(FOMIN) The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, has approved a $5 million equity investment in Velum Early Stage Fund I, a Colombian early stage venture capital fund that will provide long-term financing and value-added guidance on business development for up to 24 technology start-ups in Colombia.

Velum Early Stage Fund I is the country’s first private seed fund focused on technology start-ups. The Fund’s strategy will be to target companies in the Information and Communication Technology (ICT), Medical and Health Technology (MedTech), and Clean Technology (CleanTech) sectors. Target companies will be at an early stage, where the founding team has a minimum viable product and sales are lower than US$ 500,000. Given the concentration of technology companies in the city of Medellin, and that the Fund management is looking to create synergies among its portfolio companies, it is expected that at least 70% of its investments will be in companies based in Medellin.

“This Fund comes at a very important moment in the history of the venture capital industry in Colombia,” said Susana Garcia-Robles, MIF Principal Specialist and Team Leader for this operation. She added, “Efforts made by the government in recent years are beginning to show results, and entrepreneurs are now ready to grow their ventures through early stage financing. The MIF has worked with Colombian government agencies to develop the ecosystem, and we expect that in the coming years, Velum will inspire others to create similar funds to bridge the gap for dynamic entrepreneurs in Colombia.”

The MIF has an extensive track record investing in seed and VC funds in the region, and has pioneered the first efforts to build the industry in Colombia. All this experience will allow the MIF to provide relevant know-how during the fundraising and operational stages of the Fund. The MIF will also add value to the new fund’s managers by facilitating access to a network of practitioners and potential partners, and by promoting the use of international best practices, environmental, and social standards in the fund’s corporate governance.