Kaszek Ventures raises $600 million in two funds as Latin America’s startup market booms – gpgmail


Kaszek Ventures, the investment firm that has been one of the primary architects of the recent boom in startup financing and growth in Latin America, has just raised $600 million across two new funds.

The new commitments (raised in roughly two months) put Kaszek’s total capital under management at roughly $1 billion, making the firm the first local early stage investor to hit that milestone.

In the eight years since Hernan Kazah and Nicolas Szekasy launched Kaszek Ventures in 2011 the startup ecosystem in Latin America has experienced a renaissance, with investments in the region surging to nearly $2 billion in 2018.

Much of that growth has come on the back of Kaszek portfolio companies like Gympass, the provider of corporate-sponsored gym memberships and perks; Konfio, the Mexican small business lending platform; Nubank, the Brazilian consumer credit company now worth roughly $10 billion; and Loggi, the Latin American logistics company with the billion-dollar valuation.

For Kazah and Szekasy, the growth of their nearly eponymous venture fund marks a successful reinvention of two of the most prominent executives of Latin America’s most highly valued tech startup, MercadoLibre.

The former chief operating officer and chief financial officer of the region’s leading e-commerce marketplace, initially launched their firm to see if they could replicate their success as entrepreneurs from the other side of the table and bring the expertise and wisdom they’d amassed from their time running what is now a $29.2 billion dollar company (by market capitalization).

“We thought we could identify many more MercadoLibres and identify teams that were outstanding and would have a very ambitious vision in a very large market,” says Szekasy. “I thought I could have more impact if I moved and started working on the investing side.”

The first fund was a relatively modest $95 million investment vehicle, but one of its first investments would go on to show the potential for outsized returns that existed in the Latin American market. That company would be Nubank, and Kaszek was among the first money into the company (alongside Sequoia Capital) when it was little more than a pitch deck and an entrepreneur — David Velez.

“They had very relevant experience in scaling a tech company to multiple countries in the region,” says Velez of the decision to take cash from Kaszek. In the early days, the firms partners were involved in all stages of the company’s growth, helping recruit talent like country managers in different regions, to localizing the pitch for different countries. “They were very active also and continue to be very active around marketing and product. They helped us develop our first website and craft our pitch to consumers and eventually develop a lot of the digital marketing muscle,” Velez says. 

The local knowledge that Kaszek provided was a great compliment to the global perspective that Sequoia brought to the table, says Velez.

For Matias Muchnick, a co-founder and chief executive of NotCo, the experience of Kaszek’s founders and the breadth of their network provided incalculable help as the company expanded beyond Chile to Latin America more broadly — and as it was fundraising.

From a Kaszek-sponsored retreat at Stanford University, Muchnick was introduced to a professor who became an advisor to the company. The professor then put Muchnick in touch with Bezos Expeditions through a connection and the firm wound up investing.

Nubank may have been the firm’s first success story to come from its portfolio, but Kaszek would notch multiple other wins from its later funds.

Standouts from the firm’s $200 million third investment vehicle include the The Not Co, a new food company working on a range of products from vegetarian ice cream and mayonnaise to replacement meat patties. That company managed to attract the attention of Jeff Bezos and his Bezos Expeditions investment fund. Two other standouts in Mexico are Kavak, a car marketplace and Credijusto, an online lending company which raised $42 million from Goldman Sachs and other investors earlier today. 

Now the firm has added to its firepower with the close of a $375 million main fund and its first “Opportunity Fund” a $225 million investment vehicle that will enable the company to maintain its stakes in later stage companies as they raise increasingly large rounds.

Kazah expects that the firm will invest a bit larger amounts in roughly the same number of companies, with the fund making between 25 and 30 new investments, he said.

And increasingly large rounds are becoming the norm in Latin America just as they’ve done in other rapidly maturing technology ecosystems.

Screen Shot 2019 08 29 at 7.02.31 AM

Chart courtesy of Crunchbase News

That rapid growth has been parlayed into returns that represent an 8x multiple on invested capital for the first Kaszek Ventures fund, a 5x multiple on the second fund, and a 2x return for the firm’s third fund — already, according to a person familiar with the firm. 

“We have been investors in Kaszek Ventures since 2011 and are thrilled to continue this partnership” said Du Chai, Managing Director at Horsley Bridge Partners, in a statement. “Kaszek has been a top performer while building a great platform with talented individuals.”

In part, Kaszek’s success is an extension of broader macroeconomic trends that were bound to transform the region, according to Szekasy.

“We were looking at Silicon Valley and looking at what was happening in China and saw that Latin America was a very large region with a large population and GDP and the right demographics and a fast pace of adoption of new technologies,” says Szekasy.

One of those new technologies that helped speed up the adoption of new technology services across Latin America was the rollout of 4G, says Kazah.

Screen Shot 2019 08 29 at 7.40.18 AM

The mobile internet was always going to be the way that Latin Americans went online, thanks to the penetration of mobile phones across the continent. But high speed internet transformed the types of companies and services that could be on offer, Kazah says.

“In 2011 we had 10% 4G penetration… now more than 90% of the cell phones purchased have been cellphones with 4G access,” according to Kazah. “That really changed the entire ecosystem… companies can aspire to have more sophisticated products… in the last couple of years they started to accelerate their growth.. We finally got to a point where there’s critical mass.”

Not only has the technology improved, but increasing political stability and the rise of a middle class market in countries like Colombia and Mexico mean that there’s more opportunities for new businesses in countries across the continent.

Brazil has always been an economic powerhouse, but now Mexico, Colombia and even countries like Argentina and Chile are showing signs of increasingly vibrant startup ecosystems.

Attention from international investors is also helping to drive the region to new heights. Earlier this year Softbank announced that it would create a new Latin America fund with $5 billion to invest in startup companies. DST and Tiger Global are also active investors in the region.

“One of the reasons Latin America was lagging was that the region was not at a critical mass inflection point technologically, but it was also the lack of capital,” says Kazah. “Softbank on the one hand provides capital but  on the other hand it has opened the eyes of others as well.”

 


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African incubator MEST has a new MD and 11 fresh startup investments – gpgmail


Pan-African incubator MEST announced investments in 11 startups from its 2019 cohort that will each receive $100,000 in financing.

The $1.1 million backing for a graduating class is the largest to date for the Accra-based organization — which operates as a training program and seed fund for African innovators to build successful commercial tech companies.

By country presence and membership, MEST is one of Africa’s largest tech hubs, and has a new managing director — Ashwin Ravichandran — who succeeded Aaron Fu in July.

This year’s investment recipients come from four countries: Nigeria, Kenya, Ghana and South Africa. The startups offer goods and services across diverse sectors, from agtech to fintech to beauty and entertainment (see full list below).

Ghanaian fintech startup Bezo Money will use the funding from MEST to launch its app aimed at formalizing and digitizing West Africa’s traditional savings groups, founder Mubarak Sumaila told gpgmail on a call from MEST’s Accra offices.

MEST 2019 cohort graduate and investment recipient Zuri has created a platform to organize, review and connect beauty services and professionals to clients online. “The global beauty services industry is worth over $100 billion and the African market is worth over $30 billion,” said Zuri founder Onyinye Nnedolisa. The company will use its investment funds on product development and business development.

MEST takes equity in its portfolio startups, which have 18 months of incubation support from the organization, including the option to work out of MEST incubators in multiple African markets, MEST’s new MD Ashwin Ravichandran told gpgmail.

On future focus, MEST is looking to expand to additional countries. It currently has incubator spaces in Ghana, South Africa, Nigeria and Kenya and has a strong eye on setting up shop in Cote d’Ivoire, according to Ravichandran.

MEST will continue its entrepreneurial training programs, aimed at shaping founders who can launch companies, and maintain a strong focus on developing and investing in Africa’s early-stage startups.

MEST is funded primarily by Norwegian entrepreneur and philanthropist Jorn Lyseggen’s Meltwater Foundation. For several years, the incubator has discussed forming a full on VC fund.

That could be imminent. “We have all the pieces in place right now, I think Jorn’s just figuring out the last steps before announcing it,” said Ashwin. The VC fund would have more capital and go beyond MEST’s seed-stage investments to consider Series stage rounds to African startups.

Africa has seen a boom in tech hubs over the last decade that have become focal points for startup formation, digital skills building, events and IT activity.

A joint GSMA, Briter Bridges report tallied 618 tech hubs across the continent. Like MEST, many of the hubs got their start from grant funding, and there’s an ongoing conversation about viability and sustainability for these spaces going forward.

TechHubsinAfricain2019 Briter BridgesIncreasingly, some of the largest African hubs — such as MEST, Nigeria’s CcHub and Kenya’s iHub — have moved toward more fee-based services and investment activities to generate greater operating revenue. On whether this is a future model for Africa’s tech hubs, “Yes, it definitely is,” Ravichandran said.

Startups interested in joining MEST’s 2020 cohort, and potentially gaining investment upon graduation, can get recruitment updates online.

Here’s MEST’s list and description of the 11 ventures from its 2019 class that earned $100K seed rounds:

  • Massira: a social support network and healthcare service aggregator for women,
    launching in Ghana
  • BezoMoney: a digital savings platform for traditional savings groups, launching in Ghana
  • Farmula: a web and USSD platform to create a direct connection between farmers and businesses using an automated process to increase order efficiency, launching in Kenya
  • CoFundie: a platform for crowd-sourcing funds for the development of buildings using cost efficient and time-saving techniques, launching in Nigeria
  • Niqao: a financing platform that connects merchants and lenders to enable them to offer customers the option of paying in installments, launching in Ghana
  • Saada: a messaging and mobile money ticketing services for increasing digital sales and data collection, launching in Kenya
  • Nadia: a personalized automated health companion that provides quick medical attention and prescriptions, launching in Kenya
  • Kweza: a service that enables informal retailers to order products at the best price and receive deliveries directly to their stores, launching in South Africa
  • CoVibes: a platform that pairs verified studios and producers, allowing them to list their profiles and manage bookings while enabling artists to find and collaborate with them and each other, launching in Nigeria
  • Adi+Bolga: a platform using the power of technology and community to gather data and create conversations around the black skin and black skincare, launching in Ghana
  • Zuri: a platform that helps beauty professionals manage their customers and provides an easy way for people to find and book beauty services, launching in Nigeria


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Y Combinator-backed Holy Grail is using machine learning to build better batteries – gpgmail


For a long, long time, renewable energy proponents have considered advancements in battery technology to be the holy grail of the industry.

Advancements in energy storage has been among the hardest to achieve economically thanks to the incredibly tricky chemistry that’s involved in storing power.

Now, one company that’s launching from Y Combinator believes it has found the key to making batteries better. The company is called Holy Grail and it’s launching in the accelerator’s latest cohort.

With an executive team that initially included Nuno Pereira, David Pervan, and Martin Hansen, Holy Grail is trying to bring the techniques of the fabless semiconductor industry to the world of batteries.

The company’s founders believe that the only way to improve battery functionality is to take a systems approach to understanding how different anodes and cathodes will work together. It sounds simple, but Pereira says that the computational power hadn’t existed to take into account all of the variables that go along with introducing a new chemical to the battery mix.

“You can’t fix a battery with just a component,” Pereira says. “All of the batteries that were created and failed in the past. They create an anode, but they don’t have a chemical that works with the cathode or the electrolyte.”

For Pereira, the creation of Holy Grail is the latest step on a long road of experimentation with mechanical and chemical engineering. “As a kid I was more interested in mechanical engineering and building stuff,” he says. But as he began tinkering with cars and became fascinated with mobility, he realized that batteries were the innovation that gave the world its charge.

In 2017 Pereira founded a company called 10Xbattery, which was making high-density lithium batteries. That company, launching with what Pereira saw as a better chemistry, encapsulated the industry’s problem at large — the lack

So, with the help of a now-departed co-founder, Pereira founded Holy Grail. “He essentially told me, ‘Do you want to take a step back and see if there’s a better way to do this?’” said Pereira.

The company pitches itself as science fiction coming from the future, but it relies on a combination of what are now fairly standard (at least in the research community) tools. Holy Grail’s pitch is that it can automate much of the research and development process to create new batteries that are optimized to the specifications of end customers.

“It’s hard for a human to do the experiments that you need and to analyze multidimensional data,” says Pereira. “There are some companies that only do the machine-learning part and the computational science part and sell the results to companies. The problem is that there’s a disconnection between experimental reality and the simulations.”

Using computer modeling, chemical engineering and automated manufacturing, Holy Grail pitches a system that can get real test batteries into the hands of end customers in the mobility, electronics, and utility industries orders of magnitude more quickly than traditional research and development shops.

Currently the system that Holy Grail has built out can make 700 batteries per day. The company intends to  build a pilot plant that will make batteries for electronics and drones. For automotive and energy companies, Holy Grail says it will partner with existing battery manufacturers that can support the kind of high-throughput manufacturing big orders will require.

Think of it like bringing the fabless chip design technologies and business models to the battery industry, says Pereira.

Holy Grail already has $14 million in letters of intent with potential customers, according to Pereira and is expecting to close additional financing as it exits Y Combinator.

To date the company has been backed by the London-based early stage investment firm Deep Science Ventures, where Pereira worked as an entrepreneur in residence.

Ultimately, the company sees its technology being applied far beyond batteries as a new platform for materials science discoveries broadly. For now, though the focus is on batteries.

“For the low volume we sell direct,” says Pereira. “While on high volume production, we will implement a pilot line through the system… we are able to do the research engineering with the small ones and test the big ones. In our case when we have a cell that works, it’s not something that works in a lab it’s something that works in the final cell.”


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With Y Combinator’s seal of approval, MyPetrolPump raises $1.6 million for its car refueling business – gpgmail


Even before pitching onstage at Y Combinator, Indian car refueling startup MyPetrolPump has managed to snag $1.6 million in seed financing.

The business, which is similar to startups in the U.S. like Filld, Yoshi and Booster Fuels, took 10 months to design and receive approval for its proprietary refueling trucks that can withstand the unique stresses of providing logistics services in India.

Together with co-founder Nabin Roy, a serial startup entrepreneur, MyPetrolPump co-founder and chief executive Ashish Gupta pooled $150,000 to build the company’s first two refuelers and launch the business.

MyPetrolPump began operating out of Bangalore in 2017 working with a manufacturing partner to make the 20-30 refuelers that the company expects it will need to roll out its initial services. However, demand is far outstripping supply, according to Gupta.

“We would need hundreds of them to fulfill the demand,” Gupta says. In fact the company is already developing a licensing strategy that would see it franchise out the construction of the refueling vehicles and regional management of the business across multiple geographies. 

Bootstrapped until this $1.6 million financing, MyPetrolPump already has five refueling vehicles in its fleet and counts 2,000 customers already on its ledger.

These are companies like Amazon and Zoomcar, which both have massive fleets of vehicles that need refueling. Already the company has delivered 5 million liters of fuel with drivers working daily 12-hour shifts, Gupta says.

While services like MyPetrolPump have cropped up in the U.S. as a matter of convenience, in the Indian context, the company’s offering is more of necessity, says Gupta.

“In the Indian context, there’s pilferage of fuel,” says Gupta. Bus drivers collude with gas station operators to skim money off the top of the order, charging for 50 liters of fuel but only getting 40 liters pumped in. Another problem that Gupta says is common is the adulteration of fuel with additives that can degrade the engine of a vehicle.

There’s also the environmental benefit of not having to go all over to refill a vehicle, saving fuel costs by filling up multiple vehicles with a single trip from a refueling vehicle out to a location with a fleet of existing vehicles.

The company estimates it can offset 1 million tons of carbon in a year — and provide more than 300 billion liters of fuel. The model has taken off in other geographies as well. There’s Toplivo v Bak in Russia (which was acquired by Yandex), Gaston in Paris and Indonesia’s everything mobility company, Gojek, whose offerings also include refueling services.

And Gupta is preparing for the future as well. If the world moves to electrification and electric vehicles, the entrepreneur says his company can handle that transition as well.

We are delivering a last-mile fuel delivery system,” says Gupta. “If tomorrow hydrogen becomes the dominant fuel we will do that… If there is electricity we will do that. What we are building is the convenience of last-mile delivery to energy at the doorstep.”


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