Based in Silicon Valley, 500 Startups is definitively putting Brazil on its radar. The American fund is in the fundraising phase for its first fund dedicated exclusively to structuring its first acceleration program for Brazilian startups. The plan is to raise US$10 million to consolidate the project and invest in national companies.
Initially, the funds will be raised from local investors. "Today, the Brazilian market is experiencing a favorable moment to receive the program," said Bedy Yang, partner at 500 Startups, to NeoFeed , during the Latin America Investment Conference, an event being held this week by Credit Suisse in São Paulo.
Named Brazil Hub, the project brings to life an idea already discussed by 500 Startups on other occasions. About four years ago, the company, then led by Dave McClure, even considered raising specific funds, in the range of US$10 million to US$30 million, focusing on Latin America. The plan was postponed, however, due to the unfavorable conditions in the country at the time.
In contrast, Bedy highlights the maturity achieved by the Brazilian ecosystem during this period. "In the last 18 months alone, 14 unicorns have been created in the country, which shows how quickly this market is evolving," he noted.
She added that, in 2019, the availability of capital also showed progress. "The year was marked by the structuring of new funds in the country and the raising of additional funds by those already here," says Bedy, also pointing out that important funds, such as the American Accel Partners, have returned their focus to the country.
Still in its initial phase, one of the guiding principles of Brazil Hub, in addition to investments, will be to promote exchange between startups and local entrepreneurs with those from other regions. This approach follows the same principle adopted by 500 Startups in other similar projects, such as in Singapore.
Created in 2010, 500 Startups gained fame for its large appetite for startups. On average, the fund invests in one company every two days. Since its founding, the company has accumulated a portfolio of 2,300 investments in 75 countries.
This thesis, however, follows a logic. By distributing resources across a large number of startups, the company dilutes its risks. And, at the same time, it increases the chances of finding the next unicorn. This was the case, for example, with Twilio, an American cloud communication platform, which went public in 2017 and is now valued at over US$16 billion.
In Brazil, 500 Startups' portfolio comprises 44 investments, including names like ContaAzul, Trocafone, and VivaReal. Investments in the country totaled US$5.5 million. In total, these startups raised US$330 million in subsequent rounds with the participation of other funds.
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