Kaszek Ventures Secures Significant New Funding for Latin American Startups

Prior to the launch of SoftBank’s $2 billion Innovation Fund in Latin America, and even before Andreessen Horowitz’s increased investment activity in the region, São Paulo-based Kaszek was already actively investing in promising startups. This early commitment has resulted in the creation of nine unicorn companies to date.

New Fund Announcements

Kaszek Ventures has announced the closing of its largest fundraisings yet. These include Kaszek Ventures V, a $475 million early-stage fund, and Kaszek Ventures Opportunity II, a $525 million fund dedicated to later-stage investments. Kaszek Ventures V is considered the largest vehicle of its kind ever raised within the region.

Since its inception in 2011, Kaszek has invested in 91 companies. Collectively, these companies have secured over $10 billion in capital funding.

Founding and Team

Kaszek was established a decade ago by Hernán Kazah, a co-founder of MercadoLibre, and Nicolas Szekasy, the company’s former CFO. The firm’s name is a portmanteau of their surnames – Ka-Szek.

The team also includes Nicolas Berman, previously a VP at MercadoLibre, alongside Santiago Fossatti, Andy Young, and Mariana Donangelo.

Fund History and Growth

Kaszek’s initial fund, launched in 2011, raised $95 million, a substantial amount for the time. Subsequent funds, II and III, closed in 2014 and 2017, securing $135 million and $200 million respectively.

By 2019, Kaszek had completed its fourth fund, raising $375 million, and established its first Opportunity Fund, allocating $225 million for later-stage investments in existing portfolio companies.

Increased Focus on Later-Stage Investments

The fifth fund demonstrates a strategic shift, with a larger portion of capital reserved for later-stage investments. This reflects Kaszek’s confidence in the potential of its current portfolio companies.

Both funds experienced significant oversubscription, with demand originating globally from university endowments, foundations, technology-focused funds, and individual tech entrepreneurs.

Key Limited Partners

Sequoia Capital, through Sequoia Heritage, its community investment office, has been a limited partner (LP) since the firm’s founding. Wesleyan University, represented by Chief Investment Officer Anne Martin, is also an LP, praising the founding team as “internet pioneers.”

Latin American Startup Boom

Recent years have witnessed a surge in global investor interest in Latin American startups. The region’s startup ecosystem is experiencing increased fundraising activity and a growing number of unicorn companies.

Kaszek has been central to this growth, playing a pivotal role in the region’s technological advancement.

Vision and Digital Acceleration

“We have been at the epicenter of the technology ecosystem in Latin America since 1999, first with MercadoLibre and now with Kaszek,” stated managing partner and co-founder Kazah. “We’ve directly observed the remarkable evolution of the sector from its earliest stages.”

Kazah continued, noting that when MercadoLibre began, internet penetration was below 3% and largely reliant on dial-up connections. Today, technological trends are stronger than ever, driven by an accelerating shift towards digitalization.

Investment Strategy and Check Sizes

While Kaszek has not yet deployed capital from its newest funds, it plans to invest in 20 to 30 companies through its early-stage fund. Check sizes will range from $500,000 to $25 million.

The Opportunity Fund will be more focused, supporting 10 to 15 companies with investments between $10 million and $35 million. The firm maintains an industry-agnostic approach, considering opportunities in any sector where technology is driving transformative change.

Evolution of Entrepreneurial Teams

General partner and co-founder Szekasy explained that Kaszek initially focused on backing first-time entrepreneurs. However, its latest early-stage fund has seen an increase in investments in teams led by repeat entrepreneurs or founders emerging from successful regional startups.

Like many venture capital firms, Kaszek emphasizes a partnership approach, providing more than just capital to its portfolio companies. Creditas founder and CEO Sergio Furio describes Kaszek as “the co-founder I did not have.”

Fund Performance

While the firm has not publicly disclosed performance data, a source familiar with its metrics indicates strong returns. Multiples on Invested Capital (MOICs) are reported as 19.2 for Fund I, 10.5 for Fund II, 4.9 for Fund III, and 2.6 for Fund IV, with an aggregate Internal Rate of Return (IRR) exceeding 55%.

Current Portfolio and Unicorns

Kaszek’s current active portfolio comprises 71 companies. The firm was an early investor in Brazilian neobank Nubank, one of the nine unicorn companies it has helped establish.

Other unicorns in its portfolio include MadeiraMadeira, PedidosYa, QuintoAndar, Gympass, Loggi, Creditas, Kavak, and Bitso.

Geographic Focus

Kaszek’s investments are primarily concentrated in Brazil and Mexico, the leading startup hubs in the region, as well as Colombia. However, the firm also supports startups in other Latin American countries, including Argentina (DigitalHouse), Chile (NotCo), and Ecuador (Kushki).

The firm maintains a physical presence in Brazil, Mexico, the United States, Argentina, and Uruguay.

Looking Ahead

“We have always believed that the strong secular technology trends we observed 20 years ago in the U.S. and later in China would also materialize in Latin America,” Kazah stated. “Everything we predicted has come to pass, perhaps later than anticipated, but on a larger and more comprehensive scale.”

Kazah concluded, “Innovations often take longer to gain traction than expected, but ultimately achieve heights beyond initial projections.”