Planes dropping money
Illustration: sorbetto/DigitalVision Vectors; Protocol

VCs showered cash on Latin America. Will they stay?

Protocol Pipeline

Hello, and welcome to Pipeline.

Save the date: On July 19, I’m excited to host a virtual panel on lessons from times the bubble burst. While there’s been a lot of talk about advice for founders, there hasn’t been as much for venture capitalists. I’ll be joined by Beezer Clarkson and Geoff Yang to talk about how to shift strategies when the market changes, what emerging managers should focus on in order to survive and when it is — and isn’t — time to make that next big bet. RSVP here to join us.

This week in the startup world: Backstage Capital lays off most of its staff, Kraken’s CEO criticizes “genius eggshells” and LatAm’s boom (and hopefully, not bust).

Testing the LatAm thesis

When Shu Nyatta told friends he was moving to Miami and going to start investing in LatAm startups, they thought he was crazy.

“Now, it’s an uninteresting thing to say,” he said. “It’s so funny, but it’s just a testament to how little people know about the future.”

2021 was a breakout year for LatAm tech. Last year, venture capitalists invested $14.8 billion in the economic region known as “LatAm,” which for investors’ purposes means Mexico, Central America and South America. The nearly $15 billion was more than the previous six years of venture investment combined, according to PitchBook.

  • Investors like Sequoia had previously looked at the region over a decade ago, but found it largely underwhelming. That changed last year when Sequoia started publishing blog posts saying the timing was finally right.
  • “We used to have to explain ‘Why LatAm?’” said QED’s Mike Packer, whose fintech-focused firm had already done four investments in Latin America before he joined in 2016, and now has over 40. “At some point that flipped last year. … We saw a bunch of new funds entering the market because all of a sudden the LatAm thesis was known. The cat was out of the bag, if you will.”

So what’s behind the LatAm renaissance? Opportunity + founders + new sources of growth capital + exit potential = “the LatAm thesis.”

  • Latin America’s population is similar in size to Southeast Asia’s, equally young and digitally native. It has twice that region’s GDP. Yet it was still only receiving half as much funding in 2019. “The arbitrage opportunity struck me the minute I joined VC,” said Lightspeed’s Mercedes Bent, who began investing for the firm in LatAm in 2019.
  • The quality of founders has also improved over time, with many working on their second or third company. There are several “mafias” of entrepreneurs, including ex-Groupon and ex-Uber folks. Perhaps the most well-known is the Rappi mafia, an alumni group estimated to have started 100 companies.
  • In 2019, SoftBank debuted a $5 billion LatAm-focused fund, the largest of its kind. In the previous two years combined, LatAm startups had only raised $3.9 billion, so it was a massive cash injection and showed there was growth capital available for the region.
  • Nubank, which was started by the guy Sequoia originally sent to LatAm a decade ago to “chart its course,” landed Warren Buffett’s Berkshire Hathaway as an investor and went public in 2021 with a $45 billion valuation.

The question now is what happens in 2022: Some funds that have made a lot of investments are sticking around to protect their interests, Nyatta said. “All the other capital has disappeared,” said Nyatta. “It’s vanished.”

  • Not unlike the rest of the startup ecosystem, LatAm has seen a pullback with a 30% dip in funding between Q4 2021 and Q1 2022, according to Crunchbase.
  • But there’s certainly a lot of investors and LPs who are still bullish on the region: Nyatta is raising a new growth fund, Bicycle. Headline VC just announced a new, roughly $170 million fund. In Brazil, local firm Maya Capital raised a second fund of $100 million. QED also hired its first employee in Brazil, Camila Vieira, to further solidify its presence in the region.

After a crazy year globally for the venture ecosystem, the prospect of a downturn in 2022 is already revealing who was a true believer in investing the opportunities of the LatAm thesis and who was just opportunistically marketing to founders with a blog post.

For more of a thesis on the LatAm thesis, read my full story here.


“Sun Valley for people who do shit.” This week was the real Sun Valley, which featured lots of powerful execs in questionably patterned button-downs. But Coatue’s East Meets West conference last month in Santa Barbara had perhaps as many high-powered tech people (and still the same level of questionable fashionable decisions), per Eric Newcomer’s dispatch.

Forget “brilliant jerks.” Genius a-holes and genius eggshells (or snowflakes) both wouldn’t be a good fit to work at Kraken. CEO Jesse Powell’s defense of his company’s controversial work culture, which stops short of being a Coinbase-style, politics-free workplace, is an interview worth reading.

Backstage’s back-of-the-napkin math: Backstage Capital had to lay off most of its employees after it ran into fundraising challenges. In a podcast, founder Arlan Hamilton said the firm had invested in 200 companies and raised about $20 million over its six and half years. She also said the firm’s operating budget was between $3.5 to $4 million a year, with Hamilton often putting up around a third of it herself. The numbers didn’t quite add up for a lot of VCs who questioned the fund’s economics on Twitter.

DALL-E draws VCs. The AI artist has made some pretty incredible images, but its interpretation of VCs drafting a term sheet is truly a work of art.


Software companies are moving up the payments revenue food chain. Infinicept helps companies amplify growth and increase revenue by embedding payments into their products. Its PayOps platform offers underwriting, onboarding, and merchant management solutions that allow companies to scale their payments operations and have total ownership of their payments strategy.

Learn more

Inside track

What’s it like to raise in this funding environment? After raising $65 million, Front’s Mathilde Collin shared the pitch deck she used during her five-week process and the new questions she received for the first time about her business.

Things have yet to get truly bad in tech, according to Elad Gil, who shared his predictions on what will happen in the next three to 18 months. Expect more layoffs, more M&A and more “cleaning up work culture” moments.

There’s a “big contradiction at the heart of the tech downturn,” writes former YC partner Aaron Harris. Investors have a lot of cash, but they’re telling founders to act as if there’s none available.

Can “try before you buy” work for employment too? Homebrew’s Hunter Walk says some startups (not most) should work with potential employees on a few projects before hiring them — a process that can be a win on both sides.

Need to know

Former Theranos president Sunny Balwani was found guilty. The jury returned a guilty verdict on all 12 counts. Both he and Theranos founder Elizabeth Holmes are likely to be sentenced later this fall.

Tiger made minor gains. It’s still down over 50% for the first half of the year, but it had a slight 3.4% gain in June. Progress?

Sequoia Capital China blew past its funding target. It’s reportedly closed on $9 billion across four funds.

SoftBank lost another investment chief. Rajeev Misra has a new $6 billion fund backed by Abu Dhabi groups.

The weirdest fintech settlement: Forever 21’s owner Authentic Brands Group sued Bolt, but now, as part of a settlement, it owns a slice of the company.

The EU wants to make it easier for deeptech startups to go public. The EU Listing Act is supposed to help founders keep control of their companies through an IPO.

Y Combinator launched its own Product Hunt competitor for launches. Already companies from its summer batch are getting upvotes on Launch YC.

From Protocol: The CFPB wants Big Tech engineers to help it investigate Big Tech — with a particular eye on fintech startups.

Your weekend reading: An enterprise and productivity software investor doesn’t seem like the natural conduit to Hollywood, but Worklife VC’s Brianne Kimmel has turned into one. She’s dating “Silicon Valley” star Jimmy O. Yang and has opened a social club that Anna Sorokin/Delvey would be jealous of.


Join us at our *un*conference, happening August 7-9 in Denver. Fintech game-changers are talking embedded payments, how crypto is changing our world, having control and choice in your payments strategy, the future of embedded finance, and much more. Not to mention the rooftop party, whisky tasting, and Colorado Rockies game.

Learn more

Thanks for reading, and I hope you join me on July 19 for Pipeline’s event on lessons from the times the bubble burst. Don’t forget to RSVP. If you like what you’re reading, sign up here to get it in your inbox. Send story tips and newsletter feedback to

Recent Issues

VCs rethink the office