QED's Partner and Head of International Early Stage Investments Bill Cilluffo sits down with QED's Partner and Head of Latin America Mike Packer to discuss how Mike's eagerness to digitize corporate banking led him to fintech investing in Latin America.
QED's Partner and Head of International Early Stage Investments Bill Cilluffo sits down with QED's Partner and Head of Latin America Mike Packer to discuss how Mike's eagerness to digitize corporate banking led him to fintech investing in Latin America.
Thank you. Venture capital firm focused on investing in fintech companies all the way from pre-seed to IPO. Fintech Thought Leaders brings together the most talented entrepreneurs, tackling today's biggest problems. If you're looking to learn more about what motivates our founders and team members to succeed, you're in the right place. Hello and welcome to the Fintech Thought Leaders podcast. I'm Bill Salufo, head of Early Stage Investments at QED Investors and today on the podcast, I'm really excited to be joined by Mike Packer, partner and Head of Latin America for QED. Mike, welcome to the podcast. Happy to be here. Thanks for having me. We go way back, having worked together for both sections of our careers, both here at QED and at Capital One. Let's just start by talking to the audience a little bit about how you got roped into joining us all here at QED.
Speaker 2:Yeah, I mean I should probably ask you how you allowed me to kind of stick around this long. I was at Capital One for 10 years and got to see a lot of interesting things and hopefully do a lot of interesting things there as well. I'm sure we'll talk about a few of them, but you know, my last job there was trying to digitize the small business bank, in particular, the lending operations of the bank, and we had 40,000 small business customers all over the kind of East Coast to Texas in the US. Trying to transition that and launch new products was a really exciting challenge. And this was in 2013, 14. And at that time a lot of fintech companies were starting to pop up. I don't know when the term was coined, but it was probably a few years old at that point.
Speaker 2:The short story of that is we ended up not accomplishing what we wanted to accomplish internally at Capital One, but I saw and was really drawn to the success or the progress that some of these fintech companies were making, and so I had a couple moments of truth, of truth myself, and really realized that I wanted to do something smaller, not be at a big company anymore, really try to get a little bit more ownership over things, and then wanted to do something in the fintech space, but one of my calls ended up being to Frank Rotman. That led to a bunch of really interesting conversations and, yeah, I think the idea originally was to try to help the portfolio and see if I could learn investing Still working on the second one, but I think a few portfolio companies have benefited from our work that we've been able to do together and it's been an awesome journey.
Speaker 1:So why investing? Probably called Frank because you knew Frank. You weren't actually allowed to talk to me, given my exit agreement with Capital One, so I stayed out of your process. I'm glad we got that on the record. Given my exit agreement with Capital One, so I stayed out of your process. I'm glad we got that on the record. Understandable why you made that call, but did you also pursue the idea of operating and joining a startup, or was there a particular attraction to investing?
Speaker 2:I thought I was going to be an operator in kind of the next phase of my career. I mean, I enjoyed leading an organization, interacting with customers and clients, getting things done. Seeing the kind of output of that hands-on, I initially was kind of drawn to the idea of being part of something like that. And you know the back of my mind before this kind of transition, when I did my MBA, I kind of always thought I would want to explore investing at one point or another, because I really like this idea of ownership, owning companies whether it's owning your own company or owning investment but owning something that you can change the results of, right or impact the results of. And if you go back even further, I'd always kind of thought about my job at Capital One as a capital allocator. Right At the end of the day, the things I was trying to figure out in any of my jobs was why should we spend money here, why should we lend money here, or how much capital we put to a certain business, and so tying together a little bit of kind of the always thinking about the returns on kind of things that we're doing and trying to be a capital allocator, learning a little bit about investing in the MBA and wanting to kind of be an owner of what I was doing.
Speaker 2:And then meeting QED, it kind of all happened a lot faster. I mean it took six months before I kind of came over. And then even even then, we were like, well, what am I going to do here? At that point, you know QED was a lot smaller and so you know, I first just took it on almost like as a experiment. Can I learn investing? Am I going to like investing? I knew I liked a bunch of the ideas of it and so that was how it started.
Speaker 2:And then, you know now, if I kind of look back on it, I really like the being able to spread my viewpoint out across multiple companies, the type of investing that we do. We get really active, really involved. You know, I think about it as an operator still and I'm obviously not making as much impact as our entrepreneurs and the executives and teams on the ground, but I'm I do feel like I'm part of the teams. And then so it kind of started to connect the dots in the in reverse but not going forward. So yeah, I think honestly I lucked into it. It kind of got a little ahead of me in my career. I probably thought it was going to be my next stop after going and doing something, but got the opportunity to test it out and I've really, really enjoyed it.
Speaker 1:Can you talk a little bit about your journey at Capital One and maybe you know what are a couple of the main things that stick with you and are helpful as you work on investing today?
Speaker 2:I started in the credit card business, which I made a mistake. Introducing myself to someone this week I said oh yeah, I spent five years in the card business and if you don't talk to someone in the card business I don't know what that means. But in the credit card business and doing particularly in subprime card business, which was a big part of Capital One when I joined, and I got to see that business kind of from the bottoms up pre Great Recession and post Great Recession. It was an incredible experience as an early, early 20 year old because you got to see things kind of crash and come back and fortunately for me I was right in the middle of a bunch of really interesting decisions there.
Speaker 1:You're probably one of the few people out here that say fortunately for me, I was right in the middle of the Great Recession, but I totally, I totally understand what you're saying.
Speaker 2:So I was 25, 26. And you're just reading the headlines. I'm basically running data models and trying to figure out what our accounts are worth on a day-to-day basis, our customer accounts. And then you see the stock price go from 90 to I think it was 8 or 7. I mean, I don't know if you remember the exact number, and so it literally felt like those days people's hair was on fire, but I didn't have much of a 401k or stake in anything at that point.
Speaker 1:But at the end of the day though, I totally get what you're saying. I mean, if you look, there's the individual learning component of it. But you also sort of abstract to looking at Capital One. I mean Capital One needed that to happen. It had been 15 years of talking to the street about how great it was at managing credit, how good it was at assuming a downturn, but it was like the longest run of prosperity in the history of mankind. That's right. So Capital One actually needed the recession to kind of prove out that it fully worked and, I think, passed with pretty flying colors.
Speaker 2:Yeah, and then the lessons on resiliency and why it's important from a just business building perspective are just totally ingrained in me. And then I think the flip side of that was also how to think about the re-entry. When everybody's hair was on fire, everything kind of stopped and it was all about defense. But how do you flip to offense? I had the opportunity to be kind of the front lines when we decided to go on offense and that was fascinating because a lot of being in a big business is all about optimization. Right, it's all about keeping the lights on making sure things are working, tweaking things here and there.
Speaker 2:But at that point and I guess it was probably ended up being early 2010, when we started to go, again really felt like it was high urgency, super intense. For me as a I don't know what the title was or whatever, but somebody who was just starting to be a manager or kind of understand things, be able to interact with the top of the organization. It was just a very exciting time and part of what was so exciting about that to me was again a little bit of the newness, the urgency. You know it was an unsolved problem which led me to join your group. Eventually, once things kind of stabilized there, I saw a new group kind of joining across and we went and did partnerships together.
Speaker 2:It was when I was working for you that opened my eyes to a whole world outside of Capital One, which we might need to talk about more over beers, or sometimes we do. Dealing with partners is hard but is a huge part of kind of the way things work, and so that was a really kind of pivotal moment for me to both trying something new again but opening my eyes to the external world. And then we already talked a little bit about the small business space. So to try to distill that to your question about you know what did I take away? You know I love the intellectual kind of rigor at Capital One.
Speaker 2:You know the way decisions are made sometimes can be slow but they're very data oriented, very thoughtful, thinking about you know all the ways that things can play out and thinking about that as a capital allocator I mean that was probably my major takeaway. And the other thing is the importance of surrounding yourself with smart people and engaging people, people you get along with and how big of a part of your job that is. I think I had a great experience there. So those are probably two of the top things that came out of that, and a bunch of kind of more detailed skills around credit and data and whatnot. But those are probably the major lessons.
Speaker 1:You were trying to digitize the bank found that you weren't having the success you guys all wanted to, in part because you know fintechs had some advantages and you got exposure. Are there one or two examples of things that you saw outside that got you particularly excited about fintech, that were sort of inspiring, as you saw it from the Capital One lens?
Speaker 2:I think the biggest thing was on the product and execution side. I think we had a lot of the same ideas. We would brainstorm and do our research and come up with what we thought it should look like, and then we'd go and try to do it and filter that down, kind of morph into something else. You'd end up getting some no's, you know, as you try to implement something. And these fintech companies were able to just do it. They had the urgency and the ownership over it, so they were able to. Not only were they able to kind of build the products that I thought we wanted to build, but they really had a passion and I don't know intensity about how they thought about the world Right. And so I was really drawn to those two things.
Speaker 2:And you know, again, I think of myself as somebody who had pretty high personal ownership over what I was doing. But you know, when you're in a big company, you rely on a lot of other people below, above, around you, to get things done. And that was probably the biggest thing for me. And just that iteration led to things that we hadn't seen or thought of right In terms of new data, new ways to engage with customers, better ways to think about risk. Those were all things that were happening at that time.
Speaker 1:So talk about your early days at QED. We've hired a number of ex-operators to come into QED. I would say the vast majority of us have taken a little while to find our footing. It is a pretty jarring difference in a number of different ways, you know. I'd love to hear about your early days, and where were you able to sort of quickly apply these? You already referenced a handful of your learnings from Capital One. Versus where was it just completely jarring and you needed to take a little while to figure out what you were doing?
Speaker 2:I think it was relatively smooth where problems were defined. Working with NewBank in 2016 on certain projects that they were doing in their card business was a very kind of natural thing to do, right? It was something that I'd seen before. I had confidence in the way that I had done it before and it was very kind of easy to say, hey, I've done this. I think that was easy and that's still a big part of what we do, right? It's kind of connecting dots on hey, this company's doing this or we ran into this situation before, and so that was pretty natural.
Speaker 2:Of course, now I've added a lot of experience to that, but I think the harder part for me was just like the ecosystem, like getting your heads around something that's totally white space In venture. There's infinite things to do, and so it's all about kind of prioritizing and figuring out how to do those. I think that was very overwhelming. And figuring out how to do those. I think that's like that was very overwhelming. And yeah, and then just like having the confidence or self awareness that like people actually wanted to listen to me or I could kind of influence the way things went. I mean, I remember my first visit to New Bank, just being like completely stunned when David Velez was like, so what do you think? What should we do? And I'm like, hey, man, you're the CEO, like you should know what to do.
Speaker 2:In seriousness, like he didn't know me, right? I mean, he knew me from a resume, knew me you know because of you guys who I was working for. But he saw that value, that my specific experience and the time that I spent with this team, and he wanted to know what I thought. So that was a big moment for me to just be like, oh okay, like now I, when I think things, I should just like say them and you know, maybe they're not right, but we'll figure out the problem. So a little bit of that kind of confidence and defining the problem, I think, was a challenge for me. And now maybe it's the other way around, maybe I'm a little too opinionated on certain things or too stuck in my ways, but those were the things that took me some time to ramp up. And then the other side of confidence of where you're spending the time I think that's another thing that I've gotten more comfortable with as I've seen more things over the years.
Speaker 1:Makes sense. I mean a little bit of an aside. I do think that's one of the things that makes Velez so incredible as a CEO. I mean, he's just always surrounded himself by massive talent and has never been the type that has the need to be the smartest person in the room and is always listening for input, and when he makes a decision, they move 100%. You describe one of his true strengths as a leader, which is impressive to see. So, in your early days at QED, you already described some of the work you did with NewBank, but you also spent a fair amount of time with our own fintech junkie, frank Rotman, looking at a handful of things in the US. Can you describe some of the differences? Maybe, and ultimately, now you spend the vast, vast majority of your time leading our Latin American business. How did those early days of dabbling in a little bit of places, a bunch of time with NewBank, sometimes looking at US deals how did those early days influence you and lead?
Speaker 2:you to really the Latin American world as your focus. I think a lot of it was happenstance, maybe a little bit of luck or opportunism. Frank and I were in 2016,. He was doing a lot of research in the prop tech real estate space, so I got to spend a lot of time in kind of that world talking to companies, traveling around trying to figure out how to screen companies and find companies. That was a pretty awesome thing to see and, of course, working with Frank on a few deals. Most actually, I don't think we did any deals, but I think we worked on, you know, like half a dozen together. So just you know the rigor of kind of seeing how deals done. It was good to get some reps there and ultimately I just spent a lot of time on I guess at that time it was our venture build program now kind of our belay program kicking around a few ideas and ultimately helped start Motorifi, which is now Caribou, which was an incredible experience in and of itself.
Speaker 2:But some of the differences between Latin America and US you and I were right there together and we talk about this a lot, but in 2016, 2017, it didn't take much to get your head around everything that was going on in fintech and it was very early days of applying some of the hypotheses that we had about digitization, new styles of banking serving the underserved these are just major, major themes and still are in Latin America. And so I think because we kind of knew the space, because we saw the opportunities from the ground up, it felt much more tangible to me than the US, and I think that's still true. I mean, you would agree with this right? I mean in any of our markets that we're in that are quote unquote smaller right, we can kind of wrap our heads around the ecosystem a little easier.
Speaker 2:You know, in the US, if you're chasing after a theme or an idea, you might be talking to five or 10 companies that are doing that, and there might be another dozen or three dozen companies out there that you don't know starting up, and so I think that was early on. There's a huge advantage of trying to figure out how to be a you know, the investment decision right, because you're kind of sourcing is much more boxed in. So I was kind of drawn to that and drawn to the size of the problems and the challenges and then just super energized by all the people that I was meeting, and then we just started kind of rolling with it. Once you launched the Scotia Fund and our desks were full of new pitches and ideas, it was easy to get distracted there.
Speaker 1:I certainly didn't realize at the time how big the opportunity was in Latin America, but I still maintain Brazil is the best fintech lab in the world. You know just the margins that are made in banking and other financial services and how lousy even sitting here today after you know, 10 years after fintech really hit Brazil you know how lousy the customer experience is for the incumbents. I mean, it's just a perfect laboratory for innovation to make a difference, and Mexico is not far behind.
Speaker 2:The regulators have done an amazing job there. When you think about what the paths for regulated companies you companies maybe we could argue India or some places in Southeast Asia have some forward programs, I think, in terms of the size of the market, the opportunity for fintech and then how the road's been cleared, I totally agree it's the best risk-adjusted market in the world for fintech. I kind of lucked into it because you guys had already invested in Nubank before I came, but since we've hired Kami there, I've been building our portfolio out. We just continue to uncover really, really cool opportunities and spaces where I think we can take big bets.
Speaker 1:Yeah, it's a great call out of the Brazilian central bank. I know in the early days of NewBank the biggest worry is that at some point the big banks were just going to make a few phone calls and find a way to get NewBank just squashed, and the fact that that didn't happen and there were definitely some attempts. The Brazilian central bank, the main regulator, has been a huge advocate of competition, for good reason. Right In a country where people pay over 100% APR for installment loans, they need more competition, and the rollout of PIX, the real-time payment network in Brazil, is just an unbelievable, stunning achievement. Rightfully call that out as another key recipe. So talk about your first couple investments in Latin America in general. I wonder if there's one or two that you could call out as examples. What led you to get excited in those early days?
Speaker 2:Ironically, my first few investments were not in Brazil, so maybe that's some feedback for me after what we just talked about. But yeah, I mean a first kind of few to think about. I was kind of really interested in this small business problem broadly I mean small business banking, having seen it from the inside and then having started to work with Confio which was an investment that you made before I joined and we did some work together, kind of continuing to see the theme of how just underserved small businesses are and especially in Latin America there's an extremely long tail of both businesses and underserved businesses, and so that credit gap was extremely obvious and very large. And so in Mexico and I guess across Latin America, that was a theme that we were following, and two of my first investments that were in that theme were Tienda Pago and Credit Usto, which is now Covalto, and the ability to kind of make a digital product to try to fix distribution, early traction that those companies that had in terms of finding good unit economics like all those things just kind of fit really kind of into what I thought would be good investments and that theme was just full of those opportunities. To just plug Covalto, since we've called them by multiple names. They're the only fully regulated bank fintech company in Mexico right now, so they're up to some interesting stuff. But they were doing secured lending in Mexico. And then, bill, you had done the investment in Creditas, which was doing secured lending in Brazil, and we saw how well that was working both the ability to kind of streamline the operations of assessing, securing collateral, doing underwriting, delivering kind of a product that would add value.
Speaker 2:I was doing a lot of research in different asset classes and, of course, was drawn to the auto space and other geographies, which ultimately led us to Kavak, which was a fun one to find earlier.
Speaker 2:That was a very interesting one for us because they were, of course, buying and selling cars not really doing fintech at the time but having seen CarMax over the years and then the emergence of Carvana, we saw that there was going to be a fintech platform put alongside this and, of course, they've gone on to grow into quite a sizable fintech company. They're one of the top auto lenders in Mexico today, which is a crazy stat. So, yeah, those are a few of the first themes. So it was very much tied to things that I had seen in my past, that we had seen in the portfolio and then from an entrepreneur's perspective, just finding people who were going after these big problems, that had a ton of resiliency and tenacity and they weren't going to give up. Just to see them, the way they were approaching these problems, the passion that they have for these problems, was really inspiring at that time.
Speaker 1:Are there any commonalities of the entrepreneurs you look for that are specific sort of traits or attributes, or have you found just hey, it's all different shapes and sizes and they're all different. Anything you'd share there?
Speaker 2:I try to keep an open mind to it. But I think the most important thing for me is that we kind of mesh or get along and understand each other. So there is a portion I really believe in like how we fit together right. So if this thing works out, this thing, if investment works out, we're going to be stuck together for 7, 10, 12 years, whatever it is, and I want to try to have good read on that kind of fit.
Speaker 2:But the things I think that I've found and a lot of these are commonalities in QED. But somebody who has good command over the details has a hint of humility in terms of what they know, what they don't know. I love people who think in terms of, like data orientation what do I need to test to learn this? Where can I find data to support my hypothesis? People don't just kind of totally jump off the cliff without the parachute. They at least know, have a plan to kind of put together one or pick up one on the way down. So that's a fine line there too, because you want somebody who has a huge vision and passion over those things. But those are probably the few of the main common threads that I like to look for.
Speaker 1:Oh, that's super helpful. So you described a little bit of the early days of Latin America. We had done a couple investments in Brazil before you got there. I think you were very active in the early days at a few of the non-Brazil investments. How have you seen the ecosystem change? Qed actually did the first investment in NewBank before I got here, even in 2014, when there wasn't a whole lot going on. What are some of the main ways that you've seen the ecosystem change over the years?
Speaker 2:Yeah, I mean so just talking about Brazil for a second, and then maybe we can talk about Mexico and the rest of LATAM. I mean, it's gotten just so much bigger, right. Just the number of companies, the amount of capital that went into, you know f kind of everything on the way down. And again, the Brazil. I think the best thing that's come is just the talent. People want to be part of startups. They've seen successful startups. They want to leave big companies or they want to go to MBA and then come back or even join a startup from under. Guys become a career path, if you will, and I think that's an amazing testament to what's happened in recent years. And then I think the last thing I'll just touch on in Brazil but this is also true in the rest of the region is you see a lot more ideas that aren't the kind of X, of Y, so like the business that has been successful or on the verge of being successful in the US or UK or China. You know, coming to Brazil, you see a lot more of the kind of unique ideas. I mean you talked about PIX earlier, several other regulatory changes that have driven innovation, that are specific to Brazil, and I think the combination of talent and that opportunity is unfathomable where it is today versus where it was in 2016. Mexico, of course, is the same thing. I mean it's gotten bigger, it's gotten more sophisticated.
Speaker 2:In Mexico, the maturing of the ecosystem has been pretty striking, but I think there are still ways behind Brazil. I think mostly on the talent side because, honestly, we're still all waiting for a couple exits to come out of there and I think once that happens, the energy on the ground in Mexico City or I was in Monterey last year I mean it's pretty stunning just the opportunities people are seeing. And then that's something you didn't see 2017, 2018. It was a lot more caution. It was, I think, a lot harder to see kind of opportunity, whether that was risk-taking or actual opportunity. You know who knows opportunity, who knows we spend time in.
Speaker 2:Colombia is probably the next market, and then a little bit probably in Chile and Peru and a few other places. Ecuador we're seeing some activity, but all those places are just like another step behind. But still you're seeing entrepreneurs go and continue to come and again, I think we've had a very slow year. Maybe year two of company formation. It's still just strikingly different from what it was eight years ago. Think we've had a very slow year, maybe year or two, of company formation. It's still just strikingly different from what it was eight years ago. So we've kind of hit some version of the inflection curve, you know 2019, or kind of the hangover impact of 2021. But people are risk taking, they're looking to apply innovation, they're trying to and you see this in industry too, right, you see this at the incumbents, whether it's kind of banks or big consumer companies. Everybody's looking to change things and innovate, invest, and that's a big change in the ecosystem too.
Speaker 1:So if you look at, you know around the region and pick your country or pick your sector of it, what are a couple of the trends that you're actively watching and personally quite excited about?
Speaker 2:I'm going to hit on PIX in Brazil and some of the other changes that are going on there. Pix and the receivables legislation the ability to kind of use receivables as collateral I think these two things can change the way payments are done and commerce is done. We've seen a lot of it on the consumer side so far and I think in the B2B space we're going to continue to see some innovation there. So we're very excited about companies that are trying to find new ways to streamline workflows, streamline payments, streamline credit across these new channels and seeing lots of companies innovate in that space. And then, I think, across the region broadly in the B2B space B2B payments, back office, financial tools for businesses there's a lot of kind of space there. There's a lot of inefficiencies in still the way that businesses have or haven't been digitized in the small business and middle market spaces. So we continue to be quite excited about a lot of things there. I very much continue to follow InsurTech. I think it hasn't had a lot of activity by comparison to some of the other trends that we're seeing, but the opportunity from a macro perspective and the need for certain types of insurance is totally there across multiple markets. So we're seeing some innovation and progress there and kind of hopeful that there's going to be some good companies.
Speaker 2:And then, lastly, kind of this category of cross-border payments, global trade. I think it's just fascinating. Right now Cross-border payments are very kind of hard for a lot of companies again, especially if you're not a large enterprise or if you're not working with a large kind of international bank, and even then things can be quite clunky and slow and hard. So we're spending a lot of time really trying to understand the rails there, where the efficiencies come from and then how that's tied to actual transactions. So what are these cross-border payments paying for?
Speaker 2:A lot of it is kind of import-export services and whether it's logistics or actual goods, there's a ton of complexity there. There's lots of things I think fintech and data and platforms can and are starting to do. And then the last kind of sub theme there which is absolutely on fire in Mexico or at least like getting a lot of airtime in Mexico is this is nearshoring, right. So that's also a global trend. It's not just the US, mexico, but everyone trying to bring supply chains closer or changing which jurisdictions you have to transact to, how you build relationships across border, how you manage all these things, and I think that trend is going to continue to push change.
Speaker 1:Yeah, I mean I'd love to maybe go just a little deeper into that. It does seem like, as a result of the supply chain disruptions due to COVID and some of the political issues going on in China, mexico certainly seems very well positioned again beyond fintech but just globally, to take advantage of these trends. I know that you sponsored a bit of a field trip to the Monterey region with a number of our portfolio companies and a number of our internal folks. I wonder if you can just talk about kind of what you're seeing on the ground, either for the nearshoring in general, but also then maybe its implications on fintech.
Speaker 2:Yeah, so I went to Monterey last fall. We had an incredible trip but it totally felt like a boomtown. It was like everywhere you went you could feel a version of booming of the manufacturing sector. And there's some crazy data out there about some of the growth in foreign direct investment manufacturing space, number of companies that have kind of moved in. But what's happening is people are moving production out of places like China and Southeast Asia and mostly to either because they're US companies that are manufacturing and then selling kind of out of the US, or companies that are trying to manufacture and sell to the US, and so what's happening is both of those forms of manufacturing are moving closer to the source because of a lot of the supply chain disruptions that you mentioned.
Speaker 2:And the crazy thing about all of this, the biggest conclusion I had is that it's all driven by geography. There's economics, there's politics, there's a whole host of things, but it's driven by geography and control. Companies just want to be able to control things more and the way that you control things more is bring them closer. I mean, maybe there's an analogy to remote work and in-person work here, if we want to go that way. But these companies are basically saying, hey, I got to get it into Texas or I got to get into the US, and getting into Texas or California is a lot easier to come from Mexico than, you know, china or Vietnam and so, and so that's just happening very, very fast.
Speaker 2:The implications of that, I think, for fintech are still TBD in my mind. I think if you're any company doing commerce in Mexico, broadly this is a tailwind of growth, right. So if you're banking, lending software to any kind of types of business, you should be around these regions that are booming up. So I think that's one thing that's quite clear is there's a newness, like it's a market expansion as opposed to market competition, and I think whenever you can get a market that's expanding, it's a lot easier to grow. So that's kind of one.
Speaker 2:And then I think there's just like some opportunity around the building of business. Literally we're in between Monterey and Centio and there'd be these manufacturing centers or industrial centers, and then you need a place for people to live and you need a place for people to eat and you need a place for people to kind of stay when they visit, and you need a place to shop and you need a school, and so everything kind of tied to. That is an opportunity there. So a lot of that needs to be financed. Again, there's a lot of cross-border opportunities because of where these companies are coming from and what they're shipping to. So I think companies like FinCargo are extremely well positioned to help these kind of companies. I mean Covalta, we mentioned before Confio. Those types of companies should be able to benefit from this. What if anything comes specifically from it? We're looking for it. So if you're out there, reach out to us.
Speaker 1:I love it. You know, another one investment that's kind of split between New York and Mexico is Nuvo Cargo trying to be a digital platform for cross-border trucking, wrapped with a number of different payments, insurance, lending. You know types of fintech products? Yeah.
Speaker 2:Deepak and team were great help to our trip. We were trying to learn from the portfolio and help the portfolio learn too. So a great call out for Deepak and Nuvo Cargo there.
Speaker 1:We've just lived through an unbelievable boom in 2020 and 2021 in venture and then a pretty serious bust in 22 and 23. Who knows whether the recovery will be this year, whether it'll be next year, who knows? Have you seen notable parallels between going through the kind of recession when you're running a credit business to now, kind of this particular cycle in venture and any particular learnings that the venture world or us at QED can take from that parallel?
Speaker 2:There's probably a lot.
Speaker 2:I mean, I think the one truism is the markets are always going to be kind of up or down and reality usually somewhere in the middle, and so both understanding that that you can't get too exuberant or too down I think is true In the venture world.
Speaker 2:I think it reminds me about how long-term this game is and how building great businesses never happens overnight, it's never easy, it's very rarely, I should say, maybe not quite never. A straight line straight up, and so having the conviction in the business model and kind of what you're doing, irrespective of the value of the company or the capital on your balance sheet, I think that's probably the biggest lesson here. The Capital One parallel would be we were kind of underwriting and preparing for a version of that and we proved that to the market, that we would make it to the other side. And I think companies today who are at profitability or trying to get to profitability or trying to kind of minimize the burn so that they can kind of prove the next unlock is a version of that right. So proving kind of your business one step at a time, whether you're a seed stage business trying to get the product market fit or you're a pre-IPO business trying to prove sustainable profitability.
Speaker 1:I think that that lesson goes from one to the you know I think we have I don't know close to 50 investments in Latin America at this point, both through the core QED business as well as our seed program Fontes. You know you talked about a number of the early investments that we did. Are there one or two companies you think that are worth that we've done more recently? That would be interesting to share.
Speaker 2:I mentioned earlier a company called FinCargo in Colombia and Mexico, working with companies who are importing goods from around the world and they're particularly interested in financing those goods and trying to make things more efficient. So right kind of squarely in the zone of an underserved market and something that's going through a lot of change. They're growing extremely fast and have huge ambitions to expand the product and very excited to see what's next for them and very excited to see what's next for them. Cobre is another company, ironically also in Colombia, in Mexico, working on B2B payments and treasury management, so making kind of payments more transparent, faster, easier, and they're kind of touching on a lot of the themes that we talked about in terms of inefficiencies in these markets around money movement and starting to do some really interesting things in the cross-border space as well. So, squarely and Themes and right now finding a really interesting market and growing quite fast.
Speaker 2:I've been in a lot of board meetings the past two weeks. There's a lot going through my mind but saw the hat behind me was Sulphaseal down in Brazil. Sulphaseal, I think, is really kind of hitting its stride as a market leader in Brazil and you know, it's just really exciting to see a company in a market that's changing so fast, getting close to at scale and profitability and kind of seeing lots of opportunity ahead of them. So those are three companies, I think, that are all hitting it in all cylinders across a couple of different kind of phases and stages the Series A, b and C or D company. There in those three they're of course not the only ones that are exciting, but those are top of mind.
Speaker 1:We spent some time earlier in the podcast talking about the early days of LATAM. For a while it was just me, for a while it was you and me, but over time we've had a number of great team members working on the Latin American business. We must have 10 people at QED that do something related to Latin. But we've got two amazing people on the team, cami and Anna-Kris, who are alongside you, dedicated to helping us build this. I wonder if you can chat real quick about the two of them and what they uniquely bring to the table for us.
Speaker 2:I feel proud to be part of QED. Broadly, I think the team's been, is and will be kind of amazing. It's one of the things I think is most exciting about what we do. And yeah, I have to keep up with Cami and Anna Chris on a daily basis. So they keep me going, they give me tons of energy, they're lots of fun to work with and they accomplished incredible things. I mean, both of them have great networks. They leverage them to get things done super efficient, very resourceful, and then they're very curious, intellectually curious. So that's part of like the keeping up with them part.
Speaker 2:But particularly I love how kind of relentless Kami is. I think when Kami finds a problem, you know she's going to find an answer and usually it's the answer. And so her ability to kind of hunt things down and get them to end points is unmatched and something that's extremely valuable. And Anna Chris I think she's particularly good at seeing multiple angles of things. First of all, she gets very hard things done and I think in part because she can see not just the investor perspective or the entrepreneur perspective or the customer perspective, but be able to kind of blend those perspectives together, and so a lot of times I'm getting additional perspectives from her or challenges on wanting to look at a problem a different way, and it definitely makes me a better problem solver working with her.
Speaker 1:Well, the Latin team continues to grow. Since both Anna-Chris and Cami have become new mothers in the last year, we're building our team for 25 years from now you know, in Latin America.
Speaker 1:So that just shows how committed we are to the long term. Well, mike, it's been awesome talking to you today. I mean, we talk together all the time, but it's usually about kind of urgent, timely topics, so it's great to kind of take a step back and be a little retrospective. You encounter literally hundreds of entrepreneurs out there and see pitches all over the place. If there was one piece of advice that you would share with an aspiring new entrepreneur, what would it be?
Speaker 2:I've got to give two, so I'm cheating already, I think, if I had to give one. I think it's keep going. You're not going to have all the answers. Actions are going to give you the information to know whether you're on the right track or not. Everything's not going to go the way you want it to go, but just keep going, find the thing that works and then keep going, find the next thing that works. I see a lot of entrepreneurs who kind of you know they either get caught up in their idea or thesis and it's hard to get off of that. And I think the other thing which kind of tied to some of the other things we talked about, I mean you got to be yourself as an entrepreneur but you can't be alone. Like you got to find a support system, whether it's a co-founder or a mentor, advisor or investor. Don't feel like you have to be alone because it's a long, long journey. Like I said, you got to keep going and go for it with somebody you can trust.
Speaker 1:That's a great piece of advice. Mike. It's been amazing talking to you today. Thank you for joining the pod and to all of our listeners, take care and thanks for listening. Thanks, bill. This has been the FinTech Thought Leaders podcast your window into the world of venture capital and financial services with today's digital disruptors. Qed is proud to provide the best FinTech advice you can get. To learn more or to read the full show notes from today's episode, check out QEDinvestorscom and be sure to also follow QED on Twitter and LinkedIn at QEDinvestors. Thanks for listening.