Pedro Sorrentino and his team were successful angel investors with multiple exits and technology executives and entrepreneurs when Pedro and his team decided to co-found ONEVC, a cross-border seed-stage firm based in San Francisco and São Paulo. He went from being a tech executive to starting his own company and then transitioned into angel investing and parlayed this successful track record into a $38M venture capital fund.
ONEVC’s cross-border vision means that they invest in Latin America and the US with very specific theses for both regions. The fund focuses on investing early into category-defining startups that operate in Latin America or startups outside of Silicon Valley, whether that be in Latin America, US or in Europe, that have the potential to go global.
In this episode, we cover the ONEVC investment thesis, and why they decided to invest against this thesis. We also discuss how Pedro thinks about helping companies he partners with and his advice to startup founders going into the Brazilian market. Lastly, we talk about how Latin America’s ecosystem is changing, advice to founders seeking funding from VCs, and advice Pedro would give to his younger self when he was first starting ONEVC.
In the US, most people gloss over payment processing because almost everyone has a credit card, Paypal account, or another simple way to pay. Developers use Stripe and can process in seconds. For consumers, Amazon even created one-click purchasing for some customers and physical buttons that automatically reorder your favorite products.
In China, paying is even easier; almost everyone uses Wechat or Alipay to scan QR codes and pay for everything automatically without ever taking out their wallet.
Startups have filled almost every niche in the payments industry, providing solutions for any vendor. Need to pay someone for something you bought in an online shop? PayPal can help. Setting up online payments for your business? Try Stripe. Want to compensate your roommate for your half of the gas bill? Venmo can help you do that.
We tend to take these solutions, as well as more traditional payment systems such as credit cards, for granted in the US. Only 6.5% of households in the US don’t have a bank account, although 18.7% of households are considered underbanked. If someone in the US wants to sign up for a Netflix account or buy a t-shirt online, they enter their credit or debit card information, and that’s it.
In Latin America, completing an online transaction is not so simple.
Latin America’s tech ecosystem is maturing rapidly. 2017 was a standout year for foreign investment in Latin American startups, with investors in the US and China taking an interest in tech companies that are solving both local and global problems. Not only are the startups in the region becoming more numerous and innovative, but the older tech companies that started in the mid-2000s are reaching high valuations that allow them to compete globally.
Over the past decade, the number of tech startups reaching billion-dollar valuations, known as ‘unicorns,’ has grown considerably. At least nine of these unicorns were founded in Latin America, concentrated in Argentina and Brazil.
There is a lot to be learned from tech companies that can reach a billion-dollar valuation in a challenging market like Brazil or Argentina. What’s more, building a billion-dollar business in Latin America does not happen overnight.
Here’s a look at how each of Latin America’s billion-dollar tech companies reached their current valuations. (more…)