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I sit down with Dave Nangle, Managing Partner at VEF (STO: VEFAB), one of the few publicly listed venture capital firms that exclusively invests in fintech across emerging markets, with a portfolio of $750 million of Net Asset Value covering Brazil, Mexico, India, Pakistan, Zambia, and many more interesting markets. Some of the companies they’ve backed include Creditas, Konfio, Tinkoff, Jumo, and Minu.
In this episode, we discuss:
The opportunity of fintech in emerging markets and why Dave considers Brazil to be one of the most attractive fintech markets around the world.
“What I like about emerging markets is once you break through all the noise, and people say, we're not investing in EM because of the risk in politics and macro geopolitics, you still end up with the likes of Mercado Libre being built. With Nubank being built. These are names that have been through true cycles in these markets. And they're battle-hardened. It's just harder to build businesses in these countries, hence, there’s less competition and less capital in a true cycle.”
Benefits and challenges of a permanent capital structure and why being a publicly listed firm, better prepares VEF to invest in emerging markets with a very long-term lens.
“You may be in a company for 10 years or 15 years… And having the permanency of capital, long-term capital is a very big positive. The cons are a little bit around the constant stress and strain for transparency. We're investing in private companies that are competitive and want to keep their data to themselves, but on the flip side we have public institutions as our investors who want to know as much as possible, and we have to get that balance right.”
Navigating this bear market. How growth and pre-IPO companies should be adapting to this reality and why it could help all entrepreneurs to adopt an ‘emerging market mindset’.
“You get a couple of Indians or Turks or Brazilians running a company out of San Fran or LA, and they've had their good upbringing in the streets of Brazil or what have you - they're very much able to hustle and penny-pinch, cut quick, you know, survive.”
Dave’s advice for new incoming emerging market investors… and a lot more!
“I'd say stand tall. I'd say take your lessons, take some deep breaths. It can be a rocky ride… stay close to local investors, they know best, they they've seen this again, and again, and again. And stand tall and have your checkbook ready, because it will probably be necessary.”
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Miguel Armaza is Co-Founder & Managing General Partner of Gilgamesh Ventures, a seed-stage investment fund focused on fintech in the Americas. He also hosts and writes the Fintech Leaders podcast and newsletter.
David Nangle, Managing Partner at VEF – Navigating a Bear Market, Running a Publicly Traded VC, & How to Invest in Emerging Markets