The J Curve With Pedro Sirotsky Melzer, Founding Partner at Igah Ventures: Five Big Ideas

Pedro Sirotsky Melzer is a partner at Patria Investments and the founding partner at Igah Ventures, whose portfolio includes the likes of Infra Commerce, Unico, Avenue Securities, Hashdex, Conexa Saude, CRM&Bonus and more.

The big part of our conversation not surprisingly was tech entrepreneurship and venture capital. In case you wonder how big the opportunity in LatAm tech investing is, it’s VERY BIG:

1. In 2021, venture-backed companies raised $14.8b across 772 deals in Latin America (PitchBook data). That’s more than the total tech capital invested in the region over the previous six years

2. 4x growth in the number of tech unicorns in LatAm in 2018-2021: from 9 to 34🤯. The number is even higher if we count companies that went public or were acquired

3. 2.4x increase in VC investors active in LatAm in the same period: from 710 to 1,706

4. Brazil is the cherry on the region´s venture cake, with the lion’s share of funding and unicorns. The number of tech IPOs went from four in 2020 to seven by the first half of 2021. The accumulated value of the main technology companies tripled in Brazil over the last decade. And yet there is potential for more as tech companies represent less than 10% of all companies in the Bovespa, compared to around 30% seen in the S&P500

5. The volume of invested capital dropped in 2022 but it is still 63% above pre-pandemic level

Here are 5 big ideas from our conversation with Pedro 🧐💡👇🏻:

1. Investment discipline matters more than potential upside

   In the emerging ecosystem environment specifically, the consistent ability of a VC firm to complete the cycle from sourcing to developing to exiting deals contributes to building relationships with LPs and industry more than an occasional disproportionate return from a single outlier

2. Strong founder-driver corporate culture is the ultimate trait of every hugely successful tech company

   Great founders are absolutely committed to do whatever it takes for their businesses to succeed even if it means to step down from the chief executive role when the company outgrows their leadership

3. The key venture risk Igah is not willing to take is a business model risk

   Founders must have a strong hypothesis around how they are going to make money. The ‘let’s build a sizable customer base and figure out the monetization later’ approach won’t work

4. Founders prioritize long-term multi-stage investors committed to the region over short-term ‘tourist capital’

   To win big as a VC firm, one needs an access to a large scale high quality domain expertise and a deep pocket to lean hard on the portfolio winners. After its acquisition by Patria, Igah has both capabilities

5. Fundraising is a strategic competency that any VC-backable startup founder must develop

   Funding is a lifeblood of startup growth. Founder’s ability to tell the story about why the market they are targeting is big, why the team has what it needs in terms of deep domain knowledge and how VCs can add value to their adventure are critical pillars of this competency

Pedro’s book recommendation is The Seat of The Soul by Gary Zukav

You can watch the interview on YouTube here

Listen to the episode on Spotify and Apple Podcasts

PS: Wanna read something cool on startup culture? Read the ‘Don’t Fuck Up The Culture’ article that Airbnb CEO Brian Chesky published back in 2014

Thanks for reading,

Olga