Claire Díaz-Ortiz has been many things over the course of her career -- an angel investor, an early Twitter employee (who notably got the Pope on Twitter), the founder of a nonprofit, a published author and an entrepreneur.
Now, the globe-trotting, multi-hyphenate polymath is adding "partner" to her list of titles as she joins the Latin American investment firm Magma Partners to head up its investment activities across South America's southern cone and launch a new firm-wide initiative to invest in more women entrepreneurs.
With the appointment, Diaz-Ortiz joins a small but growing list of women investing in startups across the Latin American region, which is subject to the same woeful gender disparities as the rest of the venture world. As she's noted, only 8% of VC investing partners are women in LatAm versus 13% in the USA.
As part of her responsibilities, Diaz-Ortiz will help Magma operate the Brava Initiative, a commitment from Magma and a number of partner funds to invest in at least 20 female-founded Latin American companies over the next three years.
As Diaz-Ortiz has noted in TechCrunch, investing in female founders makes sense:
Many studies have established that female-founded companies outperform their all-male counterparts. Boston Consulting Group reports that for every dollar a female founder or co-founder raises, she generates 2.5X more revenue than a male founder.1 First Round Capital’s research held that the female-founded companies it backed performed 63% better than all-male founding teams.2 The Ewing Marion Kauffman Foundation’s showed that return on investment from women-led teams is 35% higher than their all-male counterparts.3 AllRaise, a nonprofit promoting women in VC, found that “companies with women on their founding teams are likely to exit at least one year faster compared to the rest of the market, and the number of exits for companies with at least one female founder is growing at a faster rate year-over-year than exits for companies with only male founders.”4 Jen Neundorfer, founding partner at Jane VC, succinctly explains her fund’s thesis of investing in female founders as, “investing in an overlooked asset class that is overperforming.” After all, it’s a “trillion-dollar opportunity.”5
"We're doing this because female founded startups have better returns and to highlight the disparity in VC funding to women entrepreneurs," Diaz-Ortiz wrote in a statement.
Claire Diaz-Ortiz. Image Credit: Jose Diaz-Ortiz
Magma has already made its first four investments into women-led or co-led startups: Jefa, a neobank focused on serving women in Central America; The Intern Group, which offers virtual internships for lifelong learning across careers; Prometeo, a startup developing open banking protocols for Latin American financial services; and Flickplay, a developer of augmented reality features for social networking.
Latin America already has several proof points to back up the assertion that money invested in female founders is money well spent. One need only look at the success of Nubank and its co-founder Cristina Junqueira to see that investing in women-led firms can make sense.
There's still plenty of room to improve, but Latin America is already doing better than the rest of the world when it comes to backing diverse founding teams. In 2019, investments into mixed female-male founding teams represented 16% of dollars invested in Latin America, 9% in the USA and only 8% in Europe.
“The venture capital industry in Latin America is quite young, not more than two decades. The first wave of firms was started by partners capable of raising funds from a male dominated pool of capital," said Antonia Rojas of the new Brava Initiative from Magma, in a statement. "The next generation of VCs in the region will come from partners capable of accessing the best deals and adding the most value to founders. In this new era, where results matter more, women are playing a much bigger role. (Traditional LPs will soon realize this.)"
The Brava Initiative has also enlisted a group of mentors from around the world to provide guidance to the Latin American founders that it will back, including Maren Bannon, the founder of January Ventures.
It will also have a mentor network and an SPV so that people who want to support women founders directly can invest alongside Magma.
"When I was a female founder (who was in her 30s and a mother of two), I never walked into a VC's office and felt it was created for me. So instead of joining one of those funds as an investor, I decided to co-found my own. I wanted to build January Ventures the way I wish a VC fund looked: open, inclusive, welcoming, accessible, transparent," Bannon said in a statement. "Having more female investors writing checks will help get more funding to female founders."