After a trip to Silicon Valley with former President Piñera, an idea emerged from Microsoft to create an innovation center in Chile. At the same time, four entrepreneurs were looking to build a business incubator outside the academic world. Their paths crossed, and in 2014 Imagine Lab was born, which has funded 120 startups in the region. In April of this year, they began a new stage and are now investing as a venture capital fund.
By: Juan Pablo Silva | Source: DFMas
In more than 10 years, Imagine Lab has evaluated 10,000 startups in Latin America. Of these, they have supported 700 and funded 120 with tickets ranging from US$5,000 to US$120,000. One-third have survived, and the top 15 of those still operating have a combined valuation exceeding US$300 million. Javier Cueto, partner at Imagine, reels off these figures from memory. He adds that they have worked with 60 corporates in the region and maintain relationships with more than 100 funds.
But all this was just Imagine’s first stage. Today, Cueto’s focus is different. They have just raised US$4 million for their first venture capital fund, with investors such as Daniel Undurraga (Cornershop), Wilson Pais (Microsoft), Ángel Izurieta (Google), Jaime Caicedo and Patricio Cofré (both from EY), the Procrédito Foundation of Bolivia, and another 30 contributors.
Trip to Silicon Valley
Imagine’s story began with a 2012 trip to Silicon Valley alongside former President Sebastián Piñera and a group of entrepreneurs and executives, including Wilson Pais, country manager at Microsoft. After visiting one of the company’s innovation centers, Pais kept thinking about an idea launched by the president: replicating that innovation center in Chile.
At the same time, entrepreneurs Eduardo Tastets (Redd System), Rodrigo Lafuente (ISC Chile), Pablo Caroca (Nectia), and Manuel and Roberto Pino (Being Consulting) —all members of the software industry association (today Chiletec)— were seeking to create an incubator led by entrepreneurs for entrepreneurs, as they felt the existing options were all academic in nature.
Microsoft presented the project to Corfo, but it was rejected. However, the state agency was aware of the project Chiletec members wanted to build and connected the two initiatives. This opened the door for a joint venture: Imagine would become the company’s first innovation center in Spanish-speaking Latin America, with an incubator managing US$5 million in Corfo funds.
Some of their flagship cases include Pasajebus (now Kupos), Chattigo, Mudango, Agenda Pro, and Ipsum (now Outbuild). Cueto notes they already have two exits: QVO, acquired by Kushki (tripling their investment), and Farmazon, acquired by a private buyer.
Investment Thesis
In 2016, Cueto joined as CEO of the accelerator, coming from IncubaUC, where he led the startup internationalization program. He arrived for Imagine’s third generation and became a partner by the end of that year.
By the time the pandemic hit, they had already invested 100% of the Corfo fund, leading to the question: “What’s next?” Cueto recalls. They debated whether to continue as an incubator or to pursue an idea they had long discussed: expanding into the venture capital world.
The model would be fueled by businesses coming from the accelerator but would be a 100% private fund able to invest anywhere in the world without Corfo restrictions. The idea resonated with the partners, and in 2022 they made their first close of US$2 million to start investing.
Their investment thesis focused on two industries: the future of work and the future of finance, targeting pre-seed stage startups with tickets between US$150,000 and US$250,000. That same year, they made their first investments and, to date, have backed eight companies: Relif, Wekall, Velocity, MiEmpeño, Beeok, Avanzo, Board, and Ainwater.
They recently closed the fund at US$4 million —but it wasn’t easy, Cueto admits. “We assumed it would be simpler because we lived through the 2021 boom, when you could raise money just by lifting your hat. But we faced a different government, two constitutional conventions, and rising interest rates. Every month brought a new headline that made fundraising harder. In the end, I think going through that helped us empathize with entrepreneurs —and it helped them realize that raising capital is also hard for funds.”
Diversity
“Thirty percent of the startups that raised capital in Latin America in the last 18 months have done so again,” says Cueto, reflecting the market’s low liquidity. “If you look at 2023 and 2024 by quarter, the average investment is US$1 billion —a flat line that was supposed to see an inflection point this year. That didn’t happen,” he adds.
As an additional data point, Cueto notes that only one in 30 startups that raise a seed round in the region go on to raise a Series B. In line with this, part of their investment thesis also focuses on diversity.
“If you look at fund managers, 90% are white heterosexual men. Our aim is to build a more inclusive industry —not just at the founder level, but also among fund managers and investors,” Cueto says.
That is why they are completing a certification with Diversity VC, a firm that seeks to “create a bias-free industry.” In addition, Cueto says, “33% of the fund’s applicants have female co-founders, but beyond measuring gender diversity, we aim to help our portfolio adopt diversity and inclusion policies, which may address ethnicity, education, sexual orientation, and more.”