 2% 31% 31% 10% 20% 21% 24% 8% 0%

Early VC Fund Later Growth Stage VC Debt Seed

The average size of Mexican VC Funds is no bigger than USD$ The following amounts show the actual amount that has been po­ 20Mn due mainly to the 40 INADEM supported funds which are no sitioned by AFORES through structured vehicles (CKDs, FIBRAS, bigger than USD$ 10M and CerPis) which means that the 15% and 20% that they can fully commit is not being totally invested.

Average & median VC fund size Mexican Pension Fund’s Venture Capital CKD Growth & LBO (USD$ million) Venture Capital (USD$ Million) (USD$ Million) (USD$ Million) $120 $102 WAMEX $107 $100 EMX Capital $126 LIV Capital $49 Southern Cross Group $142 $80 $102 Acon Investmnets $155 $60 $43 LIV Capital $163 $32 $40 $20 Dalus Capital $49 The Abraaj Group $186 $15 $17 $19 $18 $20 $37 $10 $10 Northgate Capital $234 $8 $6 $23 $15 $11 $8 $6 Stepstone Group $500 $- $10 Ignia Fund $91 Nexxus Capital $517 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* Discovery Americas $1,001 Median Average $- $20 $40 $60 $80 $100 $- $200 $400 $600 $800 $1,000 $1,200

Fig. 6 Fig. 7

Gava $116 Capital I $129 VEX CAPITAL $170 F. a la Energía e Inf. de México $58 Planigrupo $179 Marhnos $81 MIRA Manager $206 Macquarie $269 Finsa $214 GBM Infrastructura $283 Black Creek $226 Prologis $260 Navix $321 Finsa - Walton $299 Thermion Energy $398 Vertex Real $317 GBM Estrategia $464 Banco Credit $321 F. Capital Infraestructura $484 Grupo IGS $341 F UNO $388 Pinfra FIBRA E $622 Walton Street $676 RiverStone $731 Artha Capital $701 Infraestructura Institucional $985 PGIM RE $703 MRP $841 Navix - Axis Asset Management $991 Alignmex $1,071 CKD Infraestructura $1,026

$- $500 $1,000 $- $200 $400 $600 $800 $1,000 $1,200

PineBridge Investments $202 GBM $102

PROMECAP $438 Northgate Capital $206

Credit Suisse $1,171 Fondo de Fondos $628

$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $- $100 $200 $300 $400 $500 $600 $700 Overview of the Venture Capital Industry in Mexico 19

INVESTMENT OUTLOOK

We have seen a very interesting upward tendency regarding trans­ Seed capital investments keep being the most important sector with actions, with a year-on-year increase on total number of deals, more than 61% of total transactions in 2017. However, we have 182 surpassing each time 110 deals200 per year. seen a trend towards later stages, changing from a historical 8% 180 From 2010 to date there have been 782 VC transactions equi­ to a 21% this year,147 which shows the growth of our startups. 160 valent to USD $834 Mn invested. As commented, 2016 reached 121 140 118 113 a record high of 182 deals.120 100 Mexico´s Transaction Evolution 80 200 46(USD$ million) 182 60 180 27 40 147 160 7 20 140 118 121 0 113 120 2010 2011 2012 2013 2014 2015 2016 2017* 100 Seed 1 15 33 85 83 94 101 54 80 46 Round60 B 1 8 2 5 9 8 20 11 27 Round40 A 1 1 7 22 25 40 52 24 7 Late20 VC 4 3 4 6 4 5 9 24 0 Total 20107 202711 201246 2013118 2014121 2015147 2016182 2017*113

Seed 1 15 33 85 83 94 101 54 Round B 1 8 2 5 9 8 20 11 Round A 1 1 7 22 25 40 52 24 Late VC 4 3 4 6 4 5 9 24 Fig. 8 Total 7 27 46 118 121 147 182 113

2016 also reached a record high in capital invested with USD$209Mn, an increase of 251% from the previous year, driven mostly by marketplace and fintech transactions such as Kueski, Conekta, Clip and Linio. AnnualAnnual Invested Invested Capital Capital per per Investment Investment StageStage (USD Million) (USD Million) $250 $209

$200 $156 $150 $112 $114 Annual Invested$91 Capital per Investment$83 Stage $100 $44 (USD Million) $50 $25 $250 $209 $200$0 2010 2011 2012 2013 $1562014 2015 2016 2017* Seed$150 $5 $3 $8 $1$1211 $19 $22 $32 $1$1614 $91 $83 Round$100 A $1 $1 $5 $19 $15 $34 $52 $19 $44 Round B $4 $21 $3 $11 $24 $7 $30 $24 $50 $25 Late VC $34 $0 $75 $71 $98 $20 $95 $55 $0 Total $44 $25 $91 $112 $156 $83 $209 $114 Fig. 9 2010 2011 2012 2013 2014 2015 2016 2017* Seed $5 $3 $8 $11 $19 $22 $32 $16

Round A $1 $1 $5 $19 $15 $34 $52 $19 Round B $4 $21 $3 $11 $24 $7 $30 $24 Late VC $34 $0 $75 $71 $98 $20 $95 $55 Total $44 $25 $91 $112 $156 $83 $209 $114

Overview of the Venture Capital 20 Industry in Mexico

INVESTMENT sectors Venture Capital Investments by Sector

The most attractive sectors for VC investments in Mexico are con­ sumer services, fintech, technology and consumer goods. We are actually leading the LATAM region in fintech startups only behind Brazil, with more than 200 startups and $USD 215Mn invested in this sector in 2016.

Venture Capital Investments by Sector (2008 - 2017*)

Education 0% Energy 0% Oil & Gas 1% Telecommunications 1% Utilities 3% Financials 5% Health Care 6% Industrials 8% Consumer Goods 10% Technology 11% Fintech 16% Consumer Services 40%

0% 10% 20% 30% 40% 50% Fig. 10

Selected Transactions 2016

In the fintech sector: In the consumer services sector: General Atlantic invested Clip’s Series B round. ALLVP, Jackson Square Ventures, Accel Partners, Creandum, and Richmond Global Ventures, Rise Capital, Crunch Fund, Victory Endeavor Catalyst invested in Cornershop’s Series A round. Park Capital, Core Ventures Group, Variv Capital, Angel Ve­ntu­­ Angel Ventures Mexico and Qualcomm Ventures invested in Iguana res Mexico, and Auria Capital invested in Kueski’s Series A round. Fix. Quona Capital, QED Investors, KaszeK Ventures and Jaguar Axon Investments invested in Mercadoni. Ventures invested Konfio’s Series A round. DILA Capital and Ideas & Capital invested in Econduce. Ignia invested in Sr.Pago’s Series B round. Jaguar Ventures invested in Gaudena. Variv Capital, FEMSA Comercio, Jaguar Ventures and Conconi In the consumer products sector: Growth Partners invested in Conekta’s Series B round. DILA Capital and Stella Maris Partners co-invested in Hickies. Variv Capital, Monex Financial Group, Funders Club, Xochi Ventures DILA Capital and Stella Maris Partners co-invested in Hickies; and Digital Currency Group invested in Bitso’s Series B found. Capital Invent invested in Gaia Design; DILA Capital invested in Overview of the Venture Capital Industry in Mexico 21

Yadatex; Ideas & Capital invested in Pro Organic Growers and; ALLVP, Capital Invent, LIV Capital and Stella Maris Partners Mountain Nazca invested in Alta Motors, Human and Kavak. invested in Nubity; In the technology, media and telecom sector: Bizrupt invested in Critical Masser, Gaszen and Hoopa; Pedralbes Partners invested in Logan Media. BlueBox invested in Makeuponus and Synapbox; ALLVP, Capital Invent, LIV Capital and Stella Maris Partners Ignia invested in Underdog invested in Nubity’s series A round. Wayra invested in Descifra, Interpretap and Seenapse. Pedralbes Partners invested in Logan Media.

Selected Transactions 2017

In the fintech industry: In the technology, media and telecom sector: International Finance Corporation (IFC), QED Investors, Kaszek Elevar Equity, Kaszek Ventures, NXTP Labs y FJ Labs invested in Ventures, Accion Frontier Inclusion Fund, Accion Venture Lab and Tienda Nube’s Series B round. Jaguar Ventures invested in Konfio’s Series B round. Dalus Capital invested in Cultura Colectiva. Ignia invested in Afluenta. Ignia invested in KarmaPulse. Ideas & Capital invested in Series A in Dvdendo. Ideas & Capital and ON Ventures invested in a seed capital In the consumer products sector: round in Nimblr. ALLVP, Social Capital, Soldiers Field Angels and Ignia Partners invested in Apli’s Series B round. In the consumer services sector: Antai Fund, Bonsai Venture Capital and Pedralbes Partners DILA Capital and Mountain Nazca invested in Urbvan. invested in Trendier. Promotora Social México (PSM), VARIV Capital, Capital Invent, Axon Partners Group and Pegasus Group invested in Mercadoni. Dila Capital and Fiinlab invested in Aliada’s Series B round.

Consumer services includes, among other subsectors: home improvement retailers, specialty retailers, restaurants, broadline retailers, specialized consumer services, media agencies, recreational services, broadcasting & entertainment, travel & tourism, drug retailer, airlines, food retailers & wholesalers, apparel retailers, hotels, publishing, and general retailers. Technology includes, among other subsectors, software, computer services, internet, computer hardware. Consumer goods includes: personal products, furnishings, clothing & accessories, home construction, food products, automobiles, soft drinks, distillers & vintners, toys, auto parts, recreational products. Overview of the Venture Capital 22 Industry in Mexico

Startups with a Woman Venture Capital Investments by Sector

Capital Raised from Startups with a woman cofounder (USD $Mn)

Fig. 11

According to the Global Entrepreneurship Monitor (GEM) 2016/ ALLVP, Angel Ventures, DILA Capital, Mountain Nazca, Promotora 2017 report , in the past year, 163 million women initiated busi­ne­ Social México, On Ventures, Variv Capital, Auria Capital, Capital sses around the world. Mexico was the only country in Latin Ame­ Invent, IGNIA, Gerbera Capital, between others, are backing rica where men were outnumbered by women in terms of entre­ woman entrepreneurs. preneurship with a ratio of 1.1 to 1. Only Asian countries such as Vietnam, Indonesia and Philippines presented a similar situation. 50% of these startups belong to the consumer services sector with Not only that, also good news come from our Mexico´s Venture USD$ 9.8Mn capital invested, 12.5% belong to the health care Capital Funds, which have been increasing their investments in sector(USD $4.93M), 10% belong to the technology sector (USD startups which have a woman in the funding team. $1.06M), 10% belong to the consumer goods sector (USD $5M), 5% belong to the education sector (USD $5.5M), 5% belong to To date there are 40 Mexican startups with a woman cofounder the industrials sector (USD $0.4M), 5% belong to the fintech sector which have raised USD$31mn since 2011. 2016 saw an impres­ (USD $9.43M) and 2.5% belong to the financial sector (USD $4M). sive increase in capital deployment to these gender diversity start­ ups, which gives the ecosystem a breath and shows the deter­ mination of some of our firms to include women in their portfolios. Overview of the Venture Capital Industry in Mexico 23

Capital Raised from Startups with a woman cofounder

Industrials

education

consumer goods

technology

fintech

financials

health care

consumer services

2011 2012 2013 2014 2015 2016 2017

Fig. 12

6 Global Entrepreneurship Monitor http://gemconsortium.org/report/49812 Overview of the Venture Capital 24 Industry in Mexico

Why is everybody talking about Fintech in Mexico?

The Mexican ecosystem and in particular the fintech sector ticks need that a sector as dynamic as that of technological innovation all the right boxes for entrepreneurs wanting to launch a compa­ ­ needs a regulatory framework that allows authorities to mitigate ny. Not surprise then, is that this is the country with the most Fintech risks and allow for growth in a competitive environment. startups in Latin America with more than 238 startups and with the most capital invested in this sector. Since 2010 the Fintech Industry has received over USD $280M that have been invested in 48 startups with 32 local and 25 The 2017 scenario allows a company to solve diverse financial re­ foreign funds participating in these transactions. Only in 2017, a lated problems, create meaningful impact and transform the cus­ total of USD $62.9M has been invested in 15 startups from the tomers experience with technology. Fintech Industry. In 2016, USD $87M were deployed in 23 Fintech startups by 39 funds. Examples of this, are Abra, a mo­bile­ As firms in the fintech industry represent a massive potential growth money startup that uses the technology behind Bitcoin; Pangea in Mexico, this year, the government proposed a legislation that Money Transfer, an app-based cash transfer service targeted at seeks to ensure financial stability and defend against money laun­ the $25 billion Mexicans in the U.S. send home every year; and dering and financing of extremists. The legislation recognizes the Sr. Pago, which lets even unbanked merchants accept credit cards, all of them invested by Monterrey-based Ignia.

Annual Number of Foreign and Local Funds investing in Fintech in Mexico

year Foreign Funds local funds total

2010 3 1 4 2011 4 4 8 2012 0 1 1 2013 15 11 26 2014 15 14 29 2015 5 13 18 2016 20 27 39 2017 15 11 26 total 77 82 159 The total represents how many funds invested in Fintech Industry per year, some funds were considered for several years.

While ecosystems observers may have predicted this momentum, it is worth taking a step back to analyze the forces driving Mexico’s fintech ascent in order to provide a framework for other industries and countries in the region.

Finnovista Fintech Radar July 6 2017 https://www.finnovista.com/actualizacion-fintech-radar-mexico/ Overview of the Venture Capital Industry in Mexico 25

Fintech Funds investing in Mexico

Agave ALEB ALL VP 500 Start-ups Lab Ventures Investments Alta Ventures Bitcoin Vigil Paybook Alkanza Clip Clip KarmaShop Aplázame Diverza Coneckta Prestadero Finanys LLC CrowdFunder Rocket.la Salud Fácil Kubo Financiero FundWise Visor Technisys

Angel Avalancha Capital Capital Invent Ventures Mexico Ventures Emprendedor FEMSA Clip Kubo Financiero Kiwi Paybook Conekta Kueski Kubo Financiero Saldo.mx Kiwi Rocket.la Zoop

Grupo Fiinlab Bursátil Mexicano GC Capital Gerbera Capital Ideas & Capital

Nexu Dvdendo Finestrella (MiMoni) Briq.mx Rocket Crowdfunder Avante

Ignia Partners Investomex Jaguar Ventures Kue Capital LIV Capital

Finestrella (MiMoni) 100 ladrillos Conekta Kubo Financiero YellowPepper Holding Co. Pangea ABRA Bit Pagos Rocket.la Payit Sr. Pago AirTM Yotepresto.com

Monex Promotora Mexico Ventures MITA Ventures Grupo Financiero Mountain Nazca Social Mexico YellowPepperHolding Co. Rally Destácame Lumni Clip Bitso Creze Árbol Financiero Kubo Financiero Briq.co

Variv Capital Wayra Mexico

Kueski Kubo Financiero Conekta Zave App INC Bitso Compropago Overview of the Venture Capital 26 Industry in Mexico

Foreign Funds investing in the Fintech Industry in Mexico (2011-2017*)

Accion Accion American Bay Partners Frontier Venture Lab Express Ventures Bamboo Finance

Kon o Kon o Clip Kubo Financiero Finestrella (MiMoni)

Core Endeavor Crunchfund Ventures Group Escala VC Catalyst Finovate

Kueski Kueski Rocket.la Kubo Financiero Prestadero

Mission OG General Atlantic IFC AMC Kaszek Ventures Omidyar Networks

YellowPepper Holding Clip Kon o Clip Finestrella (MiMoni) Kon o

Seedcoin QED Investors Quona Capital Richmond Global Rise Capital

Kon o Kon o Kueski Kueski MexBT

Tanant

Start-Up Chile T2M Capital Tanant Capital Sierra Ventures Storm Ventures

Fondeadora Clip Finestrella (MiMoni) Rocket Kubo Financiero

Vander Capital Bridge 37 Roadster Capital

Kubo Financiero Crowdfunder.com Bayonet Overview of the Venture Capital Industry in Mexico 27

Mexican Startups that have raised more than USD$4 million

There are 32 startups that have raised more than USD$4 Mn, being 45% of the capital is invested in customer services sector with 11 the ones that have raised the major amount with the VC sector. Total start­ups and the fintech sector contributes with 14 startups and commitments of these 32 startups reach a total of USD$ 784 Mn. the 31% of the total amount of the capital raised.

Mexican Startups that have raised more than USD$4 million

$50 +

$20 – $50

$15 – $20

$10 – $15

$4 – $10

Consumer Technology Education Energy Fintech Health Care Media Services Fig. 13 & Telecom

StartupsStartups that have that raised have over raised USD$ over 4Mn USD$ by4Mn Industry by Industry (USD$ Million) (USD$ Mn) $400 $353 14 16 $350 11 14 $300 12 $250 $247 10 7 $200 8 $150 $144 6 3 $100 4 1 1 $50 $27 $10 2 $4 $- 0 Consumer Fintech Health Care Technology Education Energy Services Media & Fig. 14 Telecom

Total Invested Capital Number of Startups

Venture Capital Exits by Year 8 7 (2008 - 2017*) 7 6 6 5 5 5 4 4 3 3 3 3 Overview of the Venture Capital 2 28 Industry in Mexico 1 0 2000 - 2011 2012 2013 2014 2015 2016 2017* 2010 Strategic 3 2 1 2 4 5 2 3 Sponsor to Sponsor 2 0 0 0 0 0 0 1 Recapitalization 1 Exit1 T2 ransactions0 0 0 0 0 Partial Exit 0 0 0 0 1 1 1 0 Liquidated 1 0 2 1 0 0 0 0 Total general 7 3 5 3 5 6 3 4

There are 37 VC exits from 2000 to date being the most common Some notable exits within the VC industry for 2016 and 2017: type of exit is the strategic sale with 62%. • Soldiers Field Angels fund (SFA) sold its stake in Now New Media an editorial holding, owner of Repsodia, Tech Cult, th Venture Capital Exits by Strategy Holixir, Sofánimo and eldeforma. On September 19 the com­ pany’s majority stake was acquired by SDP noticias. Venture(2008 - 2017*) Capital Exits by Strategy (37 transactions*) [NOMBRE DE • Adobe Capital sold its stake in NatGas Querétaro, a Mexi­ CATEGORÍA] can firm in the vehicular natural gas sector. The fund sold its Liquidated[VALOR] participation to Northgate Capital. 11%

Partial Exit [NOMBRE DE • Accion Venture Lab sold its stake in Clip, Mexico City-based [NOMBRE DE 5% CATEGORÍA] company that provides cost-effective and efficient digital pay­ CATEGORÍA] [VALOR] Strategic ment solutions to the often financially underserved segment of [VALOR] micro, small, and medium enterprises (MSMEs) in Mexico. 62% Recapitalization[NOMBRE DE 11%CATEGORÍA] [VALOR] • Enture Smart Business sold its stake in Grupo La Alegria to Golden Pecan. Grupo La Alegria produces walnut products.

Sponsor to Sponsor • Enture Smart Business sold its stake in Xnax, to Grupo Michel. 11% Xnax produces animal food with added nutrients. [NOMBRE DE CATEGORÍA] [VALOR] • VARIV Capital exited part of its investment in Wallapop, a com­ pany that provides a platform for consumers to post used items for sale and to negotiate the terms offline. The company has pre­ sence in five countries (Spain, France, UK, Mexico, and the US) and recently merged its American operation with LetGo. Venture Capital Exits by Year Venture (2008Capital - Exits2017*) by Year 8 7 (2008 - 2017*) 7 6 6 5 5 5 4 4 3 3 3 3 2 1 0 2000 - 2011 2012 2013 2014 2015 2016 2017* 2010 Strategic 3 2 1 2 4 5 2 3 Sponsor to Sponsor 2 0 0 0 0 0 0 1 Recapitalization 1 1 2 0 0 0 0 0 Partial Exit 0 0 0 0 1 1 1 0 Liquidated 1 0 2 1 0 0 0 0 Fig. 15 Total general 7 3 5 3 5 6 3 4

Venture Capital Exits by Strategy (2008 - 2017*) [NOMBRE DE CATEGORÍA] [VALOR]

[NOMBRE DE [NOMBRE DE CATEGORÍA] CATEGORÍA] [VALOR] [VALOR] [NOMBRE DE CATEGORÍA] [VALOR]

[NOMBRE DE CATEGORÍA] [VALOR]

Overview of the Venture Capital Industry in Mexico 29

Investment outlook for 2016 182 VENTURE CAPITAL TRANSACTIONS IN 2016 SPONSOR TARGET DESCRIPTION SECTOR

500 Startups Yogome Developer of online educational games for kids Consumer Goods

Accion Frontier Konfio Provides working capital loans to SME Fintech

Accion Venture Lab Konfio Provides working capital loans to SME Fintech

AETUS SAPI de CV Juganu Lighting Technology Consumer Goods

AETUS SAPI de CV Publi Co Shared Office Rental Industrials

AETUS SAPI de CV Tropical Organic Growers Organic Banana Agriculturist Consumer Goods

App which centralizes and orders communication between Aleb Gubler Health Care doctors and patients

Aleb Paybook API for Fintech Developers Fintech

A boutique financial mathematics consulting firm with 10 ALLVP Alkanza Fintech years of experience

ALLVP Aplázame Consumer credit company offering check out lending Fintech

On-demand platform to help companies deal with demand ALLVP APLI Consumer Services peaks

ALLVP Cornershop On demand grocery delivery Consumer Services

ALLVP Dentalia Network of dental clinics Health Care

ALLVP Nubity Platform to integrate public and private cloud services Technology

ALLVP Visor Loan origination system for SMBs Fintech

ALLVP Weex Virtual Mobile Network to choose mobile plan Telecommunications

Alta Ventures Kubo Financiero Peer-to-peer lending platform Fintech

American Express Clip Mobile payments system for the Spanish speaking world Fintech Ventures

Angel Ventures Mexico ClickOnero Provider of an e-commerce platform Consumer Services

Angel Ventures Mexico Iguana Fix Provider of online marketplace for on-demand services Consumer Services

Angel Ventures Mexico Nube Developer of a mobile app to monitor usage of natural gas Consumer Goods

Angel Ventures Mexico Rocket Financing platform to control users personal finances Fintech Personal credit services to cover surgery/medical treatment Angel Ventures Mexico Salud Facil Financials costs Angel Ventures Mexico Tu cantón Online brokerage services Financials

Angel Ventures Mexico Vrtify Developer of a virtual music platform Consumer Services

Asenza Capital Galt Energy Provider of solar panel installation services Utilities

Auria Ventures Kueski Leading micro-lending platform in Mexico. Fintech Digital wallet that allows users to pay bills to companies in Avalancha Ventures Saldo.mx Fintech Mexico using smartphones

Enterprise crowd-sensing platform, empowering decision Avalancha Ventures Vioozer Technology makers with real time location based information

Mobile payment platform that enables individuals and Avalancha Ventures Zoop businesses to process electronic payments remotely from any Fintech location Axon Investment Mercadoni Online marketplace for any retail store Consumer Services

Bamboo Finance Kubo Financiero Peer-to-peer lending platform Fintech

Bitcoin Capital Bitso Bitcoins Fintech

Bizrupt Critical Masser Data science platform that analyzes social networks Technology Overview of the Venture Capital 30 Industry in Mexico

182 VENTURE CAPITAL TRANSACTIONS IN 2016 SPONSOR TARGET DESCRIPTION SECTOR

Bizrupt Farrow Ventures // Pig.gi Lockscreen mobile app Technology

Bizrupt Gaszen Gas management platform Technology

Connect people with their favorite brands in the right place Bizrupt Hoopa Technology and time

The 1st SOTA (Select Online Travel Agency) in Mexico Bizrupt Joyas de Mexico specialized in the promotion of travel experiences in luxury Technology destinations + hotels

Bizrupt Lukes Brands Data connectivity services Technology

BlockChain Tech Limited Bitso Bitcoins Fintech On-demand platform to help companies deal with demand BlueBox APLI Technology peaks BlueBox Makeuponus Artificial technology development Technology A content testing platform that helps measure your content BlueBox Synapbox and get an accurate understanding of what consumers can’t Technology put into words Capital Invent Collective Academy Disruptive education platform Consumer Services

Capital Invent Gaia Design Furniture E-commerce Platform Consumer Services

Capital Invent Kubo Financiero Peer-to-peer lending platform Fintech

Capital Invent Marco Polo Learning Online education apps for kids Consumer Services

Capital Invent Nubity Platform to integrate public and private cloud services Technology

Capital Invent Tizkka Online & mobile fashion social media platform Consumer Services

Coca-Cola Weex Virtual Mobile Network to choose mobile plan Telecommunications Conconi Growth Conekta One stop solution for online payments Fintech Parthers Crunchfund Kueski Leading micro-lending platform in Mexico Fintech Digitl Currency Group Bitso Bitcoins Fintech (DCG) DILA Capital Alameda Online Marketplace for home decoration and furnbiture Consumer Services

DILA Capital Aliada.mx Domestic Clean services Consumer Services Online ticket sales platform for small and medium-sized DILA Capital Boletia Consumer Services events DILA Capital Econduce Electric scooter sharing service in Mexico Consumer Services

DILA Capital Hickies Manufacturer and dist of footwear accessories Consumer Goods

DILA Capital iVoy On-demand last mile delivery service Industrials

DILA Capital Le Macaron French pastry High-end french pastry and bakery chain Consumer Services

DILA Capital Tu Cantón Internet marketplace to buy a home Financials

DILA Capital Yadatex Textile manufacturer Consumer Goods

Endeavor Catalyst Kubo Financiero Peer-to-peer lending platform Fintech Walnut producer. Creator of walnut products with Enture Smart Business Grupo La Alegria PECAN Consumer Goods an added value Enture Smart Business Salver Sports articles and toy store Consumer Goods

Enture Smart Business Wellnie Wellness products and services market place Consumer Goods

Femsa Conekta One stop solution for online payments Fintech FundersClub Bitso Bitcoins Fintech GBM Briq.mx Crowdfunding platform for real estate projects Fintech Healthcare company providing kidney disease solutions GBM Medica Santa Carmen Health Care through its clinics; currently focused on hemodialysis GC Capital Rocket Financing platform to control users personal finances Fintech

Genesis Capital Ventures Farrow Ventures Lockscreen mobile app Technology Fast and low cost diagnostics and infectious disease Genesis Capital Ventures Unima Health Care surveillance for limited resource settings Overview of the Venture Capital Industry in Mexico 31

182 VENTURE CAPITAL TRANSACTIONS IN 2016 SPONSOR TARGET DESCRIPTION SECTOR

Gerbera Capital Nexu Web site specialized in the promotion of automotive credits Fintech

Online site for Soccer content targeted to the US&MXN Gerbera Capital Soccerly Consumer Services consumers Shared electric scooters service with a network of charging Ideas y Capital Econduce Consumer Services stations though the city Ideas y Capital Farrow Ventures Lockscreen mobile app Consumer Services

Ideas y Capital Novelistik Online reading and publishing platform Consumer Services Company that grows organic banana in Mexico and exports Ideas y Capital Pro Organic Growers Consumer Goods to the USA Money TransferA mobile-focused remittances platform that Ignia Partners Pangea allows users to send money in 30 seconds for a fixed fee and Fintech a locked-in rate Electronic payments platform with a unique focus on the Ignia Partners Sr. Pago Fintech unbanked and banked

Ignia Partners Underdog Unique platform in Mexico for video clips of sports highlights Technology

Provider of on-demand delivery services that connects Investomex Rappi Consumer Services consumers with local stores

Investomex SimpleCitizen Developer of an application software for immigration process Technology

Provider of an online platform to trade used Investomex Upgraded Technologies Technology electronic gadgets

Jackson Square Cornershop On demand grocery delivery Industrials

Jaguar Ventures Conekta Fintech company that provides online payment solutions Fintech

Jaguar Ventures Gaudena Leading fashion ecommerce site Consumer Services

Jaguar Ventures Konfio Provides working capital loans to SME Fintech

Jaguar Ventures PontaMedia Advertising technology company for monetizing captchas Consumer Services

Allows retailers to synchronize inventories across Jaguar Ventures Producteca Industrials marketplaces Marketplace for securely hiring home cleaning/home repair Jaguar Ventures Zolvers Consumer Services tasks

Kaszek Ventures Kubo Financiero Peer-to-peer lending platform Fintech

Kaszek Ventures Konfio Provides working capital loans to SME Fintech

Kue Capital Kubo Financiero Peer-to-peer lending platform Fintech

LIV Capital Anima Estudios Digital Animation Studio Consumer Services

LIV Capital Boletia Conferences Promotion and Tickets Sales Consumer Services

LIV Capital Linio Provider of online marketplace for consumer goods Consumer Services

LIV Capital Logyten Supply Chain Solutions Industrials

LIV Capital Nubity Platform to integrate public and private cloud services Technology

LIV Capital WOBI Business content developer Industrials

YellowPepper Holding LIV Capital Mobile Banking and Payments Solutions Fintech Corporation Monex Grupo Bitso Bitcoins Fintech Financiero Monex Grupo Kubo Financiero Peer-to-peer lending platform Fintech Financiero Designs and manufactures the most advanced electric vehicle Mountain Nazca Alta Motors Consumer Goods technology on the planet Never seen before features in luggage such as connectivity, Mountain Nazca Bluesmart tracking and other safety features that give the user a new Consumer Goods traveling experience

Mountain Nazca Creze Small & Medium size Businesses lender Technology Overview of the Venture Capital 32 Industry in Mexico

182 VENTURE CAPITAL TRANSACTIONS IN 2016 SPONSOR TARGET DESCRIPTION SECTOR

Developer of consumer electronics. Introducing an innovative Mountain Nazca Human product that will fundamentally transform the way people Consumer Goods experience their world through sound

Transform the experience of buying and selling cars without Mountain Nazca Kavak Consumer Goods leaving home

Mountain Nazca Luuna Premium online/offline mattresses at a very affordable price Consumer Goods Online marketplace and booking platform for beauty Mountain Nazca Miora Consumer Services treatments Mountain Nazca Miroculus Device to detect every type of cancer even in early stages Health Care

Mountain Nazca Nubleer Subscription platform for magazines, comics and books Consumer Services

Mountain Nazca Tapptime Mass marketing platform through gaming Consumer Services

Daily commute transportation system with top of the line Mountain Nazca Urbvan executive vans, aming to make daily commuting more Technology efficient, accessible, secure and comfortable

On Ventures Gestionix Cloud ERP for small and medium enterprises Technology

PC Capital Little Caesar´s Operator of Pizza restaurant chain Consumer Services

PC Capital Te creemos Loans to low income Financials

PC Capital Universidad Internacional Provider of education and training services Consumer Services Pedralbes Capital Logan media Marketing solutions smartphones Consumer Goods Partners

A mobile application provide solution for finding destination, Plug and Play MX Bochito Technology traffics, and places around the world

Enables companies to feed and consult a global database Plug and Play US Bayonet about online consumers’ reputation, based on historic Fintech payments

A web community in Latin America where pet parents can Plug and Play US Dogsi Consumer Services find a catalogue of certified pet sitters

An online file sharing and cloud content management Plug and Play US Grill on Box service offering unlimited storage, custom branding, and Technology administrative controls Promotora Social Mexico Árbol Financiero Credit compare services Fintech

Promotora Social Mexico Granta Dental prosthesis design and manufacture Health Care

Healthcare company providing kidney disease solutions Promotora Social Mexico Medica Santa Carmen Health Care through its clinics; currently focused on hemodialysis

Healthcare company focused on developing, manufacturing Promotora Social Mexico Onko Solutions Health Care and distributing a device for early cervical cancer detection

Apparel company manufacturing a wide arrange of products Promotora Social Mexico Someone Somewhere using Mexican artisans to incorporate their art into their Consumer Services products

QED Investors Konfio Provides working capital loans to SME Fintech Operator of an online platform created to connect tenants to Qualcomm Ventures Homie Technology apartment owners

Qualcomm Ventures Iguana Fix Provider of online marketplace for on-demand services Consumer Services

Quona Capital Konfio Provides working capital loans to SME Fintech Richmond Global Kueski Leading micro-lending platform in Mexico. Fintech Ventures Rise Capital Gaia Design Furniture E-commerce Platform Consumer Goods

Rise Capital Kueski Leading micro-lending platform in Mexico. Fintech Enables companies to feed and consult a global database Roadster Capital Bayonet about online consumers’ reputation, Fintech based on historic payments Overview of the Venture Capital Industry in Mexico 33

182 VENTURE CAPITAL TRANSACTIONS IN 2016 SPONSOR TARGET DESCRIPTION SECTOR

Sierra Ventures Clip Mobile payments system for the Spanish speaking world Fintech

Startblueup Ride safe app Drive routes for motorcycles and auto-alert system Consumer Services

Stella Maris Partners Hickies Manufacturer and dist of footwear accessories Consumer Goods

Stella Maris Partners iVoy Online express courier and logistics services Consumer Services

Stella Maris Partners Lentesplus Leader Contact Lens Online retailer for LATAM Health Care

Stella Maris Partners llollo Parking and Car Rental mobility solutions Consumer Services

Stella Maris Partners Nubity Platform to integrate public and private cloud services Technology Offers advanced solutions for video compressing and Stella Maris Partners Vnova Technology software solutions Tanant Capital Kubo Financiero Peer-to-peer lending platform Fintech

Topaz Capital Yogome Developer of online educational games for kids Consumer Goods

Trebol Capital Sellfone Online store for buying/selling used cell phones Telecommunications

Vander Capital Kubo Financiero Peer-to-peer lending platform Fintech

Variv Capital Bitso Bitcoins Fintech

Variv Capital Conekta One stop solution for online payments Fintech

Variv Capital Kueski Leading micro-lending platform in Mexico. Fintech

Variv Capital Mpower A US student lending platform Fintech

Variv Capital Yogome Developer of online educational games for kids Consumer Goods

Victory Park Capital Kueski Leading micro-lending platform in Mexico. Fintech

Developer of a software platform designed to enable Wayra Mexico 5Analytics automation of important commercial decisions and Technology implementation of digital business models

Developer of a cloud-based business management platform Wayra Mexico Billage Technology designed to help operate businesses

Developer of buildings and condominium management Wayra Mexico ComunidadFeliz.cl Technology platform. Developer of counter-intelligence campaign monitoring Wayra Mexico CounterCraft Technology software

Using Big Data Geographic to help companies and Wayra Mexico Descifra Governors make better decisions or expansion, investment Technology and public policy

Provider of an intelligent receivables platform intended to Wayra Mexico Dunforce Technology help companies to better manage their invoice workflow

Developer of AI-based chatbots created to improve the Wayra Mexico E-bot7 Technology customer service experience

Specializes in creating transactional and e-commerce solutions for individuals and companies, facilitating Wayra Mexico ePayco Technology processes, collections, shipments, transaction assurance, inventory control, and other critical processes in digital business Provider of a customer engagement mobile marketing Wayra Mexico Incubapps Ltd Technology platform App based on demand remote professional language Wayra Mexico Interpretap Technology interpreting services Wayra Mexico Kubo Financiero Peer-to-peer lending platform Fintech Air Systems Advanced Analysis developed by precision Wayra Mexico Luxelare Technology agriculture Developer of a cloud based application designed to help in Wayra Mexico Nazar Technology database performance monitoring Overview of the Venture Capital 34 Industry in Mexico

182 VENTURE CAPITAL TRANSACTIONS IN 2016 SPONSOR TARGET DESCRIPTION SECTOR Provider of an online data licensing platform created Wayra Mexico people.io Technology to help users license their data Pollstr open text classifies reducing time and costs for the Wayra Mexico Pollstr user, classified into 6 languages ​​and can be as Technology accurate as a human Developer of an inventory and ordering system designed to Wayra Mexico Producteca Consumer Services manage inventory, purchases and sales

Wayra Mexico Recorrido.cl Developer of an online ticket search and booking platform Consumer Services

Seenapse is a search engine that lets you find inspiration Wayra Mexico Seenapse through non-linear, non-obvious results, powered by the Technology mental associations from people all over the world Provider of a platform for an easy-to-use digital hub to Wayra Mexico Skore Technology organize and publish knowledge content Somosfut is a platform for managing and communicating Wayra Mexico Somos Fut Consumer Services statistics tournaments, teams and soccer players Local visibility of a National-Level Consumer goods Wayra Mexico Store Level Technology companies using a network of crowdsourcing

Wayra Mexico Switchee Developer of a smart thermostat Technology WebRTC technology for customer service. Toky is a voice Wayra Mexico Toky Inc communication tool to allow businesses communicate with its Technology customers in a more efficient way Provider of a knowledge-sharing platform for small-scale Wayra Mexico Wefarm farmers designed to connect farmers around the world to the Consumer Services information they require

An app that allows users to save and send money to a Wayra Mexico Zave App Inc savings or investment e-wallet account by automatically Fintech rounding up the user’s credit and debit card payments

Online marketplace where brands offer one-of-a-kind XB Ventures If Only Consumer Services experiences with ever-expanding categories

Xochi Ventures Bitso Bitcoins Fintech Overview of the Venture Capital Industry in Mexico 35

113 VENTURE CAPITAL TRANSACTIONS IN 2017* SPONSOR TARGET DESCRIPTION SECTOR Accel Cornershop On demand grocery delivery Consumer Services Accion Ventures Lab Konfio Provides working capital loans to SME Fintech ALLVP Aplázame Consumer credit company offering check out lending Fintech On-demand platform to help companies deal ALLVP APLI Consumer Services with demand peaks ALLVP Cornershop On demand grocery delivery Consumer Services

ALLVP Enlight Leading solar electricity solution provider Utilities

ALLVP Weex Virtual Mobile Network to choose mobile plan Telecommunications

Angel Ventures Mexico Nube Developer of a mobile app to monitor usage of natural gas Consumer Goods

Angel Ventures Mexico Onko Solutions Detection device of cervical cancer in underserved populations Health Care App where freelancers can create simple legal agreements Avalancha Ventures ContratosApp Consumer Services and organize legal agenda Multi-screen platform that provides streaming HD Avalancha Ventures GoLive Consumer Services service to multiple screens

Innovative platform to manage Social Networks, oriented to Avalancha Ventures Topic Flower Consumer Services Conversation Strategies and Content Marketin Axon Investment Mercadoni Online marketplace for any retail store Consumer Services Axon Investment Neumarket Online marketplace for tires replacements Consumer Services

Axon Investment Simpati Mobile Offers state-of-the-art mobile telephony services in Mexico Consumer Services

Axon Investment Trendier Online marketplace for pre owned clothes Consumer Goods Bonsai Venture C Trendier Online marketplace for pre owned clothes Consumer Goods Capital Invent Aliada.mx Domestic Clean services Consumer Services Capital Invent Rescata Digital platform used to fix, buy and sell smarphones Consumer Services

CITO Ventures Yogome Developer of online educational games for kids Consumer Goods

Coca-Cola Weex Virtual Mobile Network to choose mobile plan Telecommunications Creandum Cornershop On demand grocery delivery Consumer Services Da Vinci Capital Catusa Metallic parts manufacturer Industrials

Operator of a digital media platform created to provide Dalus Capital Cultura Colectiva Consumer Services digital media for Spanish-speaking millennials

DILA Capital Alameda Online Marketplace for home decoration and furnbiture Consumer Services

DILA Capital Aliada.mx Domestic Clean services Consumer Services A community-based lender to Latino - owned businesses DILA Capital Camino Financial Financials with unmet credit demand Financial services company that provides unsecured loans DILA Capital Creze to Mexican companies seeking to grow and improve the Financials management of their working capital DILA Capital Econduce Electric scooter sharing service in Mexico Consumer Services

DILA Capital iVoy On-demand last mile delivery service Industrials

Kinedu leverages technology to distribute content and tools DILA Capital Kinedu Consumer Services for parents wishing to improve their children’s development Multi-modal travel booking engine for Mexico and USA DILA Capital Reservamos Consumer Services Obline bus ticketing platform DILA Capital Tu Cantón Internet marketplace to buy a home Financials Daily commute transportation system with top of the line DILA Capital Urbvan executive vans, aming to make daily commuting more Consumer Services efficient, accessible, secure and comfortable E Capital Rescata Digital platform used to fix, buy and sell smarphones Consumer Services

Elevar Equity Tienda Nube Online market place for market places Consumer Services

Endeavor Catalyst Cornershop On demand grocery delivery Consumer Services

Endeavor Catalyst Yogome Developer of online educational games for kids Consumer Goods Overview of the Venture Capital 36 Industry in Mexico

113 VENTURE CAPITAL TRANSACTIONS IN 2017* SPONSOR TARGET DESCRIPTION SECTOR

Engie Enlight Leading solar electricity solution provider Utilities

Engie Iluméxico Solar panels for people without access to energy Energy

Enture Smart Business BrickAir Construction materials company. (Aerated concrete blocks) Industrials

Enture Smart Business Frisk Naturlige High value cosmetics Consumer Goods

Fiinlab Aflore Innovative distribution channel for financial services Consumer Services

Fiinlab Aliada.mx Domestic Clean services Consumer Services

Fiinlab ePesos Domestic Clean services Consumer Services

FJ Labs Tienda Nube Online market place for market places Consumer Services

Fondo Antai Trendier Online marketplace for pre owned clothes Consumer Goods

GC Capital Rocket Financing platform to control users personal finances Fintech

Technology that allows the seismic alert to reach 120 GC Capital Sky Alert Technology seconds before the impact of an earthquake

GC Capital Tu Cantón Online brokerage services Financials

Gentera Aflore Innovative distribution channel for financial services Consumer Services

Gentera Aliada.mx Domestic Clean services Consumer Services

Provider of an online financial platform for small and Gentera Avante Fintech medium enterprises Gerbera Capital Green Gold Farms Agriculture and the application of technologies in agriculture Consumer Goods

Water filter sales to urban populations to subsidize deliveries Grupo MIA Ecofiltro Consumer Services to rural families Instalation of prepaid electricity systems generated Grupo MIA Vitaluz Energy by solar energy Ideas y Capital Crowdfunder Equity Crowdfunding Platform Fintech Micro-investing app that encourages individuals to make Ideas y Capital Dvdendo (robo advisor) Fintech investing a part of their daily routine Shared electric scooters service with a network of charging Ideas y Capital Econduce Consumer Services stations though the city Ideas y Capital Farrow Ventures Lockscreen mobile app Consumer Services Artificial Intelligence assistant that manages Ideas y Capital Nimblr Consumer Services healthcare appointments IFC Asset Management Company Konfio Provides working capital loans to SME Fintech

Digital platform that makes P2P and P2B payments as easy Ignia Partners Abra Fintech as sending an SMS for banked and unbanked users Ignia Partners Afluenta Financial network for consumer loans in Latin America Fintech Online money platform that provides customers with a Ignia Partners AirTM Fintech USD account and related basic financial services On-demand platform to help companies deal Ignia Partners APLI Consumer Services with demand peaks Helps brands, companies, agencies and entrepreneurs in Ignia Partners KarmaPulse the Spanish speaking market to translate social data in to Consumer Services human experiences Ignia Partners Lentesplus Leader Contact Lens Online retailer for LATAM Health Care Ignia Partners Rocket.la Connecting the right millennial with the best credit card Fintech

Ignia Partners Tienda Nube Online market place for market places Consumer Services

InQlab Lentesplus Leader Contact Lens Online retailer for LATAM Health Care

Investomex 100 Ladrillos Marketplace for Real Estate fractions traded 100% online Fintech Provider of a social networking platform designed to Investomex Beek Technology discover, recommend and comment on books Provider of a mobile payment platform intended to facilitate Investomex Payit Fintech digital and cashless transactions

Jackson Square Cornershop On demand grocery delivery Consumer Services Overview of the Venture Capital Industry in Mexico 37

113 VENTURE CAPITAL TRANSACTIONS IN 2017* SPONSOR TARGET DESCRIPTION SECTOR

Jaguar Ventures Konfio Provides working capital loans to SME Fintech

Kaszek Ventures Konfio Provides working capital loans to SME Fintech

Kaszek Ventures Tienda Nube Online market place for market places Consumer Services

Mission OG Clip Mobile payments system for the Spanish speaking world Fintech Designs and manufactures the most advanced electric Mountain Nazca Alta Motors Consumer Goods vehicle technology on the planet Features in luggage such as connectivity, tracking and other Mountain Nazca Bluesmart Consumer Goods safety features that give the user a new traveling experience Mountain Nazca Human Developer of consumer electronics Consumer Goods Mountain Nazca Luuna Premium online/offline mattresses at a very affordable price Consumer Goods Mountain Nazca Petsy Pet-care e-commerce Consumer Services Daily commute transportation system with top of the line Mountain Nazca Urbvan executive vans, aming to make daily commuting more Technology efficient, accessible, secure and comfortable Northgate Capital Natgas NatGas is an operator of natural gas stations Oil & Gas Helps consumers to save time and money through the Nova Founders Capital Comparaguru Consumer Services comparison of financial services NXTP Labs Tienda Nube Online market place for market places Consumer Services Financing solutions provider for NBFIs whose Oikocredit Velifin Financials clients are SMEs Artificial Intelligence assistant that manages On Ventures Nimblr Health Care healthcare appointments Pedralbes Trendier Online marketplace for pre owned clothes Consumer Goods Promotora Social Mexico Aliada.mx Domestic Clean services Consumer Services Promotora Social Mexico Hipocampus Education toddlers and kids Education Promotora Social Mexico Ilumexico Solar panels for people without access to energy Energy

Online platform assisting parents on activities to do with Promotora Social Mexico Kinedu EdTech their kids to track their progress on different key areas Helps consumers to save time and money through the QED Investors Comparaguru Consumer Services comparison of financial services QED Investors Konfio Provides working capital loans to SME Fintech Quona Capital Konfio Provides working capital loans to SME Fintech Helps consumers to save time and money through the Seaya Ventures Comparaguru Consumer Services comparison of financial services Seaya Ventures Yogome Developer of online educational games for kids Consumer Goods On-demand platform to help companies deal Social Capital APLI Consumer Services with demand peaks On-demand platform to help companies Soldier Field Angels APLI Consumer Services deal with demand peaks Helps consumers to save time and money through the Struck Capital Comparaguru Consumer Services comparison of financial services Variv Capital Aliada.mx Domestic Clean services Consumer Services Variv Capital Yogome Developer of online educational games for kids Consumer Goods Developer of a cloud-based home automation system Wayra Mexico Aerial Consumer Services intended to perform complete home monitoring Wayra Mexico Back4app Developer of an open source hub for back-end web utilities Consumer Services

Wayra Mexico Crehana Provider of an online platform to learn practical skills Consumer Services Developer of AI-based chatbots created to improve Wayra Mexico E-bot7 Technology the customer service experience Wayra Mexico Hitmap Inc. Developer of an online service for sales prediction Technology Provider of a customer engagement Wayra Mexico Incubapps Limited Consumer Services mobile marketing platform Developer of virtualized network software (NFV) designed Wayra Mexico NFWare to commoditize core networks routing market dominated by Technology traditional hardware vendors Lifestyle fashion company that offers an engaging and XB Ventures JustFab personalized shopping experience to its millions Consumer Goods of members worldwide Overview of the Venture Capital 38 Industry in Mexico

Evolution of the legal system for VC investments

Alvaro sarmiento, Partner of kuri breña, sánchez ugarte y aznar

The Mexican government has implemented policies to allow VC investment to expand. In recent years, the Mexican government acknowledged the importance of fostering a VC industry and has taken important steps towards that end.

In 2006 the country’s corporate legal framework was modernised to allow Mexican com­ panies to effectively contemplate essential features of VC investment, the corporate legal system allows the implementation of all the common features traditionally seen in VC transactions in a simpler and more reliable manner. Under this legal framework, Mexican corporations may better regulate: (i) options and other types of buy or sell agreements and rights of first refu­ sal, tag-along rights and drag-along rights; (ii) the exercise of pre-emptive rights; (iii) the right of shareholders to withdraw from the company or give them the right to redeem shares establishing either a specific price or the basis to determine a price; (iv) restrictions on the transfer of shares or on the transfer of certain rights over shares; (v) the issuance of special classes or series of shares, for example, non-voting or limited voting rights, non-economic rights other than voting rights, or shares that grant veto rights or with special voting rights; and (vi) deadlock solution mechanisms. The corporate legal system which has been in force since 2006 (revised and amended ever since) allows the implementation of all the common fea­ tures traditionally seen in VC transactions in a simpler and more reliable manner.

The government created institutions specifically intended to favour entrepreneurship through education and incentives, and the creation of private equity (PE) and VC funds, particularly the National Institute of Entrepreneurship (INADEM). In 2006, a fund of funds was created with capital from the Mexican development banks and other sources. The fund of funds manages commitments of USD$700mn, and its stated goal is to encourage and develop the PE and VC markets by providing long-term financial resources to Mexican companies, in order to boost their competitiveness and increase their business opportunities.

The overhaul of the legal system and the institutional efforts to create a solid VC industry appears to be creating results. Overview of the Venture Capital Industry in Mexico 39

Mexican entrepreneurs are increasingly assigning value to the experience, knowledge, discipline and better corporate governance that come with VC investment, and are less wary of VC funding.

Implementing VC investment in Mexico

The way to implement a VC transaction may vary depending on the nature of the invest­ ment, the value of the proposed business and the complexity of the business arrangement. The documents usually executed in the process of a VC investment in Mexico include, much like other jurisdictions: (i) a letter of intent; (ii) a confidentiality agreement; (iii) a share­holders’ agreement; and (iv) new by-laws of the company.

Letters of intent are used as a start in the early process of negotiations. They usually contain an enunciation of the major agreements of the parties in connection with the investment. In some cases, a term sheet for the preparation of the final documentation is also executed. These documents are very useful in making clear from the outset the parties’ expectations and a basic framework of the rules that will apply.

Together with the execution of letters of intent, parties execute confidentiality agreements. In some cases these agreements also include some exclusivity provisions. Once the above documents are signed, the investors conduct a due diligence process on the business. During this process it is not uncommon to detect deficiencies in day to day housekeeping and general corporate compliance; after all, entrepreneurs are focused on developing a business and do not necessarily have the means or the time to invest in these aspects of their business where they do not perceive immediate added value.

At a point when the due diligence process is advanced and there is more visibility regar­ ding the contingencies associated with the company, the parties will start drafting a share­ holders’ agreement.

Shareholders’ agreements generally contain a number of provisions regarding manage­ ­ ment and control, ownership transfers, financial forecasts and milestones and the parties agree to carry the business of the company, following business plans that have been pre­ pared and approved periodically. It is also common that shareholders’ agreements include certain mechanisms for solving possible controversies among the parties.

From a practical standpoint, it is important to approach this process in a sensible and cons­ tructive manner. The owners of a business may not have been exposed to a transaction of this type before and may have taken great financial risk in starting a business. Obviously, the company is extremely close to their heart; the owner’s philosophy and values may shape, to a large degree, the company’s own culture, and at the outset management and emplo­ yees may not always be completely open to the structural changes and accountability that come with a VC investment. The right balance must be found.

Overview of the Venture Capital 42 Industry in Mexico

www.amexcap.com

OVERVIEW OF THE VENTURE CAPITAL INDUSTRY IN MEXICO

Guillermo Gonzalez Camarena 1600 4B Bis Centro Santa Fe, Alvaro Obregon 01210 Mexico City +52 (55) 5083-5090/91/92