Recently, a news report detailing an internal dispute at a venture capital-driven company quoted the founder as suggesting he performed miracles by raising money from "suckers" in VC. This unfortunate comment exploits the industry's greatest virtue and its greatest weakness: trust as its compass.

Trust in the improbable allows for investments in a rocket company whose ambition was to colonize Mars and which is now redefining telecommunications, or in a laboratory that sought to develop computational intelligence superior to human intelligence – something that seems so commonplace today.

Perhaps it's worth reflecting on the main concept of venture capital: when an opportunity seems obvious, it seems obvious to many, and the chance of large returns is replaced by the fear of missing out, a dangerous feeling. Therefore, arriving early and believing in what seems improbable are essential.

Executing what seems improbable generates results that seem impossible. Who would have thought, ten years ago, that Nubank , a credit card startup, would compete on equal footing with giants of the Brazilian banking sector, such as Itaú, or that Mercado Livre would be one of the most valuable companies in the region while GPA struggles for survival ? Crazy, or foolish, people made these bets, which have increased in value more than 30 times over that period.

In the United States, the statistics speak for themselves. According to a study by Stanford professor Ilyia Strebulaev, updated by Volpe Capital , more than 80% of the market capitalization of the stock exchange comes from companies driven by VCs; 90% of the value of patents, likewise; and so does about 70% of the taxes paid by listed companies.

In Israel, the Yozma program to boost the VC industry, launched by the government in 1993, catalyzed the ecosystem. Today, tech represents 20% of GDP, elevating the country from a mid-table position in the 1990s to one of the global leaders in GDP per capita.

In Brazil, we are fortunate to have a well-established venture capital industry with excellent professionals. Like large families, large portfolios bring both joy and challenges. This episode is neither the first nor the last.

The pioneers in this industry brought visibility to the country and investments in solutions for major local problems: from financial inclusion to job opportunities in the gig economy – which has become the largest source of employment – and the strong expansion of entrepreneurship.

Data compiled by Spectra for funds operating in Brazil (despite a limited sample size) shows median returns higher than the median in the United States, according to data from the asset manager's report. IPOs of companies driven by VC are expected to lead the next liquidity window in Brazil.

With the strong expansion of AI investments in recent years, the only certainty we have is that we will live through years of great volatility. On the one hand, the great success of AI calls into question entire industries: from medical practice and software to the financial industry.

On the other hand, little success would be punitive for the large investments made in this area. Nearly US$700 billion in technology investments are expected this year by hyperscalers (Amazon, Google, Meta, Microsoft, and Oracle), constituting the largest investment in history in a single program—equivalent to three times the investment in the Apollo program that took man to the moon, adjusted for the percentage of US GDP then and now. Both scenarios, success and failure, generate volatility.

Driven by AI, several companies in our portfolio are growing faster than Mercado Libre did during its hypergrowth phase, something previously unthinkable and which gives us confidence in the transformative impact of technology.

Brazilian quality

We don't predict the future – especially since macroeconomics tend to have less impact on the day-to-day operations of a VC – but we do outline scenarios. One of them is that AI will lead to huge leaps in productivity, generating a collapse in inflation and, consequently, in global and local interest rates.

Countries with the largest technology and engineering debt, but with highly digitized economies like Brazil, could be major beneficiaries. Suddenly, decades of underinvestment in mathematics, computer science, and engineering will become irrelevant.

In this scenario, long-term assets, such as venture capital – where startups are the best candidates to benefit from AI – or even that 2065 Income plus 7% inflation, will become obvious. At that point, the opportunity for large returns will have been exhausted, and inflation plus 7% will seem like a distant dream.

Entrepreneurs in Brazil are of excellent quality. While funds take diversified risks across many companies, entrepreneurs take highly concentrated risks and dedicate their careers to building these dreams, and we are proud to support them.

We have a new generation of entrepreneurs, more prepared, who understand that failure can also be part of the journey and don't need questionable shortcuts.

In VC (virtual credit), Brazil has perhaps one of the lowest fraud rates in the world, even compared to the United States, and much better than in Southeast Asia and other emerging markets.

Perhaps the "foolishness" lies in not believing that we can have great entrepreneurs in Brazil, until it becomes obvious. We would certainly be happy to be in the company of the "fools" who saw opportunities where others saw the improbable.

André Maciel is the founder and partner of the venture capital firm Volpe Capital.