Contxto – In Peru, the government is making efforts to further develop its startup ecosystem. One of the strategies it’s preparing is the launch of a fund of funds for Peruvian entrepreneurship. The Development Bank of Peru (better known as the Cofide) is handling this task and hopes to unleash this investment vehicle “soon”. 

The objective of this fund of funds is to satisfy the need for startup financing in the country. To achieve this, funds would be placed in private venture capital (VC) firms for disbursement. 

Delays, imprecisions, and intentions

The Cofide had previously stated that this fund of funds would be ready before 2019 was over. But it looks like things have changed. Now the Cofide aims to start exercising this resource by the end of 2020 and into the start of 2021.

On another vague note, the targeted amount for this fund is unspecified.

What is more certain is the type of startup this organization wants to support.

Obviously they’re interested in those that show potential in impact and growth. But more specifically, through this fund of funds, authorities want to scale startups that are in the “going to market” phase. 

Moreover, this financing strategy for startups also has a less apparent goal: to stimulate the VC scene in Peru.

Striving for startups

When you take a step back and look at this fund of funds strategy in a larger perspective, the overall goal is clear. 

Peru wants to stimulate startup growth throughout all phases of their development. 

First, there are government seed funding initiatives like Innóvate Peru for budding projects. Followed by Startup Perú’s offering of favorable loans for entrepreneurs to continue operations. Now, we have this fund of funds which eyeballs more mature startups going to market. 

Beyond all the general ambiguity, my hope is that the Cofide will at least get a less confusing name.

If all of this sounds like deja vù to you, in a way, it is. In Colombia, President Iván Duque announced the release of a similar fund of funds for US$38 million last November.

Related article: Colombian president reveals US$38 million Fund of Funds for Orange Economy startup development

These fund of funds scramblings show the need for more VCs in their respective countries. Since investors aren’t being drawn in organically, the way it’s been in places like Brazil, authorities and entrepreneurial associations take matters into their own hands; a welcome development, even though it does not seem to be smooth sailing so far.