San José, Costa Rica, since 1956

‘Angel Investors’ Lend Hand to Tech Startups

It was 4 p.m. on a Friday afternoon in east San José and the power was out – not a good thing for a budding software company. The dozen or so employees at Fair Play Labs wandered to and fro in the semi-dark, waiting, while the servers kept humming on juice from a car battery.

Owner Claudio Pinto sat in the conference room, unfazed, power outages being one of those manageable obstacles of trying to run a business in Costa Rica. He seemed to think it was worth the hassle.

“In Costa Rica, there is enormous talent in software and digital art,” Pinto said, explaining with a grin that this is his second software startup and he is ready to “go through all the fun again.”

But in this small country, entrepreneurs like Pinto face a bigger challenge than the occasional power outage: To get started, they need money.

It’s harder than it sounds. Because they have no infrastructure to offer as collateral on a bank loan and they aren’t big enough to draw the attention of large private capital funds, startups like Pinto’s fall through the credit cracks.

What’s a guy looking for $300,000 supposed to do?

A new initiative backed by the Inter-American Development Bank is looking to answer that question and to jump-start an entrepreneurial culture in Costa Rica in the process.

Link Inversiones (part of the Link Project, connects people like Pinto with a network of investors who are interested in swooping down from on high to plunk a large pile of cash in the lap of a promising entrepreneur with a high-tech idea.

Not surprisingly, such people are known as “angel investors.”

“It was just friends, family and fools,” Pinto quipped. “Before the angels.”

After 18 months of operating in Costa Rica, Link Inversiones has a network of 35 investors and has channeled nearly $1 million in capital to three high-tech startups, one of them Fair Play Labs.

Angels To the Rescue

Angel investing isn’t entirely new to Costa Rica. By definition, anyone with a little money can be an angel investor. It has obvious drawbacks, however, for the people seeking investment.

“If you’re just doing pure angel investing, (the entrepreneur) might have to knock on 50 doors and it might take you two years,” said Diego May, the director of Link Inversiones.

May calls what Link does “structured angel investing,” which at its most basic level is networking.

On one side, the program draws together a group of angel investors and vets them with each other to make sure they are sophisticated, serious investors, and that they understand the risks of angel investing.

On the other side, the program advises entrepreneurs seeking investment how to present themselves to their potential partners.

The angel investors do their own due diligence, then invest in the entrepreneurs that present the most promising ideas and give advice to the ones that don’t.

“I think most of the entrepreneurs who have come in contact with the group have found the experience very positive, even the ones that haven’t gotten investment,” said Francis Carlow, a Scottish businessman retired in Costa Rica who joined the Link Inversiones network a year ago.

Pinto’s idea is one of three that have been successful so far, and Fair Play Labs pulled down $300,000 from 14 investors to work on three projects. The first is a fairly straightforward outsourcing operation in which the company writes programs and does graphic design for toy digital cameras marketed under the Disney brand.

The second and third are a little more adventurous and include the manufacture and marketing of a chess-like game called “As Majesty” (playable online at www. and the design of an actionadventure video game called “Ecovolution.”

“The fundamental message of the game is that we’re abusing the world’s natural resources and there is an urgent need for balance,” Pinto said of the Zelda-like fantasy game.

The game will include elements of Costa Rica’s famous biodiversity, for example a nature spirit named Baula that is modeled after the leatherback turtle that nests on the country’s beaches.

Pinto plans to have the game ready by next summer.

The two other ideas that have received investment are the Heart Transverter, a hightech energy-saving device, and online Spanish lessons proposed by Lejos Learning.

Though money may be the primary reason these entrepreneurs come to Link, it’s not the only one. Angel investors are often themselves business leaders and CEOs, “people who feel they are at the stage where they can add some value to the coming generation of entrepreneurs,”May said.

That means they have their own networks that Link entrepreneurs can plug into.

Many of the investors take an active role in the management of the company by sitting on the board of directors.

“People asked me, why didn’t you fund yourself? But I wasn’t just looking for capital,” Pinto said. “I was looking for partners in every sense of the word.”


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