Invest Like The Best
Episode 296 Investing in Latin America
Invest Like The Best

Episode 296: Investing in Latin America

Invest Like The Best

Episode 296

Investing in Latin America

Julio Vasconcellos and Mate Pencz are partners at Canary and Atlantico. We cover the state of investing and business in Latin America today, the nuts and bolts of building a digital payments system for emerging markets, and the most interesting insights from their report on digital transformation in the region.

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[00:02:39] - [First question] - A broad perspective on what is interesting in Latin American investing today - Latin America Digital Report 2022

[00:05:15] - What makes up the existing 1.5% tech penetration index in Lat Am

[00:06:11] - Florian Hagenbuch, Mate Pencz - Everything Will be Bought Online (Loft); David Velez - Building the Branchless Network (Nubank); How important it is to parse by country when it comes to building businesses in LatAm 

[00:08:31] - Overview of LatAm as a microcosm of fintech innovation happening really fast and what is most exciting in that sphere 

[00:12:28] - Why the adoption of PIX was so successful and how it maps onto the banking system

[00:14:27] - What PIX’s widespread adoption will enable for the coming wave of entrepreneurs 

[00:18:30] - Demographics, GDP, growth rates, and inequality in LatAm

[00:22:30] - Shifting to remote work and how it’ll affect LatAm workers and talent

[00:25:25] - Macro tailwinds that matter when it comes to returns in these markes

[00:30:06] - What it feels like for an entrepreneur today compared to when Loft launched 

[00:32:36] - Deeper themes and what needs to be unlocked for LatAm’s tech sector to look more like the US or China with big tech giants 

[00:37:04] - The opportunity set in developing a software that serves small and medium businesses in LatAm

[00:40:12] - Sources of available funding for venture and private equity  

[00:42:54] - What valuations look like and whether or not there’s an entry multiple discount

[00:45:12] - Seeking evidence that crypto is used in more valuable ways in emerging markets 

[00:48:00] - Areas where LatAm is operating in a future state more so than elsewhere

[00:50:28] - What the right amount of global firm participation in capital partnerships looks like

[00:52:38] - Big standout lessons from their operating days 

[00:55:53] - What is most exciting and concerning about their investing style and investing writ large in LatAm 

[00:58:51] - The kindest thing anyone has ever done for Julio

Investing in Latin America

Introduction

Patrick
My guests today are Julio Vasconcellos and Mate Pencz, who are partners at Canary and Atlantico, leading early stage investment firms in Latin America. They're also both successful entrepreneurs. Mate is the Co-founder and CEO of Brazilian real estate unicorn Loft. Julio was Facebook's first country lead for Brazil, an entrepreneur in residence at Benchmark and the former founder of Peixe Urbano, which sold to Baidu. This conversation was a great opportunity to dive into the state of investing in business in Latin America today, and what the opportunity set looks like on the ground. Please enjoy my conversation with Julio and Mate.

The Investing Landscape of Latin America

Patrick
So Julio and Mate, great to have you both here to talk about the investing landscape in Latin America. It's one of those funny places that I have somehow never been really. I've never been in South America. I've been in Central America and have just developed a fascination with the whole region, with a number of amazing companies that have been built there, like Loft. Mate, you and Florian and I had a conversation before about what you're building there, but just more writ large, I think it's a great opportunity to talk about the entire part of the world, the interesting opportunities, the interesting challenges that present themselves there. So Julio, maybe I'll begin with you to just frame this whole thing for us, from your perspective. You're now running Atlantico Partners, which is a firm entirely focused in this region, and are one of the leading investors down there. Maybe you can just give your broad perspective on what is interesting about Latin American investing today, and then we'll go into tons of interesting data that you guys have put together on why it's so distinctive.

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