Kaszek Ventures‘s portfolio includes great business stories, such as the ones being told by Netshoes, GetNinjas and MadeiraMadeira. Ex-MercadoLibre Hernán Kazah, who co-founded and, alongside Nicolás Szekasy, runs the firm that exceeded $ 1 billion in capital raising in less than a decade, is worried about his home country. “We always say that in Argentina there is good talent but we are world champions in muddying the field and changing the rules of the game,” sayd Kazah in a recent interview to Forbes Argentina.
Last September, Kaszek Ventures raised $ 375 million for a new fund dedicated to early stage projects and $ 225 million for more mature companies. Its main investments today are in Brazil, where they funded companies like fintech Nubank. In Argentina, they invested in startups such as Technisys, GoIntegro, Digital House and, more recently, Agilis.
According to Kazah, “in the late 90s, Argentina stood out. You had MercadoLibre [which he co-founded], Despegar, Patagon and Globant. There really was a good push from Argentine companies. Today, by far, the leader is Brazil, because it is bigger, but also because it has very developed capital markets”.
The venture capitalist says that the crisis in Argentina did not affect their business directly since the fund operates across Latin America. In addition to their office in Buenos Aires, they are also present in Montevideo and Sao Paulo.
Technology and macroeconomics
“Those offices are at full throttle, they can barely cope. Besides that, we focus on technology, which is a market that, generally speaking, grows regardless of macroeconomics”, he said. “Brazil, two or three years ago, went through its worst historical recession and, even so, our companies grew at 150% per year. So, technology isolates you a bit, but at the end of the day the macro reaches you, you can’t dodge it”.
Regarding the rise of the private capital markets, he declared that it is now huge, “and even players who only invested in the public market got into it. The good part of that is that the private market gives them more tolerance to long-term projects. There are some studies that say that the public market only values companies with a growth rate of up to 50% per year, so if you have a company that grows at 100% per year and another that grows at 50%, the public market values them both. Obviously, in the private market, they would value them differently.”
Kazah considers delivery apps a niche that is becoming overcrowded. “It is a very hot sector, which is still very hot, which received a lot of capital through several companies and which generated a very strong battle. For now, the only major beneficiary was the consumer. They finance everything. I mean: it is cheaper for me to have a coffee brought to the door of my house than to go and drink it at a bar. The current delivery landscape is not sustainable. They are burning capital. At some point some will die. I think it’s a market where entry barriers are very low.”
The entrepreneur alse remembered a deal gone sour: “One of the first companies we invested in was Netmovies from Brazil. They had the same old Netflix model: a video store by mail. They had grown, had good volume, and we were helping them with the streaming platform, but as a long-term project. In this business it is very easy to predict what will happen. The difficult thing is to predict when.” For him, many companies failed in the 2000s because they had gone ahead of their time “Their model was not ludicrous, they were just born 10 years earlier. So we failed. We waited and suddenly everything changed. Netflix was brutal and Netmovies did not prosper.”