Latin America on Globe

Kaszek Ventures is a popular investment firm that has caused a huge growth and financing in Latin America. Now, the firm has raised $600 million in two funds. Therefore, this new investment puts the total capital of the firm at $1 billion, making it the first local-stage investor to achieve this.

Nicolas Szekasy and Hernan Kazah launched Kaszek Ventures around eight years ago, in 2011. Since the inception of the firm, the startup ecosystem of Latin America has undergone a renaissance. The investment in the region increased to $2 billion in 2018. However, most of the growth has come from the Kaszek Ventures portfolio companies, including Konfio, the Mexican business platform; Loggi, the Latin America logistics company; Gympass, the provider of corporate-sponsored gym memberships; and Nubank, the Brazilian credit company with a valuation of $10 billion.

The growth fund of the firm is a reinvention of Latin America’s most popular startup, MercadoLibre. The former chief operating officer of the region’s leading e-commerce market launched the firm to see if they could succeed as entrepreneurs from the other side of the table. Their wisdom and expertise have made the valuation of the company since their time running to $29.2 billion. “We believed that we could identify many MercadoLibres in the market,” states Szekasy, “I thought I would have a greater impact if I worked on the investing side.”

The first fund given to the company was a modest $95 million investment. However, this fund proved to show great potential for outsized returns in the market. The first company was Nubank and Kaszek was the first to invest in the company when it was almost a pitch deck.

David Velez, the CEO of Nubank, talks about the decision, “They had experience in expanding a company to multiple countries.” In the starting days, Kaszek Ventures partners performed all stages of the company’s growth, like hiring recruits from different countries. They also hired managers from different regions. Velez says, “They were quite active and are active even now around marketing. They helped us to make our website and also come up with different marketing strategies to increase customers.”

The local knowledge provided by Kaszek added to the global perspective Sequoia brought to the equation, says Velez.

Kaszek Ventures also benefited another company called NotCo. The co-founder of the company, Matias Muchnick notes that it was quite a positive experience and their network expanded beyond Chile to Latin America. Originally, Munich was introduced to a professor at Stanford University. Later, the professor put Munich in contact with Bezos Expeditions and the firm invested.

The standout from the firm’s $200 million third investment is NotCo, a food company with a range of products including vegetarian ice cream, meat patties replacement and mayonnaise. The company also got the attention of Jeff Bezos and the Bezos Expeditions Investment fund. The other two standouts are Credijusto, an online lending company that raised $42 million recently, and Kavak, a car marketplace.

Now, the firm has increased its stature with a close of $375 million funds and the first “Opportunity Fund,” which is a $225 million fund that will help the company maintain its stakes in later-stage companies. Kazah expects that the firm will invest in larger amounts in the companies, with roughly 30 new investments. Therefore, large rounds are becoming quite common in Latin America.

“We have been investing in Kaszek Ventures since 2011 and we are thrilled to continue this process,” said Du Chai, managing director at Horsley Bridge Partners, “Kaszek has been a great performer with the best-talented individuals.”

According to Szekasy, Kaszek’s success is due to the broader macroeconomic trends in the region. Szekasy says, “We were constantly looking at what was happening in China and Silicon Valley. We saw that Latin America was a good place with the right demographics and a place for new technologies.”

Softbank invested in Uber two years ago. Now, It has announced that it would create a Latin American fund to invest in the companies. Kazah thinks that the main reason that Latin America was lagging was the lack of technology along with the lack of capital in the region. Kazah says, “On one hand, Softbank provides capital. It also paved the way for others.”