Aug 16, 2021 · 37m · 20vc
20VC LATAM: LATAM's Largest Fund, Kaszek Ventures on Scaling from $100M to $1BN, Why Capital is not a Source of Moat & Why LATAM is More Than Copycat Companies with Nicolas Szekasy, Co-Founder @ Kaszek Ventures
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, host Harry Stebbings interviews Nicolas Szekasy, Co-Founder and Managing Partner of Kaszek Ventures, exploring his transition from MercadoLibre CFO to building Latin America's leading venture capital firm. Szekasy discusses navigating economic crises, fund discipline, founder relationships, and the dramatic maturation of Latin America's technology ecosystem.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 28.8% of the talking time here. How this is scored →
Harry as informed peer 3.5 Guest teaching 2.0 Guest disagreement 0.9 Harry pushing back 1.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:04 Rejection of copycat trope
Nico directly counters Harry's question about LATAM being full of copycat companies by calling it an unfair statement and highlighting global LATAM innovators.
Hardest push from Harry ▶ 15:06 Challenging LATAM valuation inflationHarry uses his own deal experience to challenge Nico on whether LATAM is getting too competitive too early as 2 on 8 valuations turn into 8 on 40.
Biggest teaching moment ▶ 27:40 Reframing founder reference checksNico reframes Harry's assumption about reference checks, explaining that corporate supervisors often give poor references for true entrepreneurs.
Harry holds his own ▶ 25:50 Harry shares $6B pre-seed missed opportunityHarry demonstrates insider dealmaking credibility by detailing his own $6M to $6B missed investment resulting from flawed reference checking.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Nico Szekasy's Operating Journey and MercadoLibre's Early Days | 2 | 2 | 0 | 0 | Nico describes MercadoLibre's early days navigating the dot-com crash and subsequent capital drought. Harry sets up introductory operational questions while Nico shares his background smoothly. | |
| Lessons from Macro Crises and Why Capital Is Not a Moat | 3 | 2 | 1 | 2 | Harry probes how surviving macro crises influences Kaszek's investment thesis today. Nico emphasizes that Kaszek rejects businesses using capital as a moat, preferring fundamental unit economics. | |
| The Evolution of Latin America's Tech Ecosystem | 2 | 3 | 0 | 0 | Harry prompts a retrospective on LATAM's tech landscape over the past decade. Nico provides a stark historical contrast, noting there was not even a word for entrepreneur in Spanish in the late 90s. | |
| Raising Kaszek's First Fund and Securing LP Commitment | 3 | 1 | 1 | 4 | Harry asks about the hardest part of scaling Kaszek, and when Nico digresses into explaining the Opportunity Fund, Harry politely interrupts to re-center the question. | |
| Navigating LATAM Valuation Inflation and Competition | 6 | 2 | 2 | 5 | Harry leverages his own dealmaking experience in LATAM to challenge current valuation inflation and heightened competition. Nico distinguishes between productive capital acceleration and speculative vanity-metric chasing. | |
| Debunking Copycat Tropes and Showcasing Global LATAM Leaders | 5 | 3 | 4 | 4 | Harry raises the common LP skepticism that LATAM startups are mere copycats of US models. Nico forcefully rejects the premise as unfair, citing global category leaders like NotCo and Nubank. | |
| Establishing Authentic Relationships and Trust with Founders | 3 | 1 | 0 | 1 | Harry asks how Nico maintains founder trust amidst remote work and fast fundraising timelines. Nico emphasizes local presence, exhaustive reference checks, and radical honesty. | |
| Crisis Management Mindset and Effective Board Service | 2 | 1 | 0 | 0 | Harry asks for advice on effective board membership and crisis management. Nico advocates for humility, reminding investors that they are in the passenger seat to support rather than dominate. | |
| Investor Insecurities, Reference Checks, and the D-Local Miss | 6 | 4 | 1 | 2 | Harry opens up about missing a $6B outcome by over-indexing on a negative employee reference check. Nico shares Kaszek's miss on dLocal and explains why traditional employee references can be misleading for founders. | |
| Kaszek's Strategic Vision and Fund Size Discipline | 3 | 1 | 0 | 0 | Harry asks about Kaszek's long-term fund size ambitions and conducts a rapid quickfire round. Nico details why Kaszek maintains strict fund size discipline for early-stage strategies while scaling Opportunity Funds. |
Statements from this episode (30)
MercadoLibre Faced 100 Regional Competitors at Dot-Com Peak
“We had the most extraordinary roller coaster journey with something like a hundred competitors in the region doing exactly what we were doing at the peak of the bubble in early 2000.”
MercadoLibre IPO'd in 2007 Retaining Half Its 2000 Venture Capital
“We took the company public on Nasdaq in 2007. I was the CFO, so I led the charge there. We did that with half of the capital we had raised in 2000, still in the bank, and we had a very profitable business.”
LatAm Founders Handled Dot-Com Crash Better Than US Counterparts
“I'm sure that we were better suited than most of the founders from more developed countries, that they were not aware that something like this could happen.”
Kaszek Ventures Refuses to Back Startups Using Capital as a Moat
“We don't back businesses that claim that they have capital as a source of moat. We don't believe in that.”
MercadoLibre stock fell 90% post-IPO during 2008 crash
“I think our stock price, we had been public for a few months, went down 90%.”
MercadoLibre had 30% EBITDA margins and zero debt in 2008
“But by the end of that year, we were in great shape. The business was always very solid. Our stock had gone down, but we were making money. We had 30% EBITDA margins. We were doubling our business year over year. We had no debt.”
MercadoLibre bought back stock at $7-$8 after IPO at $18
“We started a program to buy back stock. It was amazing. We were buying stock, I think, at a price something like below 10 dollars, something like seven, eight dollars per share, and we had an IPO at 18.”
Szekasy: No local VC firms existed in LATAM during MercadoLibre's initial fundraising
“When we raised money at Meli, there was not Even one VC firm that was operating out of LATAM.”
Szekasy: Kaszek raised $1B across early-stage and opportunity funds in 2021
“This year we raised a billion between our early stage and our opportunity vehicles.”
LatAm Graduate Tech Ambitions Flipped From 10% to 90% in a Decade
“If you were to go to a graduating class in university in 2011, 90% of the students would aspire to join an investment bank or a consulting firm. That has fully reversed, and today 90% want to become a founder or join a startup.”
Szekasy: Kaszek only invests in startups that can return the entire fund
“And every investment, the bar is that it will become a fund maker. So if we don't think that it has the potential of becoming a fund maker, we would not do an investment.”
Kaszek Backed Nubank's Seed Round When It Was Just a Deck
“In Nubank, we invested in the seed investment together with Sequoia, so it was a PowerPoint really early on, David Velez by himself, and that's when we joined, and then we participated out of the fund one in several rounds in the series A and the B and the C a…”
Kaszek sets a 5x minimum return threshold for its Opportunity Fund
“And the criteria is that at a minimum, the return will be five X from the point at which we invest, hopefully 10 X from the point at which we invest.”
Copycat Startups Often Evolve to Surpass Their Original US Inspirations
“Over time, they diverge from the company that inspired them, and sometimes they end up being not only quite different, but also much better than the source.”
Nubank Will Eventually Become the Largest Bank in the World
“Nubank is not only the largest challenger bank in the world. We think one day it could become the largest bank without the challenger. They will become an incumbent bank, the number one in the world”
Multiple Kaszek Portfolio Companies Will IPO in the US by 2023
“When you look at our portfolio, there are many companies that have IPO in their sites over the next 24 months. So there will be many more coming in the U.S.,”
Szekasy: Local network edges make cross-border VC investing ineffective in distant markets
“We believe that the fact that we have been around for 20 years gives us an edge on many dimensions, where one degree of separation from anything that a founder might need might argue that we could not be successful VCs in Indonesia, for example.”
Kaszek Ventures conducts up to 20 reference checks per founder
“On our decision process, we do a lot of reference check calls. Maybe we do 20 for a founder.”
Kaszek Ventures evaluates ~200 companies for every deal closed
“By the way, we talk to something like 200 companies for everyone that we invest in, so we spend a lot of time talking to everyone in the ecosystem.”
Diplomacy Makes No Sense in Venture Capital Founder Relationships
“We don't think that diplomacy is something that makes any sense in our industry, but you do that very respectfully, and then you tell the team, this is your opinion, this is your view, but the team makes the decision.”
Szekasy: Board members must de-escalate panic during founder crises
“If you're the board member and the team is about to collapse because there's a catastrophe, the last thing that they want is a nervous board member that is adding fuel to the fire. What they need is someone that, that is going to be there to try to calm things…”
Out-of-Touch MercadoLibre Board Members Inspired the Founding of Kaszek
“Part of us being motivated to start Kasek with Hernan was that we had board members at Mercado Libre who were members of the banks or these financial institutions, and they were really great guys and really smart guys and well-intended, but they had no idea of…”
Szekasy: Board members are supporting actors who influence rather than decide
“Make sure that you don't want to be the smartest guy in the room. You're there to help. You need to understand that you're a support cast. You're in the passenger seat. Be very humble about that. Everything that you've got, and when something is wrong, you hav…”
Szekasy: Kaszek will miss more deals as Latin America market deepens
“Interestingly, during this first decade, we didn't have a lot of misses. We know that in the second decade, we will have many more, because the market now is much Deeper.”
Kaszek Missed dLocal's IPO After Passing on Its Early Business Model
“If I had to name one company, it would be the local. They just IPO'd. We met the team many years ago. We really liked the team, so not only we referenced them, but we got to know them, and we thought they were of the highest caliber, but their initial approach…”
Szekasy: Investors should track great founders even if doubting early ideas
“So the lesson there was whenever a team is amazing, but there's something that you don't like. So make sure that you follow up and you stay close.”
Founder References Are Never Stellar Because Founders Make Bad Employees
“And on the specific question about the references, we've got a bunch of cases, some of our best companies, we did references and they are Never stellar. They tend to be very good on some dimensions, but in most cases, if they were employees or managers in larg…”
Szekasy: Kaszek Will Keep Core Early-Stage Fund Size Capped
“We are fully convinced that we are first and foremost an early stage investor, and for that there's a certain size of fund that has a limit to ensure that you stay very effective and you continue to produce outsized returns. So that will not change, and maybe …”
Kaszek avoided crypto until investing in Bitso in 2020
“We stayed for years on the sidelines on crypto, and we made it in 2020, and this is a company that we were disciplined, and we kept on following for years despite that prior rounds we had passed, and then after our first investment a few weeks ago, we doubled …”
Kaszek led NotCo's Series A when it had seven employees
“And here we participated out of our opportunity fund as well. We had invested in the company. It had like a small kitchen with seven employees in Chile several years ago when we led the Series A. So excited that we managed to invest in several rounds out of ou…”