The growth in venture capital investment in Latin American tech start-ups shows the region is finally drawing attention but more investor diversity is needed, says the former chief investment officer of IDB Lab

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Venture capital investment in Latin American tech start-ups have hit record amounts in each of the last three years.

As the chief investment officer for the Inter-American Development Bank (IDB) Lab, Susana Garcia-Robles has played a critical role in helping to promote venture capital in Latin America and the Caribbean.

In the early 2000s, she spearheaded the IDB’s program to foment venture funding. But the effort immediately faced significant headwinds as Argentina’s massive 2001-2002 economy collapsed, Brazil’s economic crisis unfolded and the first dot-com bubble burst.


Today, foreign investors are pouring billions into Latin American tech start-ups, with a growing number of global investors putting money to work in the region.

Garcia-Robles and her colleagues at the IDB Lab, formerly called the Multilateral Investment Fund, helped develop several funds over the past two decades.

Since 1996, the IDB Lab has invested over $320 million in some 85 venture capital funds. The funding helped put IDB Lab at the forefront of venture capital development and spurred others in the private sector to invest.

At the end of February, Garcia-Robles stepped down from her position at IDB Lab to assume the role of executive director of LAVCA, the Association for Private Capital Investment in Latin America. She also joined the investment firm Capria as a partner.

Garcia-Robles recently sat down with LatinFinance to discuss the surge in venture investment in Latin America and the funding outlook for tech start-ups.

The interview was edited for length and clarity.

Last year, VC funding reached a new record level. Are you worried at all about too much capital being available?

I’m a bit concerned that the message to start-ups may be ‘grow at all costs.’ I think a start-up should be ambitious and want to go global and have the potential to address a $1 billion market but the founders have to know how to do it: can they recruit talent in all new geographies, do they understand the different needs in the markets? How are their numbers? Burn rates?

How would you describe the investment flows? Are they sufficiently diversified or dominated by a few players?

In the last few years, they’ve been dominated by a few.

On the one hand that put a lot of attention on the region but I’d like to see many more players investing more steadily rather than just a few injecting too much money in a few start-ups. It’s good to have the memories of the (first) internet bubble in our minds.


Shifting to local fund managers, what are VCs in Latin America doing right today?

Today when I think of the best funds, they all have some role in the ecosystem. They have a dedicated team for the ecosystem and a dedicated team for the fund.

They have understood that if you move the ecosystem, you improve the chances of having better entrepreneurs and better businesses and that reflects in the kinds of returns you can offer your investors. You create a virtuous cycle.

I think the best ones are those who are a reference in the ecosystem.

That means more than going to conferences. Of course you have to be supportive and be visible.

For example, NXTP Ventures (an early-stage venture capital fund based in Argentina) has been running an acceleration program in fintech. It is working with five banks in Argentina and created a mini-fund it’s managing. They have run agtech acceleration programs and started a blockchain accelerator. Angel Ventures (in Mexico) has worked with its own incubator and really fostered entrepreneurial talent.

What should they be doing better or differently?

Some of them – and this has been looming as long as the venture capital industry has existed in Latin America – still feel like they can totally replicate Silicon Valley.

You shouldn’t do that.

It’s not about replicating Silicon Valley or Israel. You have to find your own way to adapt the best lessons from Silicon Valley, from Israel, from whomever or wherever you want. But you have to understand that in the end, you have to grow the industry or your fund locally to then expand regionally and then globally. I think that’s very important.

You said VCs in Latam shouldn’t replicate Silicon Valley. What do you mean?

The typical example is when they present their deck to you and you go to the financial modeling of the fund.

When I say they follow the typical model of Silicon Valley, I mean thinking there will be one unicorn that makes the fund and so I don’t care if I invest in 15 or 20 other companies.

That’s not what is happening in Latin America even though beginning to have unicorns.

A fund manager in Latin America has to be a little more cautious, a little bit more prudent.

Would you advise entrepreneurs and fund managers in the region to not depend so much on Silicon Valley?

Absolutely. I’d say look at Silicon Valley but if they don’t give you the time of day, that’s not your only option. There are many, many other options. I just came back from Spain. Wearing my LAVCA hat, we have signed a memorandum of understanding to foster collaboration between funds there and our entrepreneurs.

How would you characterize the approach of foreign investors, especially Silicon Valley VCs, to Latin America?

I think they’re still being very, very opportunistic.

There are some teams in Silicon Valley that have started to have Latinos or Latin Americans. So that has helped. But they still have a lot of doubts because in Silicon Valley there are a lot of deals right there to be done.

What’s happening – and it’s a good thing – is that there are increasingly other options. Not everything is about Silicon Valley. There’s Europe, the Middle East, Spain, even South Korea is beginning to discover Latin America.


I was in South Korea twice last year and was surprised to see entrepreneurs talking to me in Spanish because they had some operations in Guatemala or Mexico or Colombia.

So when you begin to see that other regions have foresight, I say that Silicon Valley is not everything. We move on. And let them come when they come.

You’ve seen multiple phases of development or evolution as well as backsliding in the tech and VC ecosystem. Can you describe those main phases?

When you look back, it was a real rollercoaster.

The Argentine crisis didn’t help because obviously during the first internet boom. Argentina was beginning to have a very interesting private equity industry that would have trickled down to venture capital but was totally erased by the internet bust and the Argentine crisis.

We had a few funds during those years. Of course, they did not make profits but we learned who was a good co-investor to have.

We had an overseas investor that at the time of the Argentine crisis and when it collapsed, instead of helping us help keep venture capital a float until things would get better, he immediately began asking for his money and cutting down on capital calls and we were like: ‘don’t you realize the country has collapsed? What money do you want to get back?’

I was fighting for two years.

That helped me realize that you have to create a healthy local venture capital industry. You have to build it with locals that are not going to go anywhere and then you attract the overseas investors.

Overseas investors are always going to be looking at you when things look good and fleeing when things don’t look so good. So that was another hard lesson.

Even today we look at the region and it’s full of problems, but I’m much more relaxed. (because of the growth of the local VC industry.)

Given your experience, what should the role of the public sector be?

The role of the public sector is to be a facilitator. Let’s use biotech as an example. The public sector should provide more subsidies until the companies are formed. The public sector should invest in venture capital funds but not try to have any decision power in the investments.

In Brazil, do you think BNDES serves as an example of a missed opportunity? It spent so little on innovation programs compared to what it spent subsidizing the large multinationals like Odebrecht and JBS.

Yes. I would like to see them play a larger role but with caveats: No interference in the strategy of the fund managers or in the type of investments. Just be very good when determining who are the best managers in the market and give them the money.

The lack of diversity, particularly women, is one of the shortcomings of the region’s current tech and VC ecosystem in terms of both founders and investors. You’ve worked to address this issue. Why do you think this remains a problem?

I think the biggest gap is women at the C-level position.

We are beginning to see that there are many more women co-founders of startups. We’re catching up. In my view, it will still take between 5 to 10 years in Latin America.

Since we started two programs to help promote diversity, WeXChange and WeGrow, we’ve noticed an impact. A study we released in January showed that of 405 women entrepreneurs in the STEM fields in Latin America, 81 percent of them said they created their companies in the last five years.

We now have a number of fund managers who have women partners with strong credentials like Jaguar, 500 Startups, Luchradoes, and NXTP.

Turning back to the current market, do you have any other concerns?

Our region is volatile but both entrepreneurs and fund managers are resilient.

I’ve seen so many crises in the last decades that I have learned that in the end, it’s all about who is savvy enough to navigate the troubled waters and know the timing to invest and to exit. Crises bring huge opportunities!