In a deep dive into the Latin American venture capital landscape, Nico Zaccasi, co-founder and managing partner at Kazakh Ventures, joins the 20VC podcast to share his journey from CFO at Mercado Libre to venture capitalist. Zaccasi highlights the evolution of the LatAm ecosystem, from the absence of a tech scene in the late '90s to the current surge in global investor interest and entrepreneurial spirit. He stresses the importance of building sustainable businesses with solid unit economics, rather than relying on capital as a competitive moat. Zaccasi also discusses the challenges of scaling Kazakh Ventures, emphasizing the firm's focus on early-stage investment and the strategic addition of an opportunity fund to support portfolio companies' growth. The conversation touches on the significance of local knowledge in venture capital, the role of empathy in board relationships, and the potential for LatAm startups to innovate globally, as demonstrated by companies like Notco and Bitso.
"So we haven't done a feature week here on 20 VC in a while, and when I was thinking what the... Focus for this feature week should be... It was quite obvious to me. My love and excitement for the Latam ecosystem is very well documented on Twitter. And so the answer was clear."
The quote outlines the rationale for choosing Latam Week as a feature on the 20 VC podcast, highlighting Harry Stebbings's enthusiasm for the Latin American tech ecosystem.
"This is LAtam Week on 20 vc, and there's no better person to kick it off today than our guest Nico Zakazi, cofound and managing partner at Kazakh Ventures, the largest venture capital firm in Latin America..."
The quote introduces Nico Szekasy as a significant figure in the Latam venture capital scene, with a notable background in finance and leadership roles at major companies.
"Mercury is building full stack banking for startups... Ripling helps fast growing companies automate their HR and IT systems..."
These quotes describe services provided by Mercury and Ripling, which are designed to support startups in their operational and administrative tasks.
"I just love using Angelist fund admin platform to manage my investments, the team and the platform at angel list. They take care of all my back office needs..."
The quote emphasizes the benefits of using Angelist's platform for investment management, highlighting its efficiency and comprehensive features.
"Before Cassec, I was part of the founding team, Marcado Libre, and that was hyper intense experience that led me to venture."
This quote explains Nico Szekasy's background at Mercado Libre and how the challenges faced there led to his interest in venture capital.
"It has impacted us in a very significant way. We don't back businesses that claim that they have capital as a source of mode."
The quote highlights the investment strategy of focusing on sustainable businesses that are not solely dependent on capital for survival.
"I was quite convinced that I would have more impact reinventing myself as an investor versus continuing as an operator."
This quote reflects Nico Szekasy's decision to transition from an operational role to venture capital to maximize his impact in the tech ecosystem.
"So if you allow me, I would go all the way back to the founding of Melly days and say that until 98, 99, there was nothing that could be called a tech ecosystem."
The quote provides insight into the nascent stage of the Latam tech ecosystem during the founding of Mercado Libre, setting the stage for its evolution to the present day.
"When we raised money at Melee, there was not even one VC firm that was operating out of La Tam." "This year we raised a billion." "90% want to become a founder or join a startup."
These quotes highlight the transformation of the Latin American startup ecosystem over two decades, including the shift in career aspirations towards entrepreneurship.
"So it was not so hard. It was fully built on a leap of faith on our past as operators, entrepreneurs, and our potential to transition into investors."
This quote explains that the successful fundraising for the first fund was due to the founders' credibility and the investors' faith in their potential.
"And every investment, the bar is that it will become a fund maker." "It is hard to scale, sometimes these teams, to make sure that they are fully available."
These quotes discuss the investment philosophy and operational challenges faced by Cassec in scaling their support for portfolio companies.
"What is concerning is that some spaces get very crowded and there are way too many companies going after the same opportunity."
This quote reflects concerns about the negative effects of too much competition and capital in certain market segments.
"This ecosystem has evolved in such a great way that the region is now generating global innovation leaders."
This quote defends the innovation and originality in the LA Tam startup ecosystem, countering the copycat criticism.
"The US markets, how do you respond to access to public markets when questioned by lps?"
This quote brings up the issue of exit strategies for LA Tam startups, particularly regarding public markets. The implication is that there has been progress since 2011, with companies like Newbank leading the way.
"Every one of our portfolios, the companies have raised billions and billions of dollars after we have invested. So there's plenty of interest."
This quote highlights the success of follow-on funding for portfolio companies, demonstrating investor confidence and a thriving ecosystem.
"We pioneered with melee 2007. There was really nothing there and we thought there were going to be plenty of ipos following us."
The speaker references their early involvement in IPOs, setting a precedent for future listings which have since become more frequent.
"We talk to something like 200 companies for everyone that we invest in."
This quote emphasizes the thoroughness of the selection process and the importance of understanding each founder and company before investment.
"The founders call you first because they want to hear your perspective on a matter, and they trust that you will give them the best advice that you have."
The quote underlines the importance of being the trusted advisor to founders, especially in times of crisis or opportunity.
"What they need is someone that is going to be there to try to calm things down and to help everybody get out of the mess."
The quote illustrates the board member's role in providing a calming influence and practical support during crises.
"You're there to help. You need to understand that your support cast. You're in the passenger seat."
This quote highlights the supportive nature of the board member's role, emphasizing guidance over direct control.
"Sometimes you will never get there because there are some skills that you don't have. In those cases, stay on the sideline."
The quote acknowledges the reality that investors may not always have the necessary expertise in every discussion and should allow those who do to lead.
"Whenever a team is amazing, but there's something that you don't like, so make sure that you follow up and you stay close."
This quote advises investors to maintain involvement with high-caliber teams, even if initial impressions are mixed, to not miss out on their evolution and potential.
"We try to put everything together within the tea leaves and see what we come up with and our own conclusions."
The speaker suggests that while references contribute valuable insights, investors must also rely on their judgment and synthesis of information.
"So we are fully convinced that we are first and foremost an early stage investor. And for that, there's a certain size of fund that has a limit to ensure that you stay very effective and you continue to produce outsized returns."
This quote highlights Kazakh's commitment to early-stage investing and the belief that maintaining a certain fund size is crucial for effectiveness and high returns.
"I basically remember how much I enjoyed reading his very complex short stories that were written with so much beauty and precision."
Nico reflects on his enjoyment of Jorge Luis Borges' writing, illustrating his appreciation for complex and beautifully written literature.
"One key strength is probably an ability to see what is important even in the most complex or even anarchic situations that we see so often in startups."
This quote underscores Nico's ability to identify key elements in startup environments, which is a valuable skill in venture capital.
"Italy ended up winning, beating Germany in the final three to one."
Nico provides a specific historical sports fact, showcasing his memory for sporting events.
"I would say to others something like it is very important for your physical and mental health, but even for the quality of your work that you fully disconnect from work every now and then."
The quote reveals Nico's awareness of the importance of work-life balance, yet also his difficulty in applying it to his own life.
"Founders, founders. It's all about founders."
This quote emphasizes Nico's belief that the core of venture capital success lies in the quality and capabilities of the founders.
"We're very excited because Bitso is the leading crypto platform in Latam. They have an incredible team, exponential growth, amazing company."
Nico expresses enthusiasm for Bitso's position in the market and growth potential, justifying the investment decision.
"I think this is slowly happening, but in an industry that has been so Silicon Valley centered for decades, I would love to see more and more local funds around the world leading more of their early stage investments in their countries."
This quote indicates Nico's desire for a more geographically diverse venture capital landscape, moving away from the traditional Silicon Valley dominance.