The J Curve with Gabriela Gonçalves, founder and managing partner at Namari Capital: Five Big Ideas

Gabriela Gonçalves is a founder and managing partner at Namari Capital; managing partner at Brasil Venture Debt, whose portfolio includes the likes of Exact Sales (acquired by RD Station), Solfacil and Digibee. Prior to that Gabriela was a co-founder and managing director at Rocket Internet-backed tech unicorn Lazada (acquired by Alibaba).

The big part of our conversation not surprisingly was, well, venture debt. In case you wonder how attractive venture debt as an asset class is, it’s VERY attractive:

1. Venture Debt is a GROWTH powerhouse: grown from $5bn in 2010

   to $25bn in 2019, almost doubling to $47bn in 2021

2. Venture debt funds can command interest rates of between 7% and 14% on loans with maturities of between 3 and 6 years (Wells Fargo data). This has enabled venture debt managers to return 20%+ to investors annually from 2005 to 2019, (Applied Real Intelligence data). This is a figure many multiples higher than investment grade debt returns.🚀🚀🚀

3. The default rate in the industry is low and recovery rates are typically above 80% on defaulted loans 🤯. Thus, annual average losses are less than 0.50% (public SEC filings Applied Real Intelligence data)

4. Brazil has the ‘blue ocean’ opportunity for venture debt: total venture debt capital raised in the country is projected to reach US$690.00m in 2023 vs US$28,6b 😱 in the US

Here are FIVE big ideas from our conversation with Gabriela 🧐💡👇🏻:

1. Data-driven decision-making is crucial for startups to optimize their operations and achieve sustainable success

   A metrics-obsessed culture is a winning culture

2. Financial literacy is a crucial skill for startup founders 

   Finance is the lifeblood of business. Gaining an understanding of what balance sheets and profit and loss statements mean provides a clear view of the financial state of the startup and facilitates smarter decisions

3. Learning to detach oneself from a startup is a difficult but essential skill for founders

   Emotional attachment to startup can cloud judgment and impede progress. Be mindful of the sunk cost fallacy

4. Venture debt is venture capital’s little brother. It accelerates growth and extends runway while also helping growth-stage startup founders maintain ownership

   It best suits Series B+ startups that have functioning board governance, validated scalable business model, reliable recurring revenue and positive unit economics

5. 2023 is the perfect storm for venture debt financing

   The current market downturn and decreased VC activity left many high-quality VC-backed growth startups with struggling runway and threat of down rounds and hence strengthened the deal flow for venture debt providers

Gabriela’s book recommendation is Financial Intelligence for Entrepreneurs by Karen Berman and Joe Knight

You can watch the interview on YouTube here

Listen to the episode on Spotify and Apple Podcasts

Thanks for reading,

Olga