Marcelo Claure: SoftBank Champion for Latin America

SoftBank's Expanding Investments in Latin America

SoftBank has demonstrated a significant interest in startups operating within Latin America. Beginning with initial investments announced in early 2019, the Japanese conglomerate has channeled over $5 billion into the region's startup ecosystem. Projections indicate this figure will exceed $8 billion before the end of the current year.

Impact of Capital Infusion

These substantial capital contributions are having a noticeable effect. In 2019, Latin American startups collectively secured $5.3 billion in funding, as reported by CB Insights. The following year, 2020, saw a similar level of investment, with approximately the same amount raised.

Accelerated Deal-Making

The rate of investment has markedly increased this year. During the first half of the year alone, $9.3 billion was invested in startups across Latin America. Marcelo Claure, CEO of SoftBank Group, anticipates annual investments in the region will approach $30 billion by 2023.

Regional Significance

“The global market is now recognizing the substantial size of Latin America,” Claure stated during TechCrunch Disrupt 2021. He emphasized that the region’s market size is comparable to that of China, being half its size, yet surpasses both India and Southeast Asia, being twice and three times larger respectively.

Economic Indicators

Claure also highlighted the growing economic prosperity within the region. Latin America’s GDP per capita, ranging from $9,000 to $10,000 annually, aligns with that of China. This figure represents a threefold increase compared to India and a doubling of the income levels observed in Southeast Asia.

Opportunities for Disruption

The combination of existing challenges – including bureaucratic processes, healthcare reform needs, educational gaps, and transportation issues – creates an ideal environment for disruptive innovation, according to Claure. These factors present opportunities for startups to address unmet needs and introduce novel solutions.

Kavak as a Case Study

Claure referenced Kavak, a Mexico City-based used car marketplace valued at $8.7 billion following a funding round led by General Catalyst, as an example. Kavak’s success illustrates the potential for innovation within the region.

Addressing Real-World Problems

Previously, selling a car in Mexico involved risks such as meeting potential buyers at one’s home, raising security concerns, or arranging meetings in public spaces with potential safety hazards. Kavak directly addresses these issues, providing a secure and convenient platform for vehicle transactions.

Education and Investment

The co-founder and CEO of Kavak, Carlos Garcia Ottati, holds an MBA from Oxford University. This prompted a question regarding whether investors tend to favor founders with degrees from prestigious international institutions, a concern raised by a local venture capitalist with TechCrunch earlier this year.

SoftBank's Investment Philosophy

Initially, Claure asserted that the preference for founders with elite educational backgrounds is primarily observed among U.S. investors. He stated that SoftBank does not share this bias.

“We are deeply rooted in Latin America, with offices in São Paulo, Bogotá, Mexico City, and Miami. Miami functions as an extension of the region, allowing us to identify and support a diverse range of founders,” Claure explained.

Acknowledging a Trend

However, Claure later acknowledged that over half of SoftBank’s portfolio companies in Latin America were founded by graduates of either Stanford or Harvard who subsequently returned to their home countries. “These founders were able to leverage successful business models and build strong local teams, providing a demonstrable competitive advantage.”