Chinese Investors Who Got to Mexico First | Dark Tide Goes Global

By Qian Ren

Edited by Jing Liu

Over the past year, Mexico has gradually emerged as a new destination for Chinese entrepreneurs and investors. After several scouting trips, their conclusions couldn't be more different. Some are brimming with confidence: "Mexico's VC ecosystem is thin — there's huge opportunity in early-stage investment." Others are standing on the sidelines: "Going forward, we'll still focus on the US and European markets." Some have simply ruled it out: "You won't find a single country on earth that could be the next China, replicating the high-speed growth of China's past four decades."

To each their own. Right now, Chinese VC outbound investment has already reached a fork in the road. We previously explored the irreducible complexity of different regions in "A Globalization Guide for Chinese Founders: Slicing the World Horizontally."

Later to the scene than the Southeast Asian and European markets we know better, Mexico didn't produce its first unicorn, Kavak, until October 2020. That number grew to six by 2022, and now stands at nine. There are also more than 30 companies valued between $300 million and $500 million.

What's little known is that four mega funds that once dominated China's internet wave — SoftBank, Tiger Global, Coatue, and DST — began appearing frequently on these companies' cap tables as early as around 2016.

SoftBank alone invested in at least five of these unicorns: used-car trading platform Kavak, smartphone-based credit card payment platform Clip, automated digital freight forwarding platform Nowports, e-commerce brand aggregator Merama, and online lending platform Konfio for Mexican SMEs. Tiger, Coatue, and DST didn't match SoftBank's volume, but each hold stakes in at least two to three companies.

Yet despite their earlier bets on Mexico when the waters were rising, most of these unicorns' fundraising has stalled since 2021 or earlier, according to Waves statistics (with the exception of Clara, which raised a round in 2023).

The key variable that drew Chinese investors into Mexico was the emergence of fintech company Stori. In 2018, Chinese-American Bin Chen and four co-founders launched Stori. Behind this company — the most meteoric unicorn to rise in Mexico in recent years —

VisionPlus Capital led the Series A when there was almost no operating data to speak of. BAI Capital first led the A+ round and has doubled down in every subsequent round. Source Code Capital entered alongside BAI, and GGV also invested multiple times. As Stori's sole angel investor, Qing Ye, co-founder, chairman, and CEO of Rong360 Group, was also among the earliest Chinese investors in Mexico's tech sector.

For dollar-denominated investors with a China perspective, purely localized projects are clearly not the best entry point. Mexico won't become the ideal investment destination for everyone. But regardless, those who arrive first always have the right to speak.

"Waves Sees the World" is a new column from Waves. Over the past three years, we've gradually rolled out a series of globalization content, and going forward we'll publish more systematic coverage. Mexico is the focus of our first phase.

Qing Ye of Rong360: The NPC Who Triggered the Quest

Among all of Stori's early investors, Qing Ye was the source, the伯乐 who spotted this unicorn.

In fact, when Chen and his team first pitched their business plan, they didn't win over investors. It was only later that they developed a digital finance business focused on Mexico. And Ye hadn't initially approached them with investment in mind — what he wanted more was to "recognize the team's capabilities, identify the fintech mega-trend in emerging markets, and incubate a new project together."

Investing in Stori was largely within Ye's circle of competence. Over a 20-plus-year career, he had worked at tech and financial giants PayPal, America Online, Capital One, and American Express. In 2011, Ye became one of the earliest entrepreneurs to leave Capital One, founding Rong360 in a residential building in Beijing's Huaqing Jiayuan, near Tsinghua University's PBC School of Finance. He had met Chen during his time at Capital One.

From that year onward, the steady stream of people leaving Capital One to return to China formed what became known as the "Whampoa Military Academy" of Chinese fintech. Some started their own companies and went public, like PPDAI, Lufax, Wacai, and QuantGroup. Others became executives at internet giants and banks — Alibaba, Tencent, Baidu, Ant Financial, JD Finance — claiming half of China's fintech landscape.

Ye sensed Mexico's fintech potential early and visited frequently — eight times in total. Having lived in the US for over a decade, he watched as America's Latino population grew larger and larger, its share of the population rising, its economic and political influence expanding. In early 2018, he worked with the Stori team to map out market direction and team structure, anchoring their target market in Latin America — starting with Mexico, a country of over 100 million people with annual per capita GDP exceeding $10,000.

Ye's investment logic is simple: "The most important thing is betting on people and the sector." He describes Chen as a highly business-minded person with the drive and resilience characteristic of Chinese entrepreneurs. What he valued was Stori's growth potential and its ability to surpass its benchmark, Brazil's largest digital bank Nubank, which was then valued at $8 billion. "Reach 20% of Nubank, and you're a unicorn." Today Nubank's market cap has hit $60 billion, and Stori's valuation has already exceeded those early expectations.

Ye not only became Stori's earliest angel investor but also helped introduce subsequent funding rounds, providing support on strategic direction, talent recruitment, and user growth.

Yiran Liu of VisionPlus Capital: A Fortunate Accident

For VisionPlus Capital, which had never before invested in Mexico, multiple successful investments in Southeast Asia had already drawn its attention to cross-border opportunities. The firm had been waiting for the right Chinese-founded team to emerge — and then Stori appeared.

In the summer of 2018, in the dim lobby of an ordinary midtown Manhattan hotel, Ye arranged to meet Yiran Liu, partner at VisionPlus Capital, who was also traveling in the US. The two talked about the Latin American market and Stori until late into the night, growing more excited as they went.

At the time, Liu happened to be visiting US investment firms. Several American VCs had been noncommittal about Latin America, believing the timing wasn't ripe. Plus, many institutions were then investing heavily in Southeast Asia (Advance, a fintech project backed by VisionPlus, was particularly sought-after). Liu was filled with concern — why was this deal coming to me across the ocean instead of going to someone else? Why weren't Americans investing?

But he vaguely sensed this could be a new opportunity. Right after meeting Ye, the VisionPlus team decided to fly to Mexico for on-the-ground research. Several months later, they led the Series A when Stori had almost no operating data to show. "Market demand was clear, and a founding team with this background would score highly even in a mature market like China," Liu said.

In globalized investing, moving before US VCs takes some courage. This was the prelude to Mexico's warming. Soon numerous American VCs headed south again, and SoftBank established its first Latin America fund in 2019, putting half its capital into fintech.

Stori remains VisionPlus's only investment in Mexico. The firm's outbound portfolio focuses more on North America and Southeast Asia, with additional exposure in Latin America, the Middle East, and Africa. In 2017, the VisionPlus team proposed its "time machine" theory for cross-border investment: the past decade of China's PC internet had borrowed from the US, while the next decade of China's mobile internet development would provide a reference for other emerging markets. In recent years, this theory has evolved: "Cross-border investment is about identifying mismatch opportunities across sectors in emerging markets."

In terms of specific design and strategy, VisionPlus has made hard tech, computational iteration, and cross-border innovation the three focus areas for its dollar investments, zeroing in on "what China is strong at, what the world is trending toward, and what happens when China meets the world."

BAI Capital: The Resolute Gold Prospector

Among all Chinese investors, BAI Capital is probably the only fund that has grown increasingly committed to investing in Mexico by following the fintech thread and seeing the underlying logic behind Stori's growth.

Two indicators: in 2020, it quickly led Stori's A+ round and has continued to increase its stake in every subsequent round (serving as lead in multiple rounds); beyond Stori, it has also invested in six other Mexican companies.

At the time, Chen and his team returned to China to raise funding and asked, "Who in China invests well in fintech?" Friends in fintech circles immediately introduced him to Penglan Zhao, then the BAI investor responsible for fintech.

Stori was indeed a project that fit BAI's core sector focus and the aesthetic standards of founding and managing partner Annabelle Long. BAI had systematically built out its fintech theme since 2014, once publicly releasing data showing: investments in over 20 companies, more than half of which became sector leaders, 10 achieving scale profitability, 7 growing into unicorns, and 7 becoming listed companies or in the process of going public.

Years on the front lines gave BAI a distinct feel: in all these years, no fintech product or project in overseas emerging markets had a model that hadn't already appeared in China. China's fintech capabilities are globally leading and exportable, and the reasons this capability formed are impossible to replicate. Exporting China's fintech advantages to overseas emerging markets has always been the most important logical origin point for BAI's global fintech investing.

Source Code Capital: Three Consecutive Early Rounds

Another Chinese institution that invested in Mexico early (primarily in Stori) is Source Code Capital.

Financial technology innovation in emerging markets contains substantial opportunity, and it's one of the sectors Source Code focuses on in its outbound strategy. The firm began exploring and practicing in this area in 2017.

Along the "Three Horizontals, Nine Verticals" investment map under its "Global+" theme, the firm has covered fintech, e-commerce, lifestyle services, and other sub-sectors in key regions, investing in outbound companies including OPay, Zenjoy, Panpay, Stori, and Xingmai, accumulating experience in team building, sector research, and on-the-ground due diligence.

GGV: The Key Player in Pushing the Unicorn Across the Finish Line

Beyond the investors mentioned above, another enthusiast for Mexico is Hans Tung, managing partner at GGV (formerly known as GGV Capital), whose portfolio includes Xiaomi, Wish, and Xiaohongshu. According to sources close to the matter, besides focusing on North American investments, Tung has also been traveling frequently to Mexico in recent years, having invested in at least four projects there. Based on public information, Clara Card, a corporate credit card and expense control platform and unicorn, is one of them.

GGV led Stori's $125 million Series C in November 2021 and continued to invest in the $150 million C+ round in July 2022. These two investments were critical — afterward, the company's valuation broke $1.2 billion, successfully achieving unicorn status.

In September 2023, GGV announced its split into US and Asia institutions, becoming two fully independent operating entities, with the GGV name, used for 18 years, no longer continuing.

In Stori's latest funding round, the co-lead with BAI was Notable Capital (GGV's US brand).

As a US-based fund, Notable's investment stage in Mexico remains relatively late. This seems to confirm an earlier observation by one investor about Mexico's VC ecosystem — no more than 20 local VCs can only invest up to Series A, while US mega funds prefer later stages like Series C, and "$15-20 million Series B rounds are a massive vacuum."

And this may precisely be where Chinese VCs have their opportunity.

Waves is recruiting fellow travelers to join us in the regions we're tracking. If you're interested in globalization themes, we invite you to scan the code and participate in the Waves Odyssey survey. We look forward to pooling our insights to build an interactive, exploratory "globalization travel" community.

Image source ｜IC Photo