Venture Capital Firm Kaszek Raises $1 Billion for Latin American Startups

Latin America’s largest venture capital (VC) outfit has reportedly raised $1 billion this year.

The Brazilian firm Kaszek is waiting for new deal opportunities to present themselves, and for more mature companies to possibly accept new valuations as their cash runs short, Bloomberg News reported Monday (Oct. 9).

Kaszek Co-Founder Hernan Kazah told Bloomberg that founders are now realizing the need to balance profitability with growth following a tough funding year in 2022, leading to an uptick in deals for his firm.

The company’s success is happening amid a sharp downturn in funding for Latin American startups. As noted here in August, two thirds of startups in that region have cut staff in the last 18 months as VC investments have dropped by 65%.

According to the Bloomberg report, Kaszek has invested in seven companies this year — compared to just two in 2022 — including a recent $13 million investment in Colombian FinTech Cobre.

“Companies are still struggling trying to find the right model, the right unit economics, and the right balance between burn and growth,” Kazah said. “Some of those will get capital, maybe at a totally different valuation than what they raised last time, and some might not make it.”

PYMNTS looked at the divide between growth and profitability in a recent conversation with Charlie Youakim, CEO of Sezzle and Peter Beckman, CEO and co-founder of Treyd.

As that report notes, forward-thinking FinTechs have taken a harder look at customer relationships and in some cases pausing new go-to-market initiatives altogether.

“It may seem incongruous that executives would walk away from the potential to gain market share,” that report said.

But as Youakim and Beckman told PYMNTS’ Karen Webster, there’s an urgent need to reexamine costs as interest rates stay high, taking the cost of capital with it.

“I still hear it,” Youakim said, “even through this time period. People still just talk about revenue. But who cares about your revenue — unless you’re talking about driving profitable revenue.”

He added that tough times won’t be forever, and the companies that refocus on their operations and the levers they can pull — and rely on peers to learn about best practices — will come out of this period all the stronger.

As he told PYMNTS: “Get back to the business fundamentals … because it turns out that the business fundamentals work.”