HTwenty is a cross-border venture capital fund specializing in FinTech, marketplaces, and software startups, mostly in the B2B space, in the US and Latin America. Pulse 2.0 interviewed HTwenty co-founder and managing partner Daniel Lloreda to learn more about the company.
Daniel Lloreda’s Background
Born in Colombia, Lloreda moved to the U.S. at the age of 15. And he earned a Bachelor of Science in finance and leadership at Babson College in Wellesley, Massachusetts, where he met his close friend and business partner, Mauricio Porras. And Lloreda said:
“I’ve always had that entrepreneurial mindset, even as a kid. Mauricio is the same way, and we both felt that helping other entrepreneurs was how we were going to contribute to the economy.”
“I’ve also always thought of myself as a ‘doer,’ or just someone who makes decisions quickly and finds ways to get things done. After graduation, I worked for a major private equity fund doing company building for several years, so I’ve really been in the alternative investments space my whole career. In 2018, Mauricio and I launched HTwenty, and I’m now based in our offices in Mexico City.”
Formation Of HTwenty
How did the idea for HTwenty come together? Lloreda shared:
“The idea for HTwenty was born out of the desire to help local entrepreneurs and grow the startup economy in the Latin American region. At the time, there was much less access to venture capital for entrepreneurs in this area compared to places like New York or San Francisco.”
“As a Latinx business, we also wanted to propel the careers of other Latinx entrepreneurs. Not only because of our ethnic background, but because the U.S.-Hispanic market is widely overlooked, which is strange considering its tremendous size. We eventually found that Latinx entrepreneurs were having trouble accessing venture capital as well, mostly because investors were not properly educated about the U.S.-Hispanic and Latin American markets. That’s where we saw an opportunity.”
Industry Focus
What are some of the industries your firm is focused on? Lloreda explained:
“We specialize in B2B, asset-light companies – mostly B2B FinTech, B2B marketplaces, or B2B software with FinTech adjacencies – based in the U.S. and Latin America. We’re particularly focused on the Latin American market because companies in this region are just starting to adopt workflow automation software, which is now ubiquitous in the United States. There’s this whole generation of Latinx business leaders who want to bring Latin America up to speed with the rest of the world in terms of enterprise software, and we want to be at the forefront of this movement.”
Evolution of HTwenty’s Thesis
How has HTwenty’s thesis evolved over time? Lloreda noted:
“We’ve developed more stringent criteria in terms of the companies we work with. Now, we only work with asset-light and capital-efficient companies that are in their pre-seed and seed stages of funding. When it comes to the Latin American market, we’re also much more aware of the different routes to success for Latin American vs. U.S.-based companies.”
“Overall, we’ve learned to work smarter, not harder, towards getting the results we want, and that includes distinguishing ourselves from other firms and drawing attention from investors.”
Challenges Faced
What challenges has Lloreda faced in building the firm? Lloreda acknowledged:
“A lot of the investors we work with are relatively new to venture capital, so there’s a learning curve. That means we have to take the time to educate these investors about the long-term rewards of venture equity, or even how we go about determining the ROI of investing in a certain startup. From an ROI perspective, venture capital is very different from investing in real estate or the stock market. We need to help investors understand what makes a company efficient, how we know a company is going to require less capital in the long term, and how that company will reach significant scale and ultimately be acquired or undergo an IPO.”
“Another obstacle is high interest rates, which have made IPOs and M&As harder to initiate. The ups and downs of the financial market have a direct influence on the decisions of investors. When interest rates are higher, less money usually goes into venture capital funds.”
Differentiation From Other Firms
What differentiates HTwenty from other firms? Lloreda affirmed:
“What separates HTwenty from other firms is our increasing and simultaneous presence in the Latin American market and the Hispanic market in the United States. We’re helping U.S.-based entrepreneurs open up operations in Latin America, and vice versa. We are deep domain experts in both markets and we are riding the cross-border/nearshoring waves.” “Another differentiating factor is our passion for working closely with our entrepreneurs, offering assistance in any way possible. We aid them in expanding their teams, enhancing operational efficiency, or finalizing deals with new partners. This is why we are highly confident in the success of our startups: we have had a front-row seat to their journey and have collaborated with them at every step. For instance, in a recent investment, within the first 30 days of supporting the entrepreneur, we facilitated four world-class commercial introductions that successfully converted into high ACV paying customers.”
Favorite Memory:
What has been your favorite memory working with your firm so far? Lloreda reflected:
“For me, the most fulfilling part of my job is forming genuine relationships with entrepreneurs and really getting the feeling that we’re more friends than partners. Some of my favorite memories with HTwenty are moments when I felt like I had truly connected with someone on a personal level and earned their trust and respect.”
“For example, we actually solidified a partnership with one entrepreneur over a casual, light-hearted breakfast. It stands out because we didn’t spend this conversation sharing facts and figures like we would for a traditional business meeting. This entrepreneur chose to work with us because he got to know me and Mauricio as people and liked what he saw.”
“Similarly, Mauricio and I once closed a major deal with an investor while the three of us were literally taking a walk on a beach. Starting a partnership this way just makes it feel much more genuine and personal, and the serene environment certainly did its part. I’m actually planning on using some of the local parks in Mexico City as the setting for future meetings with other entrepreneurs.”
Significant Milestones
What have been some of HTwenty most significant milestones? Lloreda cited:
“We managed to raise $62 million for our second fund last year, which is pretty impressive considering that market turmoil was the story of 2023. We initially targeted a $50 million raise and ended up closing an oversubscribed fund. The fact that we were able to persuade our investors to commit to another round of funding during such a volatile time for the market shows that they trust us and share our confidence in our startups.”
“Some of these investors were initially very skeptical about venture capital, which makes their loyalty extra meaningful. The year 2023 was also when we really focused in on asset-light startups with a clear path to profitability, and our investors’ support proves that this was clearly the right idea. We’re just proud to showcase our ability to adapt to a turbulent market and keep moving forward.”
Investment Success Stories
After asking Lloreda about some investment success stories, he highlighted:
“There are two companies I’d like to highlight, both of which are asset-light Latinx companies catering to the U.S.-Hispanic and Latin American markets.”
“First is Influur, which is basically like LinkedIn for social media influencers in that it connects influencers with brands. We’re excited about Influur because influencers are currently the fastest-growing media vertical, and the U.S.-Hispanic market is the fastest-growing demographic for influencers. Lots of big digital brands don’t really know how to appeal to the U.S.-Hispanic market, which gives Influur a major edge.”
“Second is Felix, which is a FinTech platform designed to simplify the process of sending money between the U.S. and Latin America. Let’s say you want to send money to your grandmother in Mexico. Thanks to Felix, you can send the money through a WhatsApp-enabled chatbot, as opposed to having to go to CVS or Walgreens. Sending money through Felix is also cheaper and faster than a traditional wire transfer. With Felix, the recipient receives the money in real time.”
Future Goals
What are some of your firm’s future goals? Lloreda concluded:
“We want to be known as a firm that builds relationships with entrepreneurs by supporting them through their entire journey, from the very beginning – as in, pre-seed stage – to managing their wealth over time. We also want to cement our reputation as an operational, hands-on partner that works alongside entrepreneurs to help them execute on their visions and adapt to sudden changes or unforeseen obstacles. We want to prove our worth to them, even though you might think it’d be the other way around.”
“Lastly, we want to continue increasing our relevance in the Latin American and U.S.-Hispanic markets. We see huge opportunities in these demographics because the market size is gigantic and both audiences now have more disposable income than ever before. The Latin American economy is on its way up, and we want to fuel this economic growth by establishing more B2B businesses in Latin America and bringing Latin American investors into the U.S.-Hispanic market. These markets are the future, and we’re going to prove it to our investors and the rest of the world.”
