The J Curve Insider: The New Operating Manual for LATAM Founders

Every few months, I zoom out to reflect on the lessons that stuck with me from the conversations we had on the show. And the first few episodes that kicked off Season 4 were absolute fire.

We heard hot takes from Paulo Passoni (Valor Capital, formerly SoftBank), Roberto Oliveira (Blip), Guilherme Horn (WhatsApp), and André Penha (QuintoAndar). Different industries. Different stages. But a clear set of themes came through:

→ A $200M exit can be rational, but it doesn’t move the ecosystem.

→ WhatsApp isn’t a channel—it’s the new OS of Brazilian business.

→ IPOs are math. And they start with $300M+ in revenue.

→ What built the last cycle won’t win this one.

Let’s get into it.

THE M&A CEILING IS REAL. AND IT’S SHAPING HOW WE BUILD

Let’s talk exits—$200M–$300M is where most strategic M&A taps out in LATAM. That sounds like a win—until you understand how venture capital actually works.

VC is a power-law business.

Most startups fail or underperform, so every investment must be underwritten with the potential to return the entire fund. One or two breakout companies are expected to generate the bulk of returns—and cover for everything else. If you’re managing a $250M fund, that means you need at least one company to return $750M–$1B.

A $200M exit doesn’t move the needle. Especially if the company raised $75M+ at a $1B post-money valuation—the returns get absorbed by preference stacks, ownership dilution, and liquidation waterfalls.

That’s why investors backed Nubank early. Not because it was safe—but because it could return the fund many times over. That level of potential is the baseline in venture. Anything less simply doesn’t work.

But here’s the nuance: selling for $200M can be a rational—and even life-changing—outcome for a founder.

In a region shaped by currency pressure, political instability, and macro volatility, it’s not unreasonable to derisk and cash out. Many founders are navigating real systemic risks—not just boardroom theory. But while the decision makes sense on an individual level, it limits what we can build at a regional level.

Because when promising companies sell early, the ecosystem doesn’t compound.

→ No public comps.

→ No liquidity.

→ No secondaries.

→ No alumni networks.

→ No institutional LPs flowing in.

The region compounds only when companies stay unreasonable—and stay independent.

IPOS AREN’T DREAMS. THEY’RE DESIGN TARGETS

We glamorize IPOs like they’re some elusive finish line—rare, glamorous, unpredictable.

They’re not. They’re math. And in venture, they’re the cornerstone of the power law.

For VCs, a great IPO isn’t just liquidity—it’s the event that returns the fund.

For founders, it’s scale, permanence, and global validation.

But getting there isn’t about being a “good company.” It’s about being a public-grade company.

According to Paulo Passoni, the hard truth is this:

If you want to attract Tier 1 institutional investors, you need to be targeting a $10B+ market cap.

Anything smaller, and your float is too thin. The best funds—hedge funds, sovereigns, pensions—won’t touch it.

Not because the business isn’t good. But because there’s not enough liquidity to build conviction at size.

And to get there, you need the fundamentals to match:

→ $300M–$600M in annual revenue.

→ Double-digit EBITDA margins or a clear path there.

→ Efficient capital deployment.

→ Predictable, compounding growth.

There’s a reason Nubank went public at $41B. They weren’t just big. They were structurally attractive to global allocators—clean financials, efficient CAC, market leadership, and the narrative of emerging market digitization.

OUT OF THE CAVE. INTO COMPOUNDING

After the market correction in 2022, many startups across Latin America shifted into survival mode.

Uncertainty was everywhere—capital dried up, valuations collapsed, growth slowed. So founders did what they had to do:

→ Cut burn.

→ Paused hiring.

→ Hit breakeven.

They moved fast to preserve cash and live to fight another day. Paulo Passoni called this phase “the cave” And at the time, it was the rational response.

But staying there too long is a mistake.

If your growth rate is lower than your cost of capital, you’re not preserving value. You’re eroding it. You’re shrinking your equity, burning investor confidence, and losing the narrative. The best founders are back on offense—launching new products, automating core workflows, driving revenue per employee, not just headcount.

CloudWalk is already generating $450K per employee. That’s not just surviving—it’s compounding productivity at the unit level.

In this cycle, productivity is the metric. And AI is the multiplier.

INFRASTRUCTURE (HIGH SWITCHING COSTS) IS THE MOAT

In 7 Powers, Hamilton Helmer outlines the core sources of durable strategic advantage. Switching costs are one of the most underappreciated—and most powerful.

When your product is so embedded in a customer’s operations that replacing it disrupts workflows, triggers compliance reviews, or requires retraining staff—you’re no longer a vendor. You’re infrastructure. In a region where margins are tight and enterprises are risk-averse, switching costs become one of the most effective—and defensible—strategic moats.

That’s exactly what Blip achieved. Roberto Oliveira didn’t just spot the messaging trend—he built the rails underneath it. The insight wasn’t about ringtones or bots. It was recognizing that messaging would become the default interface between companies and customers. And whoever owned that layer wouldn’t just offer software—they’d control the operating system. Once banks route alerts, KYC, payments, and support through your platform, you’re not optional. You’re the system of record.

And systems of record don’t get replaced:

→ Not because they’re loved.

→ But because switching is risky, costly, and operationally disruptive.

That’s why Salesforce still runs CRM.

SAP still powers supply chains.

Twilio still handles authentication at scale.

In LATAM, In LATAM, defensibility comes from embedding deep enough to become irreplaceable.

IF LATAM HAS A NEW OS, IT’S CALLED WHATSAPP

One of Guilherme Horn’s sharpest observations was deceptively simple: “Every time I need to download an app to complete a one-time task, that’s a broken experience.” That sentence captures a seismic shift playing out across Latin America’s largest market.

WhatsApp is no longer a chat app—it’s the storefront, the bank branch, the operating system of the Brazilian economy.

Banks now issue credit cards and open accounts inside chat. Founders skipping the app layer entirely. Small businesses running on WhatsApp as a mobile-native ERP. That’s not a trend. That’s a new normal.

And as Open Finance gains traction, AI becomes the layer that turns raw financial data into personalized, automated action—within the same interface.

For fintechs and embedded finance players, this shift redefines product strategy.

→ Don’t assume you need an app.

→ Don’t assume the homepage is your entry point.

→ Don’t assume onboarding starts at your login screen.

The opportunity isn’t another neobank or digital wallet. It’s to build invisible financial infrastructure that lives inside messaging—context-aware, embedded, and effortless.

WATCH OR LISTEN TO THE J CURVE EPISODE WITH OLGA ON SPOTIFY:

THE RIGHT TIME TO EXPAND IS WHEN EXPANSION DEEPENS YOUR MOAT

Sometimes the smartest move isn’t to make the system 20% better—it’s to make it irrelevant. André Penha from QuintoAndar saw a rental market full of paperwork, brokers, and delays—and chose not to incrementally improve it. He digitized the entire process by removing friction, guaranteeing outcomes, and making leasing feel like a consumer-grade experience in a deeply institutional market.

But here’s the deeper play:

Once QuintoAndar became the default rental layer, growth didn’t require reinvention—it required observation.

Landlords weren’t asking for new features. They were asking to sell the same properties they had just rented.

So the team didn’t brainstorm adjacencies. They built into existing behavior. Sales became a natural extension—not a new vertical. Same supply. Same infrastructure. Same trust.

That’s the compounding logic most startups miss. Expansion shouldn’t dilute focus—it should deepen the moat.

→ Use what you’ve already earned: distribution, data, workflows, brand trust.

→ Stack services where the customer already is.

→ Scale only what reinforces your core loop.

André didn’t scale for the sake of it. He expanded deliberately—layer by layer—until the legacy model no longer made sense.

That mindset is what allowed QuintoAndar to become one of Latin America’s most valuable real estate companies.

THE TAKEAWAY

If there’s a common thread across all these stories—Paulo, Roberto, Guilherme, André—it’s this:

The founders who build enduring companies in Latin America don’t just ride the wave. They read the current. They build through cycles. And they stay patient when everyone else is panicking. They don’t build loud. They build deep.

If you’re building something right now—through inflation, volatility, or just plain ambiguity—

I hope these stories reminded you:

You’re not alone.

You’re not early.

And you’re not crazy.

You’re just doing the hard part—the part that actually matters.

 P.S. If this issue was valuable to you please share it with a founder who needs to hear it. Let’s build LATAM’s next tech leaders—together.

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