Latin America finds a champion in SoftBank Group International CEO Marcelo Claure

SoftBank is gaga for startups in Latin America. Since first announcing it was planting a stake in the ground in the region in early 2019, the Japanese conglomerate has plugged more than $5 billion into the region, and it expects that number to top $8 billion by year’s end.

Its capital contributions are meaningful to say the least. In 2019, startups across Latin America raised $5.3 billion in funding, according to CB Insights. In 2020, they raised roughly the same amount.

This year, the pace of deal-making has shifted into overdrive, with $9.3 billion being invested in Latin American startups in the first six months of the year. SoftBank Group CEO Marcelo Claure believes that by 2023, close to $30 billion will be invested in the region annually.

“Finally, the world has realized that Latin America has size,” said Claure, a native of Bolivia, said this week at TechCrunch Disrupt 2021. “It’s only half of China, but it’s two times the size of India, and three times the size of Southeast Asia.”

He also pointed to the fact that people in the region are making money. “Latin America has the same GDP per capita — $9,000 to $10,000 per year — as China, and that’s three times (GDP per capita) that of India and two times what people are making in Southeast Asia.

Put it all together in a region where “there’s bureaucracy, there’s problems in healthcare reform, in education, in transportation … and it’s perfect for disruption and innovation,” he said.

Claure used one of SoftBank’s portfolio companies — Kavak, a Mexico City-based used car marketplace just assigned an $8.7 billion valuation in a round led by General Catalyst — to underscore his point.

“If you think about selling your car in Mexico, [it used to be] you had to go to a classifieds [site], then you put [in] your address and you’re scared somebody is going to go to your home. They might decide to take the car without paying you because of security issues. Or you might show the car in a park where you’re scared you might get kidnapped on the way.” Those are the real issues that Kavak is helping to solve, he said.

As it happens, Kavak co-founder and CEO Carlos Garcia Ottati earned his MBA from Oxford. Noting this, we asked Claure whether it is true that regional founders without degrees from major international schools remain invisible to investors, as one local VC told TechCrunch this past summer.

At first, Claure insisted that only U.S. investors fall victim to the belief that only founders with prestigious degrees are worth backing.

“That might be true for U.S. investors who are looking for your traditional white college student who went to Stanford or Harvard … but not for SoftBank,” said Claure. “We are based in Latin America; we have offices in São Paulo, in Bogotá, in Mexico City. We have offices in Miami, and Miami is like an extension of Latin America. We’re deep in the country where we look for something completely different.”

Later in our chat, however, he conceded that more than 50% of SoftBank’s companies in Latin America were started by either Stanford or Harvard graduates who went back to their country. “They [saw] what has happened in Latin America and were therefore able to implement a business model and hire locally. So to be fair, that has proven a competitive advantage.”