The trade war between the United States and China may benefit Brazil and Latin America more broadly by redirecting investments and demand for products and raw materials from the two economic giants embroiled in a tariff dispute. This is the assessment of Hernan Kazah, cofounder of Mercado Livre and Kaszek Ventures, and a prominent figure in the Latin American venture capital landscape. His outlook is particularly optimistic for startups leveraging artificial intelligence and emerging technologies.
“There are many opportunities and many entrepreneurs thinking about how to design new businesses based on these innovations, which were not possible three or four years ago, helping to create fertile ground for investment,” said Mr. Kazah during his appearance at Web Summit Rio. “We see a new generation that is much more experienced than in the past. We are super, super bullish on the future,” he added, using financial market jargon to describe an optimistic perspective. In more practical terms: it is a moment of opportunity and upward momentum for assets.
Mike Packer, a partner at QED Investors, which manages US$3.8 billion in assets, echoed the sentiment. “If you take a long-term view of the fintech opportunity in Latin America, we see the potential for technology to change the region’s economies,” he said. “We are seeing extraordinarily talented founders wanting to build great businesses that impact millions of people, and QED believes that this is the right time for Latin America to create a series of generational companies in areas such as real-time money movement and international payments,” he concluded.
At Kaszek, the focus is on companies that are conceived within the context of artificial intelligence, but that alone is not enough. “We support an idea that we believe will be sustainable in the long term, not an idea that is great today but won’t be in the future,” said Hernan Kazah, founder of the venture capital firm, which now manages more than US$3 billion in assets across nine funds and 124 startups. Among them are high-profile names like Nubank—back when it was little more than a PowerPoint presentation—QuintoAndar, Loggi, and Creditas. Distinguishing between short-lived hype and long-term value, he noted, requires deep expertise. It was no coincidence that his talk at Web Summit Rio was titled A Tale of Two Cities—a reference, he explained, to two sharply divergent realities in today’s venture capital landscape. “If you look at where investments are going, they are in AI projects around the world. Without a doubt, the paradigm shift with AI is also leading to concentration,” Mr. Kazah said.
Santiago Fossatti, partner at Kaszek, highlighted the increasing maturity of the Latin American ecosystem following its explosive growth in 2021, when investments peaked at US$7.3 billion—far higher than the US$2 billion recorded in 2023. “The combination of a more evolved ecosystem with new technologies enables the creation of new businesses. We are finding many new companies to invest in,” said Mr. Fossatti.
Another shift underway, both executives noted, is in the profile of the companies receiving funding. While earlier rounds of investment were heavily concentrated in the B2C (business-to-consumer) space, today the emphasis has moved sharply toward B2B (business-to-business) models. More than 95% of Kaszek’s earliest investments were in B2C companies. Today, roughly 80% are in B2B ventures.
Despite the positive outlook for Latin American markets, Kaszek acknowledges that recent developments have altered its expectations from earlier in the year, particularly those formed before Donald Trump returned to office. “The tariff issue changed what we were expecting. It created a bit of uncertainty. The path was toward lower interest rates. It’s taking a while. We imagined that lower interest rates would stimulate the return of the IPO market. We are in the middle of this strange dance,” said the firm’s cofounder. Initial public offerings (IPOs), which allow startups to access the capital markets, are traditionally one of the most profitable exit strategies for venture capital funds. These investors do not typically seek immediate returns, but rather long-term appreciation in company value. That, however, is not the scenario currently playing out.
“The most likely path for exits will continue to be the sale of companies, not IPOs,” said Marcello Gonçalves, partner and cofounder of Domo.VC, a Brazilian venture capital firm focused on technology businesses in Latin America. According to him, Latin American startups tend to stay private for longer and must raise extended investment rounds due to the more speculative nature of stock markets in the region. “This requires investors to support companies for longer periods,” he added.
Mike Packer, a partner at QED Investors, sees the situation differently. In his view, Latin America currently has between 12 and 18 companies that could go public in the coming years—but he argues that IPO readiness isn’t the only thing that matters. “If they are building lasting and sustainable brands, it may not matter whether they go public or remain private,” he said. Still, he emphasized that Brazil and Mexico are well-positioned to produce companies strong enough to eventually pursue IPOs.
