The J Curve Insider: If You’re Not Using AI, You’re Dead

LATAM’s startup ecosystem has never been more dynamic—or more misunderstood. The IPO market is frozen, M& A deals are piling up, and global investors are either pulling back or doubling down. To break it all down, I sat down with Paulo Passoni, the man behind SoftBank’s $5B bet on Latin America, now shaping the region’s future at Valor Capital. Paulo doesn’t hold back. Let’s get into it.

Olga Maslikhova: Paulo, you have an unconventional background for an investor. How did growing up in Brazil shape the way you think about risk and opportunity?

Paulo Passoni: I grew up in Jardim Ângela, one of the poorest neighborhoods in São Paulo. My mother was a politician, and every four years, it was “all or nothing”—either she got reelected, or we had to completely rethink our lives.

That shaped me in two ways. First, I got comfortable with uncertainty early on. If your life resets every four years, you learn to be adaptable. Second, I never feared working hard. My parents worked seven days a week—you either hustle, or you get left behind.

OM: You also played volleyball at a professional level, right?

PP: Yeah, from 13 to 16, I played at Esporte Clube Banespa, one of the most competitive volleyball clubs in Brazil. It taught me two things I still use every day in investing:

1. Meritocracy is real. The best players make the team—no excuses.

2. Hard work beats talent every time. In sports, business, and investing, the people who outwork everyone else always win.

Why He Only Bets On ‘Crazy’ Founders

OM: You’ve said before that the best founders are a little bit crazy. What do you mean by that?

PP: Because the rational thing to do in LATAM is sell early. You raise a few rounds, build a solid business, and someone offers you $200M. You do the math—put the cash in the bank, live off interest, avoid stress—and boom, you’re out. That’s why I look for founders who don’t think like that. The ones who say, “I don’t care about an early exit, I’m building something generational.”Those are the people who create MercadoLibres and Nubanks—not companies that sell at Series C.

OM: How do you tell the difference between founders who say they want to build big and those who actually will?

PP: That’s the hardest part. Everyone says they’re in it for the long haul. But most aren’t.

The real test is watch how they act when money is on the table. If they start thinking about their personal bank account instead of the company’s long-term potential, they’re not the one.

If You’re Not Using AI, You’re Dead

OM: Every founder is thinking about AI right now. How do you see it playing out for LATAM startups?

PP: AI is the biggest productivity unlock we’ve ever seen. And yet, I see so many founders completely ignoring it. That’s insane to me.

OM: What’s your litmus test for whether a company is actually leveraging AI?

PP: Revenue per employee. Cloudwalk doubled its revenue per employee in 12 months. That’s the standard now. If your revenue per employee isn’t increasing, you’re doing something wrong. AI is making it cheaper and faster to build, and if you’re not taking advantage of that, you’re going to get left behind.

Most Latam Founders Aren’t Thinking Big Enough

OM: Everyone talks about IPOs, but let’s be real—how many LATAM startups are actually IPO-ready?

PP: Right now? 3 to 5 companies. That’s it.

OM: What’s stopping more from getting there?

PP: Three things:

１They’re not doing enough M& A. They should be merging to create bigger, more scalable platforms.

２ They’re not preparing for IPOs early enough. It takes two years to get IPO-ready, and most companies don’t start planning until it’s too late.

３ They don’t have enough scale. If you want to go public in the U.S., you need $600M+ in revenue—and strong margins.

SOFTBANK’S $5B LATAM BET: LESSONS FROM THE INSIDE

OM: You were at the center of SoftBank’s massive push into LATAM. Some say it changed the region forever, while others think it created a bubble. What’s your take?

PP: SoftBank’s $5B bet put LATAM on the global venture map. Before that, most U.S. investors weren’t even looking at the region.

OM: What were the biggest takeaways from that experience?

PP:

✓ Big vision attracts capital. The hardest part isn’t raising money—it’s convincing investors to care.

✓ Founders adapted FAST. I expected way more bankruptcies in 2023, but most startups found ways to break even.

✗ Biggest mistake: follow-on rounds. We overcommitted to backing founders at any valuation, when we should have been price-sensitive.

👉 “We made great investments in 2019. But our worst mistakes were in follow-ons at inflated valuations. We overpromised capital, and it hurt everyone.”

OM: What’s the biggest lesson for investors?
PP: Overpricing a great company can kill returns just as fast as investing in a bad one.

YOU HAVE TO BE ON THE OFFENSIVE

OM: The LATAM startup ecosystem went through a survival phase in 2023. What should founders be doing now?

PP: They need to get out of the cave and start hunting again. So many startups went into “hibernation mode” during the downturn—cutting burn, breaking even, playing it safe. That was smart for 2023. But now, if you’re not thinking aggressively about growth, you’re shrinking.

OM: What’s the right way to think about growth in 2024?

PP: Three rules:

♢ Use AI aggressively to scale smarter, not just bigger.

♢ Find M& A opportunities—the best way to scale is by joining forces with other winners.

♢ Expand your scope—if you can’t go global, at least own your region.

OM: So your message to founders is?

PP: Stop playing defense. Start attacking. Because the ones who stay aggressive are the ones who survive—and win.

Watch the J Curve episode with Paulo on YouTube:

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