Do Brazil and India offer credible pathways to venture-scale liquidity?

Harry Stebbings · Sep 11, 2023

There is not enough depth in the LATAM market to support a growth fund, because Nubank is essentially the only company there that has generated true venture-scale returns

Looking at the liquidity environment, other outcomes like dLocal are good but not venture-scale, and you can't build a portfolio on a single company

13:43 20VC: Lessons Building Nubank to the Largest Neobank in the World, How AI Changes The Future of Finance, Leadership Lessons from Sequoia's Doug Leone & What European and US Fintech Can Learn From LATAM with David Velez, Founder @ Nubank

Harry Stebbings · Mar 19, 2025

Brazil has not demonstrated pathways to liquidity at scale, with Nubank being a single case in twenty years and dLocal and others not at scale, and India has been the perennial 'now's the time' ecosystem that keeps not delivering

Only one large Brazilian outcome in two decades; India repeatedly declared ready and investors are still waiting

Scope: acknowledges the view attracts criticism

30:22 20VC: The 10 Question Framework a $217BN Manager Uses to Make Investment Decisions | Lessons from Turning Down Stripe, Coinbase and Losing Money on Northvault | The Bull Case for Bytedance | How Anduril Could Be a $200BN Company with Peter Singlehurst

Shu Nyatta · Jul 31, 2023

The LATAM liquidity problem is overstated because exits do not require a big New York Stock Exchange listing; local Brazilian listings and M&A are real paths

Brazil has a deep liquid capital market where multibillion tech companies are already public and a company can list comfortably from roughly $500M to a few billion, a scale that would be a rounding error on Nasdaq; and acquirers like Visa, Okta and SoFi have bought LATAM infrastructure companies

29:09 20VC: Marcelo Claure & Shu Nyatta on Lessons from Investing $7.5BN at Softbank & Why Dumb Money has Gone, Why "LATAM is Under Construction" and the Next 10 Years Will Be the Best & Investing Lessons from Missing Nubank & OpenAI & Investing in FTX

David Vélez · Sep 11, 2023

There is sufficient liquidity for LATAM venture outcomes: the Brazilian exchange absorbs $300M–$1B exits, New York IPOs work above $1B, and M&A is active

There were 45 IPOs in the Brazilian market in 2007-08, many exits around 2018-19, and recent M&A such as Visa's billion-dollar-plus purchase of Pismo

Scope: applies mainly to Brazil and Mexico

16:47 20VC: Lessons Building Nubank to the Largest Neobank in the World, How AI Changes The Future of Finance, Leadership Lessons from Sequoia's Doug Leone & What European and US Fintech Can Learn From LATAM with David Velez, Founder @ Nubank

David Vélez · Sep 11, 2023

Sequoia was right not to open a Latin America office in 2012, because the region's entrepreneurs at the time were building clones of Silicon Valley businesses rather than genuinely ambitious companies

Eighteen months of looking at startups and entrepreneurs surfaced nothing exciting; the region was sixteen hours from San Francisco and Sequoia already had access to the best entrepreneurs in the world

11:30 Clone founders not ambitious justified no office in 2012

David Vélez · Sep 11, 2023

Latin America is now a large enough market to support venture-scale outcomes, and the conditions for more Nubank-scale companies exist over the next five to ten years

It is the third largest GDP bloc, 650M people, GDP per capita 3-5x India, high internet and smartphone penetration, big unsolved problems, and the biggest companies in the region are still non-digital incumbents, unlike the NASDAQ where 25-30% of companies didn't exist thirty years ago; the culture has changed and the capital exists

14:20 Latam now large enough for venture scale outcomes over next decade

Harry Stebbings · Jul 14, 2023

Even great companies in markets like Pakistan and Bangladesh lack a credible liquidity mechanism — they are not going to go public on the Nasdaq.

He learned this personally from his own Pakistan investment and wishes he had listened to people who warned him

12:23 Pakistan and bangladesh lack credible liquidity mechanisms like brazil and india

Jake Gibson · Jul 14, 2023

For a truly exceptional company in an emerging market there will always eventually be a path to liquidity, but investors have to enter at a price that discounts for how tough that path is.

African companies have gone public on the Nasdaq and the same liquidity objections were made about LATAM before Nubank; in 2021 investors weren't getting an appropriate discount for the risk

12:49 Exceptional emerging market companies eventually find liquidity if priced for that risk

Jake Gibson · Jul 14, 2023

Paying $20M seed valuations in emerging markets where the path to a billion-dollar-plus exit is very hard was a mistake.

The pricing failed to account for how tough the exit path is in those markets

13:33 20m seed valuations in emerging markets were mispriced given exit difficulty

Harry Stebbings · Jul 14, 2023

There are only two or three large emerging-market fintech outcomes, which makes building a whole firm on that thesis a tough sell.

Nubank and D Local are essentially the only examples, and D Local's value has fallen

13:54 Only two or three large emerging market fintech outcomes exist making a firm thesis hard

Shu Nyatta · Jul 31, 2023 · hedged

A fund needs only some exits at New York Stock Exchange scale, not all of them, to generate scaled returns

It depends on your entry price

30:12 Fund needs only some scaled exits not all to return well

Marcelo Claure · Jul 31, 2023

The absence of LATAM IPOs is a supply-of-companies problem caused by missing late-stage investors, not a lack of receptive public markets

There is always room for IPOs of great companies in Brazil, the US or London; the region simply hasn't produced those companies because the necessary class of investors did not exist until SoftBank started it

32:01 Absence of latam ipos reflects missing late stage investors not unreceptive markets