7 Top Investors in Latin America Describe what Fuels the Region: (Part 2)

SoftBank, ALLVP, Fen Ventures, Founders Fund, Endurance, Volpe Capital, and Magma talk about the challenges and opportunities that lie ahead.

Latin American investor locations - Part 2
By Marcella McCarthy (EN)
August 18, 2021 | 10:04 AM

Miami — By Marcella McCarthy

In part 2 of this investor survey, we extended our reach to seven more investors in Latin America. Like the first batch, some are early stage and seed, while others look at more mature companies.

“To paraphrase Jeff Bezos, we’re still on day 1 in Latin America.”

Nathan Lustig

While the region has been on fire recently, many of the investors we spoke with still view LatAm as very nascent when it comes to startup activity, with plenty of opportunities to be discovered. While some see saturation in markets such as fintech, others think this is just the beginning. In fact, Nathan Lustig of Magma Partners in Chile has been keeping track of possible opportunities, “We have a big list of startups we’d love to see someone build, and that we’d love to fund. If any prospective founders are out there looking for ideas, feel free to reach out, we’d love to share some of our ideas,” he told Bloomberg Línea.

PUBLICIDAD

In the following investor survey Bloomberg Línea checked-in with investors in the region or those who invest in it, to learn how they see the LatAm startup ecosystem today and where it’s headed. This is a two-part series and part 1 can be found here. In part 2, the following investors participated:

Read here: 6 Top Investors in LatAm Describe what Fuels the Region

Part 2:

Shu Nyatta, Managing Partner, SoftBank Latin American Fund, U.S.

Federico Antoni, Founder, ALLVP, Mexico

PUBLICIDAD

Cristóbal-Silva Bengolea, Fen Ventures, Chile

Matias Van Thienen, Principal, Founders Fund, U.S.

Pablo Fernandez, Partner, Endurance Ventures, Chile

Volpe Capital, André Maciel, Volpe Capital, Brazil

Nathan Lustig, Managing Partner, Magma Partners, Chile

Shu Nyatta of Softbankdfd

Shu Nyatta, Managing Partner, SoftBank Latin American Fund, Miami

What industry sectors do you focus on within Latin America (and beyond)?

PUBLICIDAD

At the SoftBank Latin America Fund, we are all generalists. We try to identify special founders and companies that can keep compounding value for decades. Limiting ourselves to sectors may allow us to be a bit cleverer about certain things, but may also cause us to miss out on that truly generational company that falls outside an area of focus. I am driven by the founders and by curiosity, not by specific sectors.

What’s your latest, most exciting investment in the region?

We just participated in the IPO of VTEX, which is one of our portfolio companies. We believe the future of capital is going to be about flexibility - from early stage to public. We have made a few public investments already, including in IPOs. I also couldn’t be prouder of the first company from our portfolio to transition from a private startup to a publicly traded, global leader in e-commerce infrastructure.

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

PUBLICIDAD

We try not to pre-define investment opportunities or themes. There are lots of high-quality entrepreneurs solving all kinds of problems across the region. They are the ones defining the opportunities, not us. The best thing we can do is pay close attention, listen carefully, and be open to being surprised.

PUBLICIDAD

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

Whenever investors decide a sector is out of favor, new angles show themselves. E-commerce, one of the most established sectors in global venture capital, reveals new opportunities for value every year, everywhere in the world. We would never count a sector out. I sound like a broken record now, but everything comes back to the founders. Our job is to listen to them for their insights and to keep an open mind. Latin America’s adoption of tech-enabled products and services is in the early stages, meaning no sector can be considered “saturated.”

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

PUBLICIDAD

There’s a lot of entrepreneurial excitement happening around crypto, and Latin America is one of those regions where crypto isn’t just a technology - it’s being used to build real solutions to real problems. We’re very excited about what’s coming through the pipeline in crypto in the region.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

COVID is obviously a horrible tragedy. The good news, which is no longer news, is that digital-first businesses are thriving. And those are the companies we invest in. However, remote work has really stressed the cultures of every organization. With the flood of funding into LatAm, employees are being recruited by competing companies more than ever. Teams have to find ways to keep their employees engaged and energized.

PUBLICIDAD

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two?

Thankfully, I’m an optimist. Hope is never in short supply! My family and I are leaving San Francisco after almost a decade to live in Miami. It’s a sad goodbye to San Francisco, which has been an incredible place to live, but we’re extremely excited about the energy in Miami right now and look forward to contributing to the city’s rise in any way we can. And, of course, the flight to São Paulo and Mexico City will be much easier.

Federico Antoni, ALLVPdfd

Federico Antoni, Founder and Managing Partner, ALLVP, Mexico

What industry sectors do you focus on within Latin America (and beyond)?

PUBLICIDAD

We back formidable founders solving the hardest problems in Latin America. We focus on founders who share our vision to democratize access to services and fix large inefficient industries. For example, Cornershop scaled its unique on-demand marketplace from Chile to Canada; Nuvocargo enables thousands of cross-border shipments in the world’s most active trade corridor; Robinfood is building the largest network of ghost restaurants in the region and Yana is the world’s fastest-growing mental health app with over 6 million downloads.

What’s your latest, most exciting investment in the region?

Another exciting example is Flink, the largest free stock trading platform in Spanish-speaking Latin America, providing the first investment experience to millions of young Latin Americans. Only a few months after launching its service it surpassed in numbers of accounts all brokers in Mexico. We co-lead the A round with Accel.

PUBLICIDAD

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

We wish we saw more founders focus on solving problems in healthcare and education, extremely complex sectors, ready to be disrupted. Given the complexity of execution in these spaces, we believe that the teams that find product-market fit will have highly scalable and defensible companies.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

There’s been unprecedented capital deployed to challenger banks in the region. While there’s a clear opportunity to compete with banks, it’s hard to imagine there’s enough space to build huge companies targeting the same pool of middle class millennials. All this financing is positive on balance because it is pushing the sector forward. However, there are so many other problems in the region that urgently need entrepreneurial innovation.

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

The iconic startups in Latin America such as Nubank, Cornershop, Kavak and Bitso are all solving problems for consumers. The next great startups will probably come from companies building the OS (operating systems) of SMEs in the region. Providing millions of small companies with the technological tools to better manage their finances, workforce, marketing and logistics can unlock tremendous economic value for the region.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

With all the suffering and disruption brought by the pandemic, its impact in the tech sector is a bright spot. ALLVP has become much more agile and fast in its investment process. We have approved deals within days, without meeting the team in person and wire the money in a matter of weeks not months. We recently created the first Operator Network in the region to invite entrepreneurs we know and trust to all our rounds. These angel investors provide critical support to our portfolio companies in addition to what we do.

Given that capital is more readily available, finding the right talent to scale is the new bottleneck for our startups. This is a challenge not only for technical profiles but across the board. In this environment, entrepreneurs have realized how important it is to bring local investors to their cap table. In this era of US-based investors rushing to the region to seize our momentum, never has it been more important to build a team with Latin American VCs.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Working with founders that are moved by solving real problems for millions of people gives me hope. I’m never as thankful and energized as when I support humans like Andrea Campos, the extraordinary entrepreneur behind Yana, a mental health app that provides support to millions of Spanish speakers around the world. Her success will make our world better and I get to be part of that journey. I’m a lucky guy.

Cristóbal-Silva Bengoleadfd

Cristóbal Silva Bengolea, Managing Partner, Fen Ventures, Chile

What industry sectors do you focus on within Latin America (and beyond)?

We look for tech enabled companies solving real problems, pretty much industry agnostic but we tend to stay away from consumer, asset-heavy or social platform investments. What we’ve seen over the years is that the ecosystem is tightly related and grows more rapidly around the region’s major issues, and so as a result our portfolio has more representation of those areas such as Fintech, SaaS and biotech. Additionally, at our core we are a financial-first impact fund, so we focus on supporting companies that not only can provide financial return but also social or environmental return as well.

What’s your latest, most exciting investment in the region?

We are very impressed by the performance of our portfolio companies over the last 18 months, and thus it is very difficult to choose just one company. One of our most recent investments is Chipax, a SaaS company that focuses on serving SMEs across Latam to keep their finances under control. It’s a great tool that empowers business owners to understand beyond what their accountant is reporting to them, allowing better expenditure management and planning.

We have a number of companies in our portfolio that mainly serve SMEs with high-tech but easy-to-use and affordable solutions. This is particularly important around our impact motto: SMEs account for around 99.5% of the total companies in the region but, more importantly, give employment to 60% of the formal workforce (vs 47% in the US). By supporting companies that in turn help SMEs thrive, especially in uncertain times like the present, we hope to contribute to a stronger local economy and accelerate social development.

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

With the rapid growth the entrepreneurial and startup ecosystem is experiencing, pushing for a more widespread technology adoption, the population is becoming technology savvy at earlier ages than ever before. As a parent of four young kids, I would love to see more solutions targeted for this specific group, especially around traditional and financial education. Inequality is amongst the region’s biggest challenges, and even though we’ve come a long way in technology democratization it hasn’t penetrated equally. It’s great we are all looking to tap into issues we have now, but we should also be looking at what effects the rapid implementation might bring in the future, because there’s this huge risk of making the gap even wider by undeserving segments that need it the most.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

Fintech is an area that has been trending for the past years. I believe the baseline was so low that the opportunity seemed very attractive, so many players jumped on it aggressively. Having referents in other more developed regions certainly helped a lot in terms of inspiring the tech-based solutions we can access locally today, but unfortunately the regulatory framework is not evolving at the same pace. On top of that, since it’s a hot sector, there have been increasingly large funding rounds at early stages (many of them led by foreign investors) so you have money-fueled companies, a -still-big opportunity, but a somewhat uncertain regulation that should not be underestimated. My concern around it is that since even foreign investors are betting hard on the local sector there’s a lot of pressure for companies to execute and grow faster, which might push them toward acting in their self interest first rather than the user they intended to build the solution for in the first place.

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

There’s still a lot of room for growth in the ecommerce sector and the infrastructure that enables the growth of ecommerce. As everywhere else in the world, with the pandemic outbreak there was a massive technology adoption trend that forced many people that were used to buying offline to seek online alternatives.

Before the pandemic there weren’t as many merchants selling online as in the U.S. and Europe, and the ones that were, often served a poor CX (customer experience). We are increasingly seeing new startups around solutions for setting up online ecommerce websites, returns management, inventory and warehouse management, delivery optimisation, customer interaction and so on. With windtail from the fintech boost, prepaid debit cards emergence gave rise to a new layer of consumers previously left out, and with that I’m expecting an even more rapid sector growth and evolution.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

Fortunately for us, by the time COVID-19 made it to international news most of our portfolio companies had recently closed new funding rounds. This certainly allowed us to look to supporting them in ways aside from cash, which is something that we ultimately believe this industry must embrace more. If you asked me 10 years ago when I was in my early years in venture, I would’ve never thought of the idea of investing in a team without meeting in person. However, we managed to be one of the most active VCs in Latam during Q2 2020, by mostly closing all new investments. It was somewhat challenging getting used to it, but at Fen we saw it as an opportunity. Since then we have connected with many great investors and entrepreneurs from different parts of the world which made us expand our vision, which developed into what is becoming now our third fund “Fen III”.

Portfolio companies have, overall, definitely thrived through the pandemic, many of them even growing at double digit figures monthly! Currently our founders’ main concerns are around hiring and retaining top tech talent, which is a big challenge for local startups since remote hiring makes them compete with international companies for a still limited talent pool. This increased competitiveness in the tech talent market made it more expensive to maintain and grow their teams which partly explains the growing size of early stage financing rounds. My advice would be to look for people who value your company for what it’s doing and where it’s going, that won’t bail on you at the first side offer that comes up, and keep them motivated. This route may require you to put in additional effort on your end, but it will prove its worth along the way for sure.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Professionally, these last two months could have been the tipping point for the Chilean entrepreneurship ecosystem, with two massive events: the Cornershop acquisition by Uber and the Notco fundraising at a unicorn valuation. These two events confirm what we have been saying for years, that the Chilean entrepreneurs have all the talent needed to create big companies, big enough to justify a local venture capital industry to support them

Personally, I recently moved with my family to Miami to open Fen’s U.S. offices with the mission to support our portfolio companies in their expansion and fundraising efforts.

Matias Van Thienen, Founders Funddfd

Matias Van Thienen, Principal, Founders Fund, U.S.

What industry sectors do you focus on within Latin America (and beyond)?

We prioritize founder quality over all else. We will invest in any sector if a founder is exceptional.

What’s your latest, most exciting investment in the region?

We invested in Kavak, a full-stack marketplace for pre-owned cars. The most exciting aspect of Kavak, similar to many of the largest & most compelling startups in the region, is that it’s solving a much deeper pain point than exists in the U.S. In Mexico, only 5% of used car purchases are financed and 40% of all transactions involve some type of fraud. Kavak is building the financial & logistical infrastructure, as well as the trust, for Mexican consumers to buy and sell used cars confidently and seamlessly for the first time. While it’s much harder to build fundamental infrastructure in a market that lacks it, the competitive moats that form if you succeed are incredibly valuable. We’re confident Kavak will be the clear leader across global emerging markets within the next few years.

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

We’d like to see more companies with a global ambition rather than just addressing Latin America. We’ve seen extraordinary companies like Auth0 and Mural take that approach and would like to see more founders build products for a global audience.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

Nubank, which was Founders Fund’s first large investment in Latin America, has announced they have over 40 million customers in the region, so we are generally wary of other emerging consumer neobanks with no clear differentiation. Other than that, we generally stay away from categories with low barriers to entry which tend to result in costly capital wars.

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

Given the pandemic’s impact on e-commerce adoption, we’re seeing an immense tailwind for companies that better serve consumers and merchants, ranging from social commerce to infrastructure and logistics. Of these, the social commerce space is likely to get the most attention given the potential to generate a new generational consumer platform.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

While at first it took our team some time to get used to evaluating founders without being able to meet in person, it has not affected our investment strategy. We remain focused on backing extraordinary founders tackling the world’s most important problems. My advice to our companies is to think rigorously through the challenges and opportunities around hybrid/remote work and find the approach that best enables them to fulfill their mission without resorting to imitating what others are doing.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

I recently met a founder in São Paulo who told me I was the first person he’d met other than his family since the start of the pandemic 14 months ago, which made me happy that we’re starting to go back to normality, especially in countries that were even harder hit by COVID than the U.S. In that light, planning our upcoming wedding in Colombia has filled my fiancé and I with hope, knowing that people are eager to resume human connections in person.

Pablo Fernandez of Endurance Venturesdfd

Pablo Fernandez, Partner, Endurance Investments, Chile

What industry sectors do you focus on within Latin America (and beyond)?

Up to now we have been pretty open in terms of industries. We have done investments in foodtech, agtech, medical devices, Saas platforms, IoT, and more. What do they have in common? Besides amazing teams, all of these startups have a strong tech-science based solution, most of them are in the B2B market and are in industries with strong relevance in Latam.

What’s your latest, most exciting investment in the region?

Our last investment was in The Live Green Co, a company developing a technology based on Ai to develop plant-based functional ingredients to create clean labels of different products. They also have their own products such as vegan ice cream, burgers, protein bars and such. We are about to announce a new investment in a company that will revolutionize the online psychology industry, combining a marketplace with Ai based tools to improve the perfomance of the psychologies and allow the patients to have a better experience.

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

Every year we see more and more Latam companies joining YC and others accelerators in the U.S. and Europe. Most of them are digital startups, adapting the U.S. business model to Latam. I’m missing science-based startups in areas like biotech, considering that Latam has some unique conditions (highly qualified human capital, extreme biodiversity, good research centers, etc).

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

We are pretty bullish about Latam as a whole and have confidence that there are plenty of opportunities in every industry. Having said that, there is a proliferation of copycats startups that don’t necessarily focus on the real problems of the region.

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

We continue seeing space for fintech to grow in Latam, but the new hot topic will definitely be biotech. Foodtech and Agtech have a lot to offer, given the demand for more sustainable and green production.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

The pandemic accelerated trends that we were observing in the last years, this helped us to confirm our thesis that tech will disrupt every industry, especially in places like Latam. Also remote work has been a way to capture talent in different places and allows companies to hire more diverse teams. The main concern of our founders is the negative impact that this pandemic is having on the economy; we have a strong B2B portfolio but the majority of SME are having a bad time.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Watching both the Euro Cup and Wimbledon being crowded with fans made me feel hopeful, there is a light at the end of the tunnel.

Andre Maciel, Volpedfd

Andre Maciel, Volpe Capital

What industry sectors do you focus on within Latin America (and beyond)?

Fintech, Edtech, Health tech, Software

What’s your latest, most exciting investment in the region?

We have a few, Uol Edtech, a leading digital education player, has been growing with outstanding margins. Caju, one of our new investments in the benefits segment, grows like a rocket in a very large addressable market.

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

We would love to see more deep tech or biotechnology players. The region is still light on technology development, although large on technology usage

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

We don’t see any. The region is still starved for capital.

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

B2B software. Businesses in the region are still in the early stages of cloud adoption and full digitalization.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

It has accelerated digitalization in the region. Overall, we see markets as more mature for widespread technology adoption. Key focus area for our founders is to move quickly and try to capture their respective market opportunities. We believe capital will continue to flow to technology companies in the region and companies that move more quickly will have an advantage. Our key advice has been for our companies to focus on excelling in their main product and capture that opportunity, before moving to other fronts.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

It has been nice to watch life resume somewhat at the Olympics. It is always inspiring to see the dedication and what it takes to be an Olympian and in many cases, a full four years of dedication for a few hours or minutes of competition.

Nathan Lustig, Magma Partnersdfd

Nathan Lustig, Managing Partner, Magma Partners, Chile

What industry sectors do you focus on within Latin America (and beyond)?

We’re probably best known for our fintech investments, but we invest across many sectors, including fintech, prop tech, insurtech, api infrastructure, marketplaces, SaaS, logistics and more.

What’s your latest, most exciting investment in the region?

Some of our most recent investments have been:

Neivor - SaaS + fintech to manage Latin America’s apartment buildings

Quansa - Financial education products for Latin America

Zenda - Freemium health insurance for Mexico

Are there startups that you wish you would see in the region but don’t? What are some overlooked opportunities right now?

Yes, we have a big list of startups we’d love to see someone build, and that we’d love to fund. If any prospective founders are out there looking for ideas, feel free to reach out, we’d love to share some of our ideas. Overlooked opportunities in Latin America are the underestimated founders, those who didn’t go to a top U.S. university and don’t have access to U.S. capital markets generally until Series B.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup in LatAm? What other types of products/services are you wary or concerned about?

To paraphrase Jeff Bezos, we’re still on day 1 in Latin America. There are still so many opportunities to solve the region’s big problems.

Fintech’s have had a phenomenal year so far; what other sectors do you envision becoming “hot” next in the region?

As “tech” becomes “the economy” I expect more sectors to get hot like Fintech. Insurtech, logistics and vertical marketplaces are ones I’m keeping an eye on.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

With the exception of travel related startups, Covid-19 has been positive for technology startups. Large businesses in Latam that might have had digital transformation as priority 10 on their to-do list now have it as 1 or 2, which is moving latin america 2-10 years ahead, depending on the industry.

Most founders are worried about FOMO (fear of missing out) and building in a hyper competitive space as more funding comes into the region.

My advice would be, keep on executing, keep on problem solving, raise money from good partners and don’t get caught up trying to play the valuation game. Focus on the basics and execute your plan to solve Latam’s biggest problems.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Seeing more rounds being done by new entrants to the market that are also looking at underestimated founders with lots of traction. We can build an ecosystem in Latam that takes the best of Silicon Valley and mixes it with the best of Latam.