1Mby1M Virtual Accelerator Investor Forum: With Hernan Kazah of Kaszek Ventures (Part 2)

Sramana Mitra: When you look at the last decade or so, besides MercadoLibre, what are other notable success stories from the Latin American market as far as startups are concerned.

Hernan Kazah: There’s one company called Globant.

Sramana Mitra: We covered Globant quite extensively actually.

Hernan Kazah: There are two companies in Brazil. One is Status which is kind of an ERP, which was created from mergers of several small companies in Brazil. There’s a company called Lynx that helps businesses connect for B2B offerings. That company became public two years ago. Then there are other large companies. One is a company in the travel space called Declare. It’s probably the largest travel agency today in Latin America.

There is a company in our portfolio called Netshoes. It’s a sporting goods retailer and expanded into other verticals like clothing, apparel, and fashion. A new company that is having tremendous traction is NuBank. It’s an online bank in Brazil. There are a few good companies in our portfolio.

Sramana Mitra: If you were to summarize the trends that you see, how do you synthesize the trends of the industry?

Hernan Kazah: The companies that are gaining traction are companies that are working on local friction points – things where being local gives you an edge versus being global. That wasn’t the case of MercadoLibre. It’s global but it wasn’t the case when we started the company. We added global platforms with functionalities and faster speeds. You need to get access to local suppliers. You need to have a local payment. You need to solve local logistics. You need to solve fraud. There was a reason why you had to be local.

In technology, there is never an absolute competitive advantage, but being local gave you an edge. Those are the businesses that I see growing. When you look into some of the companies that we have in our portfolio, we have a company that does tax-filing for Brazilian businesses. When you think of Netshoes, you have to source your products locally. You have to ship them locally. You have to get paid locally. You have to finance that business locally. It’s a very local business.

Then there are several marketplace in real estate classifieds area. There’s a company that is in the long-term renting of apartments. You clearly need to connect local demands with local supplies. In our view, whenever you have significant reasons why a local player may succeed, that’s where good companies are emerging. So far, we haven’t seen global players from Latin America.

Sramana Mitra: Have there been exits besides MercadoLibre and Globant? Both went public in the US stock exchanges.

Hernan Kazah: There have been exits mainly focused on Brazil. We sold a few of our companies to global players that wanted to have local presence and who understood that local edge was important. For instance, we sold a company called Eventioz to Eventbrite. We recently sold a company called LoveMondays to Glassdoor.

There have been a few acquisitions. These are not so big except for those coming from Naspers. There were a few IPO’s. If you look at the size of the opportunity and the number of companies that have gone public or that have had significant exits, that’s where we see opportunities coming in the next five years.

Sramana Mitra: Just to clarify on the Naspers point, Naspers is a South African group that has been very active in the emerging markets in acquiring companies and have created a portfolio of assets across different sectors. They have been very active in India and Brazil. They have acquired companies in the online travel sector.

Naspers has provided exits to a bunch of startups in the emerging markets and has been a significant player. You’ll hear Naspers in other markets as well. This is a group that has taken this strategy. It’s worth noting.

The other question I have is on scale of these companies. How many of these have reached over $10 million in revenues? How many have reached $50 million plus in revenue? Are there any that are over $100 million in revenue in the companies that have been formed in the last decade?

Hernan Kazah: As you can imagine, it’s a pyramid. Those that are over $100 million in revenue are a few.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Hernan Kazah of Kaszek Ventures
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