Devlab’s Ruben Hernandez was interviewed by Lisa Kiefer of Method to the Madness, a KALX radio program exploring technology and innovation. In the program Ruben explains how Devlabs creates deal flow by developing a tech startup ecosystem in outlier communities in Latin America, the Caribbean, and California.
You can listen to the full 30 minute interview on iTunes here.
Ruben spoke about history of Devlabs and why he co-founded the organization with jose d lopez. “We had a software development company, and we took the profits from our software development company to create our own fund, because we felt that there was not enough v.c. or angel capital money going into first time entrepreneurs from what we call outlier communities,” said Ruben.
He also shared that he learned that software is "the future for investment” when he was leading trade missions around the globe with the Greater San Jose Chamber of Commerce. “In software you have typical 40 - 70% gross profit margins in year one, if you do it well. In projects that are more energy intensive, or physical assets intensive, you have a lower margin. So you need to wait longer to get your return in investment. In software you can get your return in investment, and get really large multiples, in ten years,” explained Ruben.
Ruben went on to detail Devlabs investment criteria. He gave examples of the companies we have helped to incubate, preparing them to become investment ready. This is part of the Devlabs philosophy that talent from outside of the main hubs for technology are going to come up with innovative solutions to problems because they have a different perspective and because no one is addressing their needs.
“We believe that people are the center of all this. We are working with people, whether that is the entrepreneurs, or limited partners, or the customers of those entrepreneurs. That is the biggest success: that we have built some really strong rooted relationships with people who are trying to solve very big and very complex problems, and they don’t give up,” said Ruben.
He talked about his experience working in Chile where he helped to develop a tech startup scene 600 miles south of Santiago, in Temuco, Chile. Devlabs is launching our first fund in Chile this winter. We have also been working with the World Bank, the Government of Barbados and other stakeholders to launch similar work in the Caribbean.
“We are planning to come back here to the US and raise a fund here in a couple of years,” said Ruben. In the meantime we are working to identify and incubate companies to invest in once our US fund is launched. Devlabs is collaborating with the City of Oakland, Oakland Chamber of Commerce, universities, banks and other investors to create an Oakland entrepreneur tech ecosystem that incubates local business to create deal flow. “Oakland has the ingredients and the mentality,” said Ruben.
When asked what he would like to see happen in the next five years, Ruben said, “We want to see our first entrepreneurs have a successful exit and create their own fund… We want more angel investors, we want more capital investors. We want to create investors that invest in outlier companies.”