Julie Ruvolo, Director of Venture Capital at LAVCA, shares her vision about the investment scene in Latin America

2019-12-18
We talked with Julie Ruvolo about her vision about the current investment scene in Latin America; trends, major opportunities, and great insights about how the entrepreneurial landscape works and grows.

Julie Ruvolo is the Director of Venture Capital at LAVCA, where she manages venture investor relationships in Latin America and globally.


She also serves on the advisory board of LatinSF, a public-private partnership between the Mayor’s Office of Economic and Workforce Development (OEWD) and the San Francisco Center for Economic Development (SFCED) to promote business between San Francisco and the Latin American region.

Before joining LAVCA, Julie covered tech and innovation in Brazil as a journalist for TechCrunch, Buzzfeed, GOOD Magazine, Advertising Age, The Atlantic’s CityLab.com and others.

We talked with Julie about her vision about the current investment scene in Latin America; trends, major opportunities and great insights about how the entrepreneurial landscape works and grows.

The Interview

Q: When did LAVCA start tracking VC and startup activities in Latin America? What was the scene like at the beginning?
A: We issued our first VC breakout report in 2016, covering activity from 2011-2015. The chart was already starting to go up and to the right, but the deal volume was dramatically lower compared to now, reaching a record (at the time) of US$594m in 2016. We’ve been producing annual VC/tech reports ever since, reporting on total dollars and deals per country, breakouts by sector and stage, top deals, and more recently, co-investments between local and global investors.

2016 is also when we started tracking the total number of Latin American startups in operation with more than US$1m in verified (and disclosable) venture funding, verified by LAVCA. The Latin American Startup Directory grew from 100 to 155 (2017) to 256 (2018). Our 2019 directory, which covers funding through the end of 2018, has over 300 companies listed.

Q: How have the activities changed over the years? What are some milestone-type events and activities that have shaped the ecosystem
A: Regardless of the macro-landscape in Latin America’s main markets — political, economic or otherwise — venture and tech investment in the region has been growing at a steady clip for about the past eight years, up and to the right, in the kind of chart startups like to show investors for projected growth.

2017 was the first billion-dollar year in terms of VC investment into Latin America, and venture investment from local and global players alike has effectively doubled year over year since then. Our most recent VC Data indicates ~US$2.6B invested in 1H2019, compared to US$2B for the entire year of 2018 (see graph below). If you added in all the corporate investment, and more recently, venture debt, you’d see a significantly higher number.

Q: Can you elaborate on the VC investment trends you have seen in Latin America?
A: A couple of milestones in terms of the pace of growth:

  • Starting with a US$200M investment in Brazilian rideshare 99 in 2017 (Riverwood Capital, Didi Chuxing & SoftBank), and Didi’s majority acquisition of 99 a few months later at a reported valuation of ~US$1B, the frequency of rounds over US$100M has grown, as has the emergence of a new cohort of Latin American unicorns. It’s important to remember that it’s necessary to have growth capital to create VC-backed tech unicorns, and the 99 transaction, chronologically at least, marked its arrival.
  • In 2018, the largest VC transaction, US$500 raised by Brazilian food delivery giant iFood (Naspers, Innova Capital, Movile) represented the entire amount raised in Latin America in 2016.
  • In 2019, the largest transaction so far has been SoftBank’s US$1B investment in Rappi, a Colombian last-mile delivery platform, which represents the entire amount of VC invested in Latin America in 2017.

Q: LAVCA is the official source of venture investing activities for the whole region. Could you share some highlights from the data in 2018? How are you seeing this year going?
A: While the big rounds and the unicorns are driving the headlines, our 2018 VC Data indicates that there is record growth happening across stages of investment, in terms of both deals and dollars. There was also growth in all of the major markets in terms of dollars. The entire ecosystem is growing.

Another interesting view into the activity is looking at how much of the invested venture capital was via local syndicates (only investors based in LatAm), versus blended (at least one local and one global investor), versus global syndicates (only globally based investors). In 2018, US$1.2B of US$2B total VC investment was via a blended syndicate of local and global investors. That seems like a lot of cross-border collaboration. It will be interesting to see how this indicator changes over time.

For 1H-2019, we’ve seen about US$2.6B in venture capital invested across 160 deals in the region, including about $1.06B in Colombia across 13 deals (including Rappi’s US$1B round from SoftBank); Brazil with US$989M invested across 88 deals; and Mexico with US$310M invested across 34 deals.

Q: So far most of the big deals have been led by international funds. At the aggregated level, are local funds lagging? What advantages do international funds have in the region?
A: It’s not unusual for global funds to bring the growth capital to emerging markets. SoftBank alone led or participated in 10% of all known global VC deals so far in 2019, according to Crunchbase News.

The main advantage global funds have in the region is the amount of capital, and theoretically some kind of competency of scaling a business with all that funding. While we see some notable global funds playing with early-stage checks, such as Andreessen Horowitz, the large majority are coming in to provide growth capital to startups that were identified and supported by local funds in the earlier stages, something that has never been historically available. And returning to the co-investment statistic for 2018, they are largely investing together.

Q: LAVCA conducted the first region-wide startup survey. Could you share some data and insights you got from there?
A: We used LAVCA’s Latin American Startup Directory as the basis of building a survey where we asked startup CEOs directly about their business, funding, growth, and challenges.

Some highlights from our Inaugural Latin American Startup Survey conducted end-2018:

  • Entrepreneurs are more experienced than they may be perceived; 66% of participating founders have started multiple companies; 59% advise other startups.
  • Impact matters: 59% of startups are measuring some form of impact; job creation and financial inclusion top the list.
  • Growth is widespread: 89% of startups reported positive net revenue growth for 2017-2018.
  • Adoption of emerging tech is widespread: 73% of startups across all sectors are using some form of big data, machine learning, or AI.
  • Startups are making meaningful contributions to the workforce: Startups that responded to the survey (~230 total) are responsible for over 25,000 current full-time jobs in the region.

Q: Latin American countries are some of the most important markets for many tech companies at a global level. What are some of the examples, and what do you think this reflects about Latin American consumers’ needs?
A: Just a sampling gives you a sense of the breadth of global tech companies oriented around, and/or focusing on Latin America:

  • Airbnb’s fastest-growing market in 2017 was Latin America.
  • Alibaba’s investment arm Ant Financial invested in the IPO of Brazilian payments company Stone Pagamentos.
  • Amazon launched its first-ever debit card in Mexico.
  • Didi Chuxing acquired 99 and is launching an AI engineer exchange program in Brazil and a joint lab in Chile with Universidad de Chile.
  • Mexico and Brazil are among the top global markets across Facebook’s messaging platforms.
  • Google’s largest campus globally is Google Campus in Sao Paulo, with well over 100,000 members last time I checked.
  • Latin America is a key growth market for Netflix.
  • PayPal made a US$750m strategic investment in Latin American e-commerce giant MercadoLibre this year.
  • SoftBank launched a dedicated US$5b Latin American VC fund.
  • Mexico City has grown into Spotify’s largest listener base, ahead of New York and London, according to the Financial Times.
  • Telefonica is one of the most active investors in Latin American startups, with almost €12 million invested across more than 20 deals in 2018.
  • Uber’s top three cities by volume are in Latin America (Sao Paulo, Mexico City, Rio), and Buenos Aires is growing quickly. Uber also just announced a majority acquisition of Cornershop, a Mexican on-demand delivery platform (pending regulatory approval).
  • WeWork is officially Mexico’s largest office tenant.

Q: Chinese tech companies have become more and more interested in Latin America. What comparative advantages do you think they have compared to western peers?
A: At LAVCA, we see value in bridging perspectives between the Chinese and Latin American VC/tech ecosystem. We have had the pleasure of hosting a keynote interview with an investor from China’s ecosystem for the past three years in a row at our annual meeting: James Shen of Qualcomm Ventures China joined us this year; previously we hosted Victor Wang of Zhen Fund and David Chao of DCM.

We sense that tech investors across Latin America, as well as startup entrepreneurs, are increasingly looking to China for models of innovation and inspiration for how to build and scale their projects. Silicon Valley used to be the dominant reference. Now there are two models to look at.

One example of this curiosity or warmer reception around the Chinese model is the “one app for all” model pioneered by the Chinese tech giants, to have a single place you can get a lot of different things done. In the US, you may have multiple apps that do almost the same thing (like ordering food), but in Latin America, there is a movement towards multi-purpose apps.

Rappi is a great example. From its early days, you could order food, but you could also order cash from your debit account delivered to your door. Uber’sspending majority acquisition of Cornershop is another example of the “one app for all” model playing out in Latin America.