Unicorn Rainmaker Amasses $1 Billion for Latin America Startups

VC firm has invested in nine startups worth $1 billion or more

Ezra Fieser
Jun 18, 2021

As lockdowns started to sweep across the globe lastyear, venture capitalist Hernan Kazah sent an ominous message to his portfolioof Latin America tech startups: cut costs and preserve cash in what Kazahthought would be an all-out effort to survive the pandemic.

Now just over a year later,Kazah is less concerned about the survival of the region’s burgeoning techscene than he is with how to spend the $1 billion of cash his firm just raised.Because rather than decimate startups, the lockdowns boosted sales for techcompanies as customers tapped into their phones to do everything from orderfood to bank online as the spread of Covid-19 kept people at home while takingits tragic toll.

Kaszek Ventures, the venture capitalcompany Kazah and partner Nicolas Szekasy founded a decade ago after leavinge-commerce giant Mercado Libre, have already invested in a roster of so-calledunicorns, startups worth $1 billion or more.

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As the pandemic unfolded,they saw so many investment opportunities arise that they moved up plans bymonths to raise new funds that will be used for investments in startups incoming years, Kazah said in an interview this month. The result was the biggestventure capital round in Latin America’s history, in another sign the regionhas catapulted from an innovation backwater to an emerging region for theworld’s tech investors.

“The start of the pandemicwas horrible. Companies had to recalibrate and adjust. But then a month and ahalf in, we saw the opposite: demand kept increasing and increasing,” Kazahsaid. “It accelerated so much and there were so many really great investmentideas that we really didn’t want to be left without dry powder.””

Pandemic Deals

Venture capital investments held strong in LatinAmerica in 2020

Source: LAVCA

While Latin America has been one of the hardest-hit regions in the worldby the pandemic, that has hardly made a dent in the pace of venture activity.Last year, investors rang up a record number of deals while pouring more than$4 billion into startups for a second-consecutive year, according to theAssociation for Private Capital Investment in the region. The association,known as LAVCA, estimates first quarterinvestments were north of $2 billion.


Kaszek raised $475 millionit plans to spend on early-stage startups and $525 million for a fund that willbe largely dedicated to companies in which it has already made an investment.The funds were several times oversubscribed, with demand coming from across theworld, including strong interest from Asian institutions as well as investorsin Latin America, Kazah said.

Wesleyan University andCalifornia-based Sequoia Heritage are listed among its investors. Other backerswere not disclosed.

The demand may be partially explained by the firm’s track record ofpicking winners, with at least nine unicorns in its portfolio. Among them,Kaszek counts investments in Brazilian fintech Nubank, which is valued at $30billion after receiving an investment from Berkshire Hathaway, Mexican used carplatform Kavak and real estate firm Quinto Andar.

With its new funds, Kaszekwill target companies in which technology plays a fundamental role, Kazah said.He expects financial technology, or fintech, to continue to grow, as well ase-commerce and education companies. The firm looks at companies across Latin America,but will be focused on Brazil, Mexico and Colombia, he said.

After seeing a bannerperiod for initial public offerings on the Brazilian stock market, Kazahexpects “many companies” from Kaszek’s portfolio to go public in coming years.

With every portfolio itbuilds, the firm sees a “big group of companies” that it sells at costs orloses its investment, he said.

“At the end of the day ifyou build a portfolio just with successes, that means you’re not taking enoughrisks,” he said. “Whenever we build a portfolio of 20 or 30 companies, we havemaybe, if we’re lucky, a handful of big winners.”




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