Monashees moves forward with its 11th fund, aiming to reach R$1 billion.

Venture capital firm Monashees is close to the first closing of its eleventh fund, which aims to raise US$200 million (approximately R$1 billion), half the amount of its previous fund, according to NeoFeed .

The Monashees XI fund is currently expected to raise between US$80 million and US$100 million and already has some anchor investors who participated in the previous fund. These include the IFC (International Finance Corporation), the private sector arm of the World Bank, and IDB Lab, the innovation and venture capital arm of the Inter-American Development Bank Group (IDB).

According to documents published by these institutions, the IFC will invest US$11.2 million in Monashees' new fund – the investment has already been approved by the investment committee and now only the final OK is needed, which should happen in May. The IDB Lab, in turn, will contribute US$6.5 million.

“No manager likes to raise a new vehicle that is smaller than the previous one,” says a venture capital investor. “But there is a lot of global instability, wars, and investors are selective with high interest rates.”

A source close to Monashees, however, says that the decision to reduce the fund's size was intentional and strategic in order to maximize returns for LPs ( limited partners , as the investors are called). "Even smaller, it's a size that allows us to lead funding rounds and is ideal for the opportunities of the next three years," they stated.

Monashees' last funding round took place at the end of 2021, when it raised US$700 million across two funds: Monashees X, focused on early-stage startups, and Expansion II, for growth but which invests only in portfolio startups.

The values of each vehicle were not revealed at the time. But NeoFeed learned that Monashees X raised approximately US$400 million and Expansion II, US$300 million. The management company still has capital to invest in at least three startups from this vintage before starting to deploy the capital from the new fund.

Now, Monashees will focus on early-stage investments. The thesis will not change compared to other funds. But the intention is to reinforce the bet on AI, a topic that is on the agenda of all venture capital investors.

According to a document from IDB Lab, which approved the investment, Monashees XI “will invest in up to 30 technology-based startups that address market inefficiencies through technological solutions with the potential for scalability and regional impact.”

He goes on to add that the "fund will follow a sector-agnostic approach, with an emphasis on fintech, edtech, healthtech, retailtech, Software as a Service (SaaS), and emerging technologies, including Artificial Intelligence (AI) and climate technology."

Despite its smaller size, the fund is not expected to reduce the size of its investment portfolio. The goal is to lead or co-lead investments in rounds ranging from seed to Series B. "Today, thanks to AI, startups have a lower capital requirement to scale," says a source close to Monashees.

With offices in São Paulo and Mexico City, Monashees has just opened a branch in San Francisco, in the United States, to be closer to the cradle of American innovation and closely follow the transformations of artificial intelligence.

According to a source close to Monashees, the new fund should reinforce a thesis that has already been gaining traction in the firm's strategy: Latinos who are starting businesses in the United States. Currently, Monashees already has startups with this profile, such as Moises, Tractian, Slope, Simetrik, and Vortexa.

"They noticed a greater influx of Latinos to Silicon Valley due to the AI trend. And with that, they assembled a team to provide support and invest in these cases ," says this source.

The study “Brazil Tech Diaspora in the USA” , by Endeavor, published exclusively by NeoFeed , mapped 200 Brazilians in the American tech ecosystem, of which more than 140 were entrepreneurs, and showed how AI, abundant capital, and global ambition were driving this new diaspora.

Pioneer of venture capital

Founded in 2005 by Eric Acher and Fabio Igel, Monashees is one of the pioneers of the Brazilian venture capital market. Throughout its history, it has invested in 150 companies (including 12 unicorns) in Argentina, Brazil, Chile, Colombia, and Mexico, through 12 funds (10 of them early-stage and two growth funds). Approximately 90 of them are still active.

The portfolio includes companies such as Rappi, Wellhub (formerly Gympass), Creditas, Loggi, Ualá, and ID Wall. The 99 app, the first Brazilian unicorn, was part of Monashees' portfolio, as was Nubank. Méliuz and Enjoei, the first two startups to go public in Brazil in the 2020 and 2021 wave, were also investments of the venture capital firm.

However, as is inherent to the venture capital asset class, which carries a high level of risk, especially in the early stages , the firm also has investments that have not worked out.

The most high-profile of these investments was in the social commerce startup Facily , which raised over US$500 million and was valued at US$1.1 billion. In 2023, Monashees wrote off this investment, according to NeoFeed .

The latest round of investments also coincided with a boom in the venture capital market, where valuations were inflated, leading to a correction in the valuation of many startups.

“The last few years for most venture capital managers have suffered a lot. There’s a value correction and a drought of exits,” says one investor. “They’re going through the ‘J-curve.’ We’ll know if it was good or not later on.”

The "J Curve" is a theoretical concept in which a venture capital investment follows a cycle similar to the letter J. It experiences an initial drop, then recovers and accelerates, surpassing the initial starting point.

Fundraising returns to the market.

Monashees is the latest fundraising firm to move forward, a positive sign for the venture capital market, which experienced what has been called "the startup winter" since 2022.

On one hand, with the market correction, it became a good time to invest. And those who had money, the so-called dry powder , had the opportunity to make good deals.

On the other hand, with high interest rates and disappointment with the 2020 and 2021 harvest, many investors began to view venture capital with suspicion. In short, it became much more difficult to raise capital for new funds.

According to NeoFeed , there are over 40 venture capital firms in the Brazilian market raising funds. However, most of them have either failed to raise capital or have closed their funds below their fundraising targets.

Even so, asset managers with a track record and tradition in the market have managed to attract investors to their new funds. Examples include Astella Investimentos, Canary, Valor Capital , OneVC, Big Bets, Volpe Capital , and Spectra .