Kaszek Ventures, a venture capital firm based in Latin America, currently has almost $1 billion in funds raised earlier this year and is in a state of expectation that new deals will be concluded and that more mature companies will lose a significant portion of cash and potentially agree to revised estimates.
For Latin American technology brands, 2021 turned out to be a record year in terms of financing opportunities. Last year, the realities became more severe. The founders of technology companies in 2022 tried to cope with negative circumstances, but now they are faced with the need to balance growth and profitability. This was stated by the co-founder of Kaszek, Hernan Kazah, during a conversation with journalists.
The flow of venture capital company deals has increased this year. This firm, based in Sao Paulo, made only two investments last year. Since the beginning of this year, the company has sent funds to seven firms. Hernan Kazah expects that 2024 will be more successful. This week, the company announced a $13 million investment in Colombian financial technology startup Cobre.
Hernan Kazah says that firms are currently struggling to find the right model, the right unit economics, and the right balance between costs and growth. According to him, some firms will receive capital, possibly at a completely different valuation compared to the one they raised last time. Separately, he stressed that some companies will remain without funding.
Technology startups are currently in a difficult situation. These firms are experiencing a lack of financing, which was plentiful during a period of record low-interest rates and high liquidity. The current realities are more severe against the background of tightening the policy of central banks aimed at curbing the rapid growth of inflation.
In Latin America, the deterioration of the situation turned out to be more serious. In the first half of this year, the total volume of investments amounted to $1.7 billion. This indicator is 75% lower than the highs of 2021 for the same period. The relevant data were released by Lavca, a non-profit association of private investment in Latin America.
Kaszek was founded by former MercadoLibre executives Hernan Kazah and Nicolas Szekasy. In a sense, this company has defied the economic downturn. At the beginning of 2023, the firm raised $540 million for early-stage investments and $435 million for late-stage growth brands. In total, Kaszek managed to attract nine funds totaling $3 billion. The firm has supported more than 120 companies, including Nubank, a Brazilian fintech brand that went public at the end of 2021.
Hernan Kazah says that about a third of the funds raised two years ago remained in the fund, which should be fully utilized by the end of this year or the beginning of 2024.
In the absence of equity financing, many startups from Latin America are increasingly applying for loans at high-interest rates. Hernan Kazah says that his company does not offer a venture fund, but positively assesses it as an additional source of income.
During a speech at a technology event in Sao Paulo, the head of Kaszek said that he was particularly interested in startups developing climate technologies, and options for using artificial intelligence by business.
Hernan Kazah believes that the flow of deals should accelerate next year. Currently, Kaszek is considering six to seven deals with a high probability of closing. According to Ernan Kazah, founders adjusted their expectations and will receive funding on any terms.
As we have reported earlier, Mythos Ventures Raises $14 Million.