Kaszek Ventures is the most prominent venture capital firm in Latin America. Founded by two Argentine business veterans of Mercado Libre Corporation, the entity is the undisputed leader backing fintech startups throughout the subcontinent after having raised and deployed over $ 2 billion worth mostly of seed capital across 199 investments as of August 2022. From these 199 investments, the firm maintains 114 current investments in its portfolio including 47 leading positions providing funding held in seven off-shore funds, all registered in the Cayman Islands. Among the most relevant startups Kaszek Ventures has backed, the track-record comprises nine past and present unicorns including Nu Holdings Limited, better known as Nubank, Creditas Sociedade de Crédito Direto S.A., Volanty Tecnologia e Serviços Veiculares Limitada, Konfío Limited, Kavak Holdings Limited and Bitso S.A.P.I. de C.V. Unicorns are tech startups whose assessed values reach at least $ 1 billion without having gone public just yet. Consequently, these well-known past and present unicorns translate into economic interests in one digital commercial bank, two digital lenders specializing in small businesses, two online used car dealerships and a cryptocurrency exchange.
Moreover, it is worth noting that Creditas and Konfío, operating in Brazil and Mexico respectively, are projected to disrupt one the biggest inequalities present in Latin America which is the access to credit. In fact, Latin America as a whole leads several inequalities globally including access to credit, access to health care, access to information technology, access to private education and ownership of arable land. On the other hand, the inequality of income distribution, which is the most studied on the planet, is presently led by four countries in the southern tip of Africa where GINI coefficients currently exceed 0.6. Nevertheless, the worse inequality of them all with a GINI coefficient attaining slightly over 0.85 today is the ownership of arable land in Guatemala where nine families alone own around half of all the cultivated and raw land harvesting crops including sugarcane, banana, palm oil, pineapple, papaya, avocado, plantain and coffee. Likewise, it is also worth noting that most emerging markets excluding China are way more unequal than developed markets and with substantially more economic activity happening in informality. As a result, this is where the foundation of Creditas and Konfío come into play by helping small and medium-sized enterprises or SMEs obtain affordable and reliable credit without the need to resort to loan sharks prevalent in the region. Accordingly, a sizable share of economic activity remains in the shadows throughout Latin America with very little regulatory oversight and substantial abuse inflicted by unscrupulous lenders who benefit the most from the informal sector of the economy. This is something that the prominent Peruvian economist Hernando de Soto has exposed in full in some of his published work. A property rights guru and expert on economic informality and its inefficiencies, his work is at the forefront of breakthroughs in the region emphasizing the informal sector of the economy including challenges in assessing the fair value of collateral such as untitled real property, fixtures, unregistered intellectual property, aging equipment and inventory on hand. Altogether, Mr. de Soto estimates the value of assets sitting in informality at $ 10 trillion worldwide, something he coins as “Dead Capital”.
Furthermore, formally registered as Kaszek Management S.A. and domiciled in Montevideo, Uruguay where it is headquartered as well, the venture capital firm was founded by two Argentine nationals, both of them graduates in Economics from the University of Buenos Aires and alumni of the Stanford full-time MBA program. In fact, one of them met Argentine entrepreneur Marcos Galperín after being a classmate of his at Stanford. After finishing their MBAs, the two teamed up and founded Mercado Libre in 1999, the undisputed e-commerce leader in Latin America and one of the most valuable publicly-traded companies regionwide with a market value now reaching $ 40 billion. I’m talking about Hernán Kazah, a long-time business veteran of Mercado Libre who took the executive role of COO for about a decade at the e-commerce giant before founding Kaszek Management S.A., branded as Kaszek Ventures, in 2011 with fellow Argentine and Stanford MBA alumnus Nicolás Szekasy. The latter was the CFO of Mercado Libre after having been recruited at the e-commerce colossus by Hernán Kazah himself. From here, the pair became friends and decided to leave Mercado Libre in excellent terms in order to switch gears by launching their incredible venture capital firm going by the name of Kaszek Ventures. Accordingly, the name of their firm comes from the combination of the first two and four letters of their two last names respectively, Kazah and Szekasy. Altogether, their pet project is the king of venture capital in Latin America focusing on fintech startups that have hidden potential for financial services industry rebalances, strategically enhancing efficiencies along their path. The most successful of these rebalances are Nubank, Creditas and Konfío. Nubank has already heavily disrupted the financial services industry in Brazil while trying to do the same in Argentina, Mexico and Colombia as we speak after having plenty of muscle at its disposal from its recent IPO mentioned here in an article published earlier this year. Creditas, on the other hand, is also disrupting Brazil by driving loan sharks out of business while consolidating its leadership there by acquiring Volanty, the online used car dealer champion, just recently. Similarly, Konfío is expected to take the Mexican market by storm, helping small businesses thrive freely with legitimate checks and balances in place.
To conclude, accruing an internal rate of return or IRR of 55% after fees on its deployed seed and pre-IPO investments, Kaszek Ventures is the undisputed champion of venture capital in the region. Accordingly, wisely supporting fintech startups regionwide, Kaszek Ventures is enhancing improvements industrywide in Latin America. In fact, with its unmatched track-record across the subcontinent, Hernán Kazah and Nicolás Szekasy have become significant angel investors in this emerging market ripe for rebalance and meaningful improvement within its entire regional geographic boundaries down the road.