How a Mormon VC ended up betting everything on Mexico

What’s a Mormon white guy from Southern California doing running a tech fund in Mexico? Paul Ahlstrom, the founding partner of one of Mexico’s rare venture capital firms Alta Ventures, says he gets that question all the time. It’s no doubt on the minds of the 40 plus Geeks on a Plane group, a traveling tour of entrepreneurs and investors organized by the 500 Startups tech fund, that stopped through Mexico City last weekend to learn about what — if anything — is going on in Mexico.

Back in 2005, Ahlstrom, who was running a successful venture fund in Salt Lake City, Utah, asked himself and his investing team the question: if you could invest in any country in the world, where would it be? The group started collecting and crunching data points, like it needed a high growth potential, a large market size of over 50 million people, a GDP per capita of under $14,000, political stability, a decent history of human rights, and it needed business and entrepreneurship indicators like a small number of days needed to start a business.

At the end of the analysis the country that was spit out was Mexico. “We didn’t believe it. We were completely shocked,” says Ahlstrom, who told his team to go back and scrub the data and recrunch it. But again, the answer fell on Mexico. “Our image of Mexico was dusty, sombreros, drug problems, immigration issues. Not high tech,” says Ahlstrom. Nevertheless, a few years later Ahlstrom led a private equity growth fund in the region, and opened up Alta Ventures, based in Mexico City.

Alta, and Ahlstrom’s efforts, have really been one of the first major pushes to create an entrepreneur and investing community in Mexico. The ecosystem is still tiny compared to the Valley or even its Latin American counterpart Brazil, but it’s now growing. On the Geeks on a Plane tour through Mexico we participated in a Startup Mexico Weekend, which included a dozen teams pitching interesting ideas like RockMob, a Rockband for regular instruments, and Legal U, a startup creating online legal documents for landlords and small businesses. 500 Startups plans to focus more on the region, founding partner Dave McClure tells me.

Ahlstrom has worked tirelessly to kick start the industry. One of the problems with Mexico has been that pension funds were only recently able to invest in venture firms, and Ahlstrom began working on that problem as soon as he identified it. He also personally helped organize a conference in Mexico’s city of Monterrey in 2010 that he says was “a watershed moment and the launch of the venture capital industry in Mexico.”

Ahlstrom has done so much work that he has essentially helped clear the barriers for everyone else to come in. The pioneer is the man with a lot of arrows in his back, face down in the mud, says Ahlstrom.

For Ahlstrom, bringing his family down to Mexico, was actually more like coming home. His great great grandfather was a polygamist Mormon who brought his family down to Mexico to be able to keep the family together, and Ahlstrom tells a group at the U.S. Ambassador to Mexico’s house that the Romneys lived down the street (not exactly sure if that was a joke or not). Ahlstrom’s family (no longer polygamists) were driven out of Mexico for various financial and political reasons a couple times, but continued to return to Mexico over the years. Ahlstrom says creating the venture capital community in Mexico is “huge for my family.”

Image courtesy of Arturusoft.