Marcos Gonzalez — Vamos Ventures

Posted on Wednesday, November 25, 2020
Marcos Gonzalez is the managing partner at Vamos Ventures, a seed-stage venture fund investing in Hispanic and diverse founders.  
 
Over half of LA county is Hispanic. Seems like a great time to be investing in this community! 

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Marcos Gonzalez is the founder and managing partner at Vamos Ventures. Based here in downtown L.A., Vamos Ventures is an early stage venture fund focused on tech companies led by Hispanic and diverse founders. Before this, Marcos was twice in private equity, once a founder, and he grew up here in L.A.. Marcos, nice to see you. And congratulations on building Vamos Ventures.

Great, thank you, many thank you for the introduction and the invitation to be on this podcast. Great. Now it’s been fun getting to know you, so maybe if we just start with the basics of, you know, how long has Vamos been around? And you know what? What are you doing?

Sure, sure. Absolutely, Minnie. So while this is a new fund, it’s a first time fund. The idea kind of came about in the year. Twenty, fifteen, twenty sixteen. So it’s something that I’ve been working on for, for a while as you said, we focused on diverse teams. So we have an emphasis on LatinX entrepreneurs. But really, it’s it’s it’s pretty broad. So we look at entrepreneurs who come from underrepresented areas, so African-American women, veterans, disabled, LGBTQ, etc.

So that’s where we are.

And you guys, you’re writing checks now. You’re actively investing.

We have started to invest.

So it’s one hundred or five hundred thousand dollar range. But I think we’ll be doing more on the two fifty side of things and then follow on investing. Check sizes will be half a million and above.

Great, great and super needed. I’m glad you’re here in L.A. Do you know what percent of L.A. is Hispanic?

Yeah, it’s certainly over fifty percent. Not that. Yeah. To me.

Yeah. And if you being good former business school students, you know, we look at the data in terms of like cohorts and we look at 65 and above 40 to 60 and so on, that number changes in. And certainly when you look at the older demographic cohort in this city, it’s a lot lower percentage. But when you look at eighteen and below, it’s it’s clearly over 50 percent. And if you look at, you know, five and below.

So kids and going into kindergarten, it’s probably something I would bet, probably something around 70, 75 percent. It’s a heavily, heavily Hispanic county. Certainly city. Yeah.

And, you know, I knew it was very high, but I know that high and and the U.S. as well. I mean, it’s not it’s not fifty percent, but it’s a huge percentage of the United States. I don’t know the number. Maybe you do.

Yeah. No, from a from a U.S. perspective, I do. It’s, it’s approximately eighteen, nineteen percent of the U.S. population. It’s the largest minority group in the country and it’s super high growth. One of the data points that we throw out from time to time is that, you know, every month eighty thousand Hispanics turn 18 for the first time ever in the U.S. system, system wide Hispanic students were the largest.

A group of students entering the UC system, so if you think about Asian, Caucasian, African-American, Hispanic, it’s never been the largest. It’s been creeping up. But this last year, the number of admitted students, the largest demographic group, was Hispanic students.

Well, good for us. I mean, good for good. I’m not Hispanic, but they are good for California, good for the Hispanic community.

I didn’t know that at all. So staying on this topic, it’s interesting to me as an investor, obviously, the young demographic, which is fantastic. Anything else that you think about when you sort of put your investor hat on in terms of, you know, consumer behavior or whatever?

Yeah, there’s there’s a number of points. You know, it’s kind of stepping back a little bit. Know Vamos Ventures is a, you know, early stage fund. Some might say micro fund. Right. Twenty five million dollars is where we’re at right now. We’re probably going to end up at about twenty seven million. But there’s plenty of funds like this.

And I always tell folks when we go through the data that this is why it’s an interesting area from an from an investor perspective. And it’s just a happy coincidence that we happen to be Hispanic and we happen to know it and have access to it.

And so there’s two of these points, right? One is from an investor perspective, one’s from from an impact. And I’m mentioning that because these are two categories that I’ll get to us now with with some data. And so on the investor side, not only is it young so twenty eight is the average age of Hispanics in the country. Forty two for non Hispanic. So that’s that’s a pretty dress. So you’re looking at runway, right?

You capture a customer at a young age, you’ve got you’ve got runway to work with. So it’s especially young in high growth. And I told you the eighty thousand a month number and that’s ninety two percent driven by domestic growth. This is not immigration, so it’s domestic driven. So that’s going to continue for good. While 60 percent of future growth in the United States is attributable or projected to be from the Hispanic demographic. So we’re looking at 18 percent, 19 percent of us, I suspect, today.

But in the next 20 to 30 years, we’ll be reaching something around twenty eight percent. That’s over a quarter of the country. 

So that’s huge. But but what’s more interesting is that from a consumer perspective, buying and brand loyalty is over indexed when it comes to Hispanic consumers. So the what we’re looking at is how do we identify opportunities that play to these demographic trends.

So one of the areas we’re looking at is consumer packaged goods and the whole CPG tech world is most of that population natively English speaking Spanish, speaking bilingual and and does the way that you reach them. Does it have dramatically different channels and cost of acquisition?

So really, really interesting. Good questions. So the breakdown in terms of language, I can give you the specific numbers, but roughly for anybody listening and it’s roughly a third, a third and a third. A third is English dominant. Very little Spanish. If any third is Spanish dominant, understands English, you can probably figure out some directions that they need to, but they’re Spanish dominant. And then a third is completely bilingual in consumer broadly. I think people always talk about how hard cost of acquisitions going up. And so, you know, is that the same in in the Hispanic community or different?

The way you reach them, some of the ways are very traditional ways that we would use on any consumer but the Hispanic demographic, which like the African-American, when it’s very tech savvy to the Facebook, you know, the Google ads, the social media channel, whether it’s SNAP or it’s it’s absolutely critical to reaching this consumer group. What are the data points I didn’t throw out is that every year the number of Hispanics receiving STEM related degrees is doubling.

A lot of these young folks with STEM degrees are going to be getting into the engineering world and innovation and entrepreneurial world, that’s a great indicator of future.

Yeah. Do you think, like for these brands, do you think it’s do you think it’s like developing a whole new brand for this market, or do you think it’s modifying messaging around existing products? Or how do you sort of think where do you think the breakouts will come from?

I think it’s going to be both, but I would rather not. I would rather focus on new brands or existing brands and giving them a makeover so for example, chips.

Right. So everybody knows tortilla chips. Right. And who doesn’t have tortilla chips right now in their house somewhere or the last month had them in their house. And so everybody does it. But but here’s the big company we saw the other day. And this company is focusing on formulation and they’re using cactus to develop their product. That’s much more healthy. It’s a different ingredient that’s better for you versus all the processing that goes to the whole corn base, MySpace future.

And in these guys are all young guys and gals who grew up either here with Mexican parents or in Mexico, know the community, know the consumer and have a reverence for the product. But also know that if you want to see kind of this, there’s opportunities for new growth of new product, you know, keeping the cultural side of it and I.

Justified in peppering you with all these questions, because my understanding is before this, you did private equity for a while focused on the U.S. Hispanic market. Tell me more about what were you doing?

Like what? What was the actual job? Look, were you acquiring companies? What is private equity?

Do I still don’t put you up to. So so for you mentioned I’m from Los Angeles, but I left at a young age and I did brown undergrad and then business school at HBS like you did. And after that I got to BCG and I worked at the Boston Consulting Group and did a lot of work in the US and Latin America. And I lived in Mexico for a while. I lived in Buenos Aires for a while and in the US for four years.

Of course, we looked at consumer packaged goods clients and I mentioned got into private equity and within private equity. One of my roles of the last war I had in the private equity world was looking at the US Hispanic consumer. And for us it was kind of a dual view of looking at companies that were established, brick and mortar businesses that were run by Hispanic entrepreneurs or any company with any ownership that was servicing the growing domestic emerging market in the U.S. market.

In the private equity world, as you know. I mean, even for folks that are listening, it’s it’s very similar to venture capital. There’s some major differences. Of course, some of the major differences are that you’re looking at companies that are a lot more established, have grown already, are more brick and mortar than they are technology and software driven.

But we got to know and I got to know the food and beverage world. And to be honest, this is not was not a priority area for for me in Vamos ventures. That’s not why I started Vamos Ventures. But it’s clear to me that that’s a meaningful opportunity for us in the venture world, because 15 years ago, 10 years ago and, you know, we didn’t have the kind of consumer targeting capabilities that we have today.

We didn’t have the broad outreach opportunities that we have today. It’s it’s really an interesting opportunity to focus on this area. And CPG, let me ask one question.

So I think a lot of people find v.C a little bit more inspiring or something like you’re you’re you’re creating something. You have a vision. But what do you think you can learn from private equity?

I think that one thing is that you have got to go not get carried away with with some ideas. And, you know, the private equity world, there’s a lot of tire kicking that goes on and you have plenty of tires you can kick. In the VC world you don’t have a lot of depending on what stage. And we’re talking about early stage. There aren’t a lot of tires you can kick, but certainly there are some, one of the things that we can learn there is that mature teams are are also good, thoughtful business analysis and strategy is worth something, kicking the tires and really kind of doing some diligence, not getting carried away with the latest fad. And the latest idea that’s coming out of Silicon Valley, I think is a good thing to to stay away from that and perhaps suspicious.

I I think that you are going a different direction than most of the VCs I talked to. And I’m not disagreeing with you, but like, I just had my since on the podcast. And he said that almost all of the deals they’re doing now were they’re writing a three to five million dollar check. They are pre revenue companies. And I think you actually, according to your website on your website, it says, we prefer companies with revenues.

Yeah, sure. And. Mark, obviously very successful here and not just here in Los Angeles, but successful investor, and that’s that’s great.

We will invest in companies that are, let’s say, CPG tech companies. And if you don’t have even five thousand dollars in revenue, then and we’re not maybe going to say no, but we’re going to absolutely create a different structure to invest it the fact that so many investors in the very early stage are basically safe agreement signers, that’s that’s fine.

But the world that I come from is that’s not what you’re paid for.

We’re investors and that means we do deals, we don’t sign agreements, we do deals. 

So going back to business ventures in the Velma’s venture story, when you go out to raise to start a fund and raise money for a strategy that, you know, four years ago was not that popular or well known, hey, we want to raise money to invest in diverse teams with a focus on Latin. People would look at me like I had two heads on my shoulder. What are you talking about? I don’t know. Founders and entrepreneurs, you know, is this a pipe dream?

And so I realized early on I’m going to have to do some deals and short pipeline so that we have access so that we can pick something, we can add value and that can be successful. And so I invest in about six companies.

You said something on a someone else’s podcast that I liked, but I want you to unpack it for me, which, as you said, there’s a difference between being a fund manager and an investor.

Yeah, for sure. So tell me what you mean by that. Well, you know, I’ll say that I received calls and emails, often from mostly younger men and women who aspire to be a venture capitalist, and that’s their words. And they’ll say, hey, Marcus, I’d love to talk to you. I’m so and so. And I want to I want to invest in a lot. Next entrepreneurs, for example. I’ll say, great.

Do you want to be an investor or a fund manager? And they’ll say, well, it’s the same thing. I said, Well, well, no, it’s not. I mean if you want to fund your now a fund manager and it’s it’s much more than it is writing a check than just writing a check. If you want to be an investor and you take out your own checkbook, you write a check.

You’re an investor now and that’s great. But if you want to raise money from other folks and third parties, you’re now a fiduciary and you’re a business owner and you’re an entrepreneur. And there are many parts to that business. And if you don’t have experience in it, it’s a it’s a it’s a tough business. Right. First of all, I don’t know anyone. I don’t know Minnie. Maybe you do. But if anyone’s come on your show and said it’s an easy business, I’d love to meet them.

But it’s a hard business. And I’ll tell you, I’ve seen a lot of things happen in my own experience in the private equity world that have blown up and how you deal with it. And I think if you haven’t seen some of this and spent 10, 15 years, doesn’t have to be that long. But for me, it was 10, 15 years of listening to your senior partners tell you, Marcus, don’t do that. Here’s why they want to do it like this.

Here’s why. Stuff you don’t read in the textbook. But I also sometimes counsel to spend a couple of years, you know, come work here or be a summer associate with us or do these things and and dig in and learn on somebody else’s dime, you know, even if it’s our time.

And so you can get out to market and do that.

And that’s great, because I think you just said, come work here and you can learn on my dime you are hiring, are you not? Do you want to say that on this show?

Yeah. Yeah, we are. We’re still building the team out and we’re looking for somebody right now who ideally comes from a different background is mid levels, had a few years out doing deals as part of a fund and coming in at a pretty senior level. That that’s great. And we’re also looking for somebody that’s very junior.

That’s great. I think you you’re setting up a lot of interesting sort of pipeline structures, which is great to see. Yeah, no, I agree with you completely. Like being a fund manager. It’s not it’s not all that sexy. The two and funding model, you know, with a twenty million dollar fund. Thirty million dollars and fifty million. I find it’s still not that much now.

Now anything else on on Vamos. I don’t want to leave the impression that you only do KPG, right? That’s right.

We don’t, we made a decision early on to say, look, we’re going to be pretty broad, but there’s a handful of areas that we really like, we have experience in and that we’re going to we see a lot in our pipeline, and that’s financial services, health and wellness, CPG, retail broadly and media.

And so Palladin is a company that I invested in some ago, the Chicago and New York based fund by two women. And they created a marketplace for lawyers that either must or want to do pro bono work. And on the demand side, families and individuals that need legal help can’t afford it. And it’s a great business. It’s it’s now raised three rounds of funding. We were part of the very first round and they’ve done a lot of great work.

And there’s a real value proposition there to law firms principally, which is how do you get your attorneys to do pro bono work that they have to do efficiently and save their time so that you can build them out at market rates. And number one and number two, you use this to attract lawyers because young lawyers say they want to be engaged, so tell like Vamos Ventures, you know, you had a cushy job. You know, private equity is usually larger funds.

You know, this is more this is a mission for you. I know you’re from L.A. So so maybe take me back to childhood and how that’s, you know, your journey to here.

I think there’s plenty of venture capital professionals out there that feel that it’s a mission because of the type of work that we do. It certainly is for me, for sure. And but I grew up here. I was born in El Sarino. I’m looking out the window right now and I see City Hall and it’s just beyond it.

And so I grew up there and born there. My my siblings were two and my parents are from Mexico. My parents immigrated to this country sixties. They met here in Los Angeles. But my brothers, my sister and I were all born in Los Angeles and then at a young age moved to Alhambra, which is just the very next community, the very next city outside of anybody listening to this knows L.A., you get to drive east and eventually you go right into Alhambra and then Pasadena.

But I went to Alhambra High and I’ve always been part of this. I’ve always felt part of the city in a weird way. The East Side, the real east side is very, very Mexican and have cousins, uncles, whatever. You know, over in East L.A., myself, you our family in El Serino and kind of really grew up in that environment, that Mexican house, Mexican neighborhood, et cetera. But when we got to all Hambro, I was a very different story in Alhambra.

We were probably one of the first Hispanic families on our block, hebra. And but in a matter of years, three, four years, it was all Hispanic. And it was really interesting to see in the high school that I went to Alhambra High Public School, very large. I was half Hispanic, half Asian. That was my world. Very, very different than the brown, for example. But, you know, I remember, you know, I grew up loving the city of Los Angeles.

And my my parents love the city ballet. So they would take us everywhere downtown to see, you know, and they built the Bonaventure Hotel. We would go up and down the elevators. That was our weekend event. And so but you know what? I got into Brown. They had an event on a Saturday or Sunday. Bel Air, and it was for admitted students, and I remember clearly my dad and I driving down Wilshire and his truck.

And I swear to you, when I was 18 and driving down Wilshire and looking around and thinking to myself, where are we? I have never been anywhere in this part of the city. It was possible to grow up then in those days and be very sheltered. The original point is that I grew up here.

I was born here. I love Los Angeles. But I would say that I love and identify with a particular part of Los Angeles that is not a very broad piece of it necessarily. Nothing against the West Side or the other valley. You know, I grew up in the San Gabriel Valley. I get it. We’re not San Fernando Valley. But but that’s the part that I definitely I completely agree.

I mean, I’m in the house that I grew up in right now. And I think it’s a big trend, actually, in L.A. versus San Francisco, San Francisco, everyone moved to San Francisco to do entrepreneurship. I don’t think you feel the same commitment to the community as you do when it’s the community that raised you.

And so.

And how did you see your parents immigrated here? It’s kind of the American dream. How did you end up, you know, going to Brown, where you were you were they, you know, were you just very academically focused?

And I was very motivated. I was very ambitious young kid. And I wanted to do the best and I wanted to be the best. And I thought, OK, where can I apply it?  But it was my parents, completely American dream, super hardworking, super entrepreneurial, resourceful, tenacious, smart, common sense, you know, stick to it, Omnes Froogle, everything you want and find.

And an entrepreneur, they have me. And and so that’s that’s part of the reason why Vamos Ventures, you know, it’s when somebody tells me, look, Marcus, I don’t think there’s a pipeline for this or I don’t think there’s any entrepreneurs out there that, like, I grew up around this. You cannot tell me that this doesn’t exist. I’ve seen it all my life. And, you know, Peter Thiel is very famous, saying in his book One Zero or one of his articles about one of the questions that he has zero one zero zero one zero zero to one.

Maybe I’ll come up with a one to zero. So maybe he’ll write one. But he asks the question right. Of what do you believe that others don’t believe or something that. Yes. And early on. This came up in a discussion and I said, yeah, I clearly I I don’t think most people believe that this community has amazing entrepreneurial talent, including in the tech world. And but I believe and I’m willing to bet on it. And I questioned myself many times, like, am I ruining my career and my life that no, no, I have you know, I had to follow my instinct on this one. And that’s that’s what drove it.

I mean, immigrating is an extremely daring, entrepreneurial endeavor.

You know, you say, oh, it’s scary to start a company. Well, changing moving countries is is a daring endeavor. Absolutely.

And so now I’ve heard you, as I said, I heard you talk about what you’re doing with with the entrepreneurs who come and pitch you. You can invest in all of them. But I think you’re doing a lot of giving back to the community. How do you think about those those ventures and what you want to be building there?

Yeah, you know, it’s it’s really hard. I think we’re all investors and we all have our number one priority is generating returns for our investors. And we’re very clear on that. If you start a fund, as I do, to to give energy and momentum to creative expression through entrepreneurship of entrepreneurs of color, if that’s your mission, then how do you reconcile that with having to say no to ninety five percent of the folks that reach out to you and they don’t just reach out to you.

They say things like, gosh, I’m so happy to see what you’re doing. Marcus, congratulations. Thank you for doing. This is amazing. Gosh, I’ve been telling you, by the way, I’m an entrepreneur. You what we’re doing and then what? Sorry. Not for us. Yeah. Oh, don’t reply.

Yeah, yeah, yeah. I mean, that’s devastating. And I’ll say we got four things to do.

One is we recognize everybody may not be the very day you email us. It may be a week or two later, but we’ll recognize everyone who reaches out. It’s not easy. It’s part of what we think adds value is that we see you and we recognize and number two, we we provide feedback. If you want it, we’ll give you feedback, honest feedback. Three, we’ll make connections. If we know anyone that could help you on your journey, we will make the connection and then for you will have an open door.

And if you want to come back, if you have other things you want to discuss or you have a new company in the future, whatever it might be, we’d love to hear from you again. This is not a no don’t ever bother us again situation. And we found that that’s all great, but it’s not enough. And so we developed a program called the Founders Roundtable and oh, no, no, sorry, it’s brand new. We’re actually launching this next week.

It’s it’s actually the founders roadmap, you know, zero one one zero what’s instead of the founders roadmap it’s a monthly video, fireside chat discussion with a founder and an investor. 

And so we’re going to talk about what works, what doesn’t work from a lens of a Latina entrepreneur that has started a couple of companies, has raised a couple of rounds in this company and what works, what doesn’t work for her. And then turns out, coincidentally, a Latino investor at a local financial clocktower ventures. So so a friend of Arizmendi actually at The Onion. And so this is a great, in my view, a really interesting opportunity to do several things.

One is to promote these two young women, an entrepreneur or an investor. And give them a platform to articulate their personal brands and then more kind of bricks and mortar or kind of brass tacks would be what what they look for as an investor. What’s what gets immediate no.

Here’s what I struggle with the most in terms of what gets an immediate no or yes. It’s the founders. Right. And the stage we’re investing in, it’s a lot about the founders. And I’m not great at giving feedback. Like if the reason I’m not investing is because. A view that’s a much harder thing than hiding behind sort of I’m not investing because I don’t believe in the tailwinds of the market.

How do you think about giving meaningful feedback when it’s, you know, it’s a more personal sort of feedback? You know, this this also comes up and there’s a particular example of a founder and we had gotten to know each other and had developed a relationship and so is fundraising. And he was frustrated and kind of expressed frustration. And I said, hey, can I can I be really honest? Sure. I said, well, and it was a very honest personal feedback on attitude, on behavior, on the way you’re dealing with the way you deal with folks.

And nobody, I think, disputes that. You’re a smart guy. It’s these other things. And honestly, people this is not just I’m going to write a check. It’s somebody’s thinking, do I really want to deal with this guy for five to 10 years?

Is there anything else I missed that you’d like to talk about otherwise? This is great.

Well, you know, I would like to say I know this is L.A. based podcast and we’re relatively new on the scene. But I would love to just develop relationships and get to know local funds and investors and collaborate, you know, over time and start the process of getting to know each other.

That’s great.

I’m excited for the enduring institution that you’re building and it’s it’s a very exciting time to be building what you’re doing. So it’s so great. Thanks for being on the show and thanks for doing your work.

You bet. Minnie thank you very much for having me. I appreciate it. And I look forward to being in touch with you.

Thanks, Marcus.