1Mby1M Virtual Accelerator Investor Forum: With Cristobal Perdomo of Jaguar Ventures (Part 3)

Sramana Mitra: Are you seeing B2B SaaS in Latin America or is that not so much a trend? Is the trend more towards transaction-based marketplaces and FinTech?

Cristobal Perdomo: FinTech, across the world, is a hot topic. It has become too hot for my taste. That’s the largest sector of ventures you see. I also see SaaS B2B. We have another company that does Spotify for business.

The problem with Spotify is, so much of every dollar goes to licensing. You’re doing selection of music a la carte. When you create a playlist, the equation reverses. Instead of paying out licenses of 90 cents for every dollar, here you’re paying 10 cents for every dollar.

That’s one B2B subscription model that we invested in. We see invoicing services and marketing talent services.

Sramana Mitra: What are the key trends that you see in your deal flow? It sounds like you have deal flow all over Latin America. What are the trends?

Cristobal Perdomo: It varies by country. FinTech is the major trend all over Latin America. Probably 90% of those are lending-based.

Sramana Mitra: That’s a very big trend right now.

Cristobal Perdomo: There’s very little differentiation. One thing that I hadn’t really thought about is direct to consumer just because we didn’t understand how the model works. It’s completely different. It’s a branding model. They usually go to industries where margins are very high. There are incumbents that are milking consumers. People are fed up with that.

You also solve the problem of deciding which is the best product. You’re relying on the brand to give you three options and you know that those are really good. They might not be the best, but they’re good enough for most people.

We have one investment in Mexico. It’s a Warby Parker clone. Their margins are just amazing. Unfortunately, I haven’t seen as much as I would like, but I haven’t seen that elsewhere. We have another company doing EdTech in Colombia, which is surprising.

In Argentina, it’s broader. In Chile, you see more B2B because you have a lot more established companies that are willing to pay for those services.

Sramana Mitra: Interesting. What about Colombia?

Cristobal Perdomo: Colombia is very interesting. It’s a medium to large-sized country where there’re zero VC funds. All the funding is done by four investors who are family offices. Rappi has been the flagship company of Colombia for the last three years.

You see how successful they are in capturing funding from Sequoia and all those large funds. A lot of the hot startups in Colombia have some connection to Rappi. Either they’ve been funded by the founders of Rappi or introduced to YCombinator or some US investor.

Sramana Mitra: What is your assessment of the numbers? How many startups are operating in these countries right now?

Cristobal Perdomo: Through our first fund, we invested in 10 companies. We saw around 1,150 companies for that.

Sramana Mitra: You have a sense of what percentage of the total population of companies that would be?

Cristobal Perdomo: It’s a fairly large size. The problem you have in Latin America is that there isn’t a lot of capital. You will find that almost every entrepreneur, at some point, will get to you. If you setup Mitra Ventures tomorrow, you’ll probably get 90% of the startups.

Sramana Mitra: Those 1,200 companies in the first fund probably represent 90% of the total deal flow in Latin America.

Cristobal Perdomo: I would say so. The number of companies is growing tremendously. Of those 1,200, we saw probably half of those last year. In terms of how much funding is spent per user, the figure is around $230 per user in the US. For China, it’s $80. For Latin America, it’s $2. 

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Cristobal Perdomo of Jaguar Ventures
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