The Exchanges

Q Can I ask a hard one? Do you think there are any areas of misalignment between founder and VC?

A Yeah, often. I mean, BCs want to mark up the company. Often that's the goal, especially if you're at the early stage, right? You want the A to be lower than the B by some margin, and then you want to raise a new fund on the back of the B or C. That's a very different goal from the founder's goal, which is to build a lasting company. Um, at the growth stage, it tends to be less the case because the markups are not fast and furious the way they are at the early stage. So I would actually think the later you go in a company's life, the more aligned you are with trying to create something that's long-term durable and successful, because you can't hide anymore. It's not about the markup. It's about whether you have a real business.

AI assessment note: “Yeah, often. I mean, BCs want to mark up the company.”

Q Can I ask a hard one? Do you think there are any areas of misalignment between founder and VC?

A Yeah, often. I mean, BCs want to mark up the company. Often that's the goal, especially if you're at the early stage, right? You want the A to be lower than the B by some margin, and then you want to raise a new fund on the back of the B or C. That's a very different goal from the founder's goal, which is to build a lasting company. Um, at the growth stage, it tends to be less the case because the markups are not fast and furious the way they are at the early stage. So I would actually think the later you go in a company's life, the more aligned you are with trying to create something that's long-term durable and successful, because you can't hide anymore. It's not about the markup. It's about whether you have a real business.

AI assessment note: “That's a very different goal from the founder's goal, which is to build”

Q A couple of weeks ago. Time flies. Um, my question to you is, you know, it was mentioned as growth equity, and it's a five hundred million dollar vehicle. Can you talk to me about the focus, where it is specifically, and how you view that both from a stage and an insertion point?

A The answer is very specific to Latin America as well. So there, there are a lot of really good Early stage funds in Latin America. Some local, some foreign, but it's a solid base of early stage funding. And then crossover funds, once you get to the D or the pre IPO round, they always show up. If a company has good numbers, they will show up. The gap is in the middle. So starting at the series B, it's a bit of a desert in Latin America. For a few years there, from 2019 to 20 21, it was not a desert. And in 2021, notably, venture went from something like four and a half Billion a year to sixteen billion a year. Now it's back to less than a billion a quarter. So we're back to the four and a half. So there's a real gap in funding at the B and later. And the B tends to be the trickiest round because you need some meaningful amount of capital. The A can't do, can't lead the B. They could do maybe some pro rata in the B. So you really need someone to step in and lead the round and price the round. And there's still some risk in the business. That's the real, real opportunity. And then of course you get opportunistic stuff at the C and D. At good prices, maybe some secondary here or there. So that's the gap that we want to fill with the fund. That's a product, so to speak, that founders don't have, and that's a product that LPs can't buy today, which is growth exposure in Latin America…

AI assessment note: “So there's a real gap in funding at the B and later.”

Q How important do you think it is having feet on the ground, being there, having offices in the cities?

A Extremely. Extremely. There's a lot of adverse selection. There's some founders who Might or might not be great who play really well in New York and in San Francisco. And so if you wait for them to come to you, that's all you'll think Latin America is. We were just in Brazil and we went to the middle of Brazil to a state called Goyas to a town called Goyania. I don't know how many investors have been there. They said we were the first ones to go visit them at their offices. Really interesting company. Those folks are not going to New York to raise capital from. 57th street. You have to go and find them and build the relationship.

AI assessment note: “Extremely. Extremely. There's a lot of adverse selection.”

Q A couple of weeks ago. Time flies. Um, my question to you is, you know, it was mentioned as growth equity, and it's a five hundred million dollar vehicle. Can you talk to me about the focus, where it is specifically, and how you view that both from a stage and an insertion point?

A The answer is very specific to Latin America as well. So there, there are a lot of really good Early stage funds in Latin America. Some local, some foreign, but it's a solid base of early stage funding. And then crossover funds, once you get to the D or the pre IPO round, they always show up. If a company has good numbers, they will show up. The gap is in the middle. So starting at the series B, it's a bit of a desert in Latin America. For a few years there, from 2019 to 20 21, it was not a desert. And in 2021, notably, venture went from something like four and a half Billion a year to sixteen billion a year. Now it's back to less than a billion a quarter. So we're back to the four and a half. So there's a real gap in funding at the B and later. And the B tends to be the trickiest round because you need some meaningful amount of capital. The A can't do, can't lead the B. They could do maybe some pro rata in the B. So you really need someone to step in and lead the round and price the round. And there's still some risk in the business. That's the real, real opportunity. And then of course you get opportunistic stuff at the C and D. At good prices, maybe some secondary here or there. So that's the gap that we want to fill with the fund. That's a product, so to speak, that founders don't have, and that's a product that LPs can't buy today, which is growth exposure in Latin America…

AI assessment note: “that's the gap that we want to fill with the fund.”

Q What have you changed your mind on in the last year?

A I think, uh, peace is overrated. So just being very practical, I think markets, big markets matter a lot. And I come from Kenya, right? Which is a fifty million dollar, we have a fifty million people population. If Kenya was a hundred and fifty million people population, it would be a completely different story in the world stage. And so Kenya and Uganda and Rwanda and Burundi and Tanzania and Ethiopia just need to merge. We need more M and A between countries. And I think that's way more important than this idea of sovereignty that everyone's obsessed about. So I think sovereignty is overrated. I shouldn't say peace is overrated. Sovereignty is overrated. We need more country M and A.

AI assessment note: “Sovereignty is overrated. We need more country M and A.”

Q Before we dive into kind of the models of venture in the future, I, I just have to ask the obvious question. Why bicycle?

A At the simplest level, it's a magnificent technology. Magnificent. It's the most, one of the most empowering things we've ever invented as a human species. The passenger is also the engine. It's a really fantastic idea for technology and what it should mean, so it empowers us a lot, but we have to put a lot of energy in. So that's a core inspiration. But the other is, it's timeless. I mean, bicycles look the way it's looked, two triangles and a triangle and two circles for a hundred years, and it's very democratic. Any street corner, anywhere in the world, you'll see bicycles changing people's lives. So as a manifestation of what technology means, you'd struggle to find something that embodies that better than bicycles. And in places like Latin America, where the opportunity is the middle of the pyramid, the bottom of the pyramid, nothing represents that better than a bicycle.

AI assessment note: “At the simplest level, it's a magnificent technology. Magnificent.”

Q Before we dive into kind of the models of venture in the future, I, I just have to ask the obvious question. Why bicycle?

A At the simplest level, it's a magnificent technology. Magnificent. It's the most, one of the most empowering things we've ever invented as a human species. The passenger is also the engine. It's a really fantastic idea for technology and what it should mean, so it empowers us a lot, but we have to put a lot of energy in. So that's a core inspiration. But the other is, it's timeless. I mean, bicycles look the way it's looked, two triangles and a triangle and two circles for a hundred years, and it's very democratic. Any street corner, anywhere in the world, you'll see bicycles changing people's lives. So as a manifestation of what technology means, you'd struggle to find something that embodies that better than bicycles. And in places like Latin America, where the opportunity is the middle of the pyramid, the bottom of the pyramid, nothing represents that better than a bicycle.

AI assessment note: “At the simplest level, it's a magnificent technology. Magnificent.”

Q How do you want to build the firm? You can build firms in different ways. You know, your insights on one with huge, huge teams and your benchmarks on another. When you think about the firm that you want to build with Bicycle, it's something that I think about a lot with TwentyVC. What type of firm do you want to build?

A I'll start, and Marcelo can compliment. We're lucky because we have three people who joined Bicycle day one, who we've worked with for four years, and they've been part of the journey from 2019 with the SoftBank Latin America Fund, so there's already a lot of inbuilt tribal trust and knowledge and way of working together. That's the core, and that core is very important because there's a shorthand in how we communicate, Uh, we all have the same general ambitions. People come from multiple different places. It's hard to imagine we're going to get dramatically bigger than that. The nice thing also is it's a whole spread of ages. So we already have the seeds of a multi-decade firm now. Our goal is to not screw that up. You have to build capability sequentially over time, but not damage the core that got you started.

AI assessment note: “It's hard to imagine we're going to get dramatically bigger than that.”

Q How do you want to build the firm? You can build firms in different ways. You know, your insights on one with huge, huge teams and your benchmarks on another. When you think about the firm that you want to build with Bicycle, it's something that I think about a lot with TwentyVC. What type of firm do you want to build?

A I'll start, and Marcelo can compliment. We're lucky because we have three people who joined Bicycle day one, who we've worked with for four years, and they've been part of the journey from 2019 with the SoftBank Latin America Fund, so there's already a lot of inbuilt tribal trust and knowledge and way of working together. That's the core, and that core is very important because there's a shorthand in how we communicate, Uh, we all have the same general ambitions. People come from multiple different places. It's hard to imagine we're going to get dramatically bigger than that. The nice thing also is it's a whole spread of ages. So we already have the seeds of a multi-decade firm now. Our goal is to not screw that up. You have to build capability sequentially over time, but not damage the core that got you started.

AI assessment note: “It's hard to imagine we're going to get dramatically bigger than that.”

Q What have you changed your mind on in the last year?

A I think, uh, peace is overrated. So just being very practical, I think markets, big markets matter a lot. And I come from Kenya, right? Which is a fifty million dollar, we have a fifty million people population. If Kenya was a hundred and fifty million people population, it would be a completely different story in the world stage. And so Kenya and Uganda and Rwanda and Burundi and Tanzania and Ethiopia just need to merge. We need more M and A between countries. And I think that's way more important than this idea of sovereignty that everyone's obsessed about. So I think sovereignty is overrated. I shouldn't say peace is overrated. Sovereignty is overrated. We need more country M and A.

AI assessment note: “I shouldn't say peace is overrated. Sovereignty is overrated.”

Q Now, you said you didn't read the questions beforehand. That's great, because I just decided to go off schedule. Um, when you think about yourselves as partners, what is Marcelo world-class at, and Marcelo, what is Shu world-class at?

A Marcelo is, I call him the master of momentum. Nobody else generates momentum like Marcelo does. Any, any idea Any geography, any topic, if you want somebody to get the ball rolling, he'll do it. And it's impressive to see because often it means bringing together all these different people and capital and spheres of things into one project. It's incredible. Incredible. I've never seen anything like it. And so the, the gift is you just get this momentum that comes from the sky, like mana from heaven, and you have to do something with it. And so I've learned that you get out of the way of the momentum, and then you try and capture that magic and push it forward in an organized way with a team, and we've done that now a few times in a row.

AI assessment note: “Marcelo is, I call him the master of momentum.”