Amadeus Capital Partners, an expert in late-stage venture capital and growth investing in emerging markets, continues to invest out of its Amadeus IV Digital Prosperity Fund in Brazil but could soon expand to other parts of Latin America, Pat Burtis, a partner at the firm in San Francisco, tells Marine Cole.
How does Amadeus approach investing in Latin America?
We have an emerging markets fund – $76 million raised in 2013. It’s a global fund excluding China and Russia, primarily focused on digital themes.
As we are mid- to late-stage investors, the cohort of companies that are mature enough for our strategy are mainly in India, Brazil and South Africa. We have no formal allocation to countries, but 70 percent of our dealflow comes from those three.
There’s been a venture community in Brazil for about 10 years, so there are a fair number of companies now with real traction, starting to raise larger rounds, which suits our growth stage thesis.
What sector is particularly attractive in Brazil?
Brazil had kind of a slow start on fintech relative to other countries we operate in. However, there has been a concerted effort over past years by regulators to enable and foster more innovation. The financial services industry in Brazil is dominated by a very small number of banks and there’s desire in some camps to liberalise it. We’ve seen a lot of stuff starting to happen in the last two years – on the payments side, in credit. We’re also seeing a lot of software companies starting to streamline Brazilian commerce in areas such as e-invoicing and point of sales systems.
How has the political and economic situation in Brazil impacted your activity there?
The political situation has been unpredictable, and unfortunately remains so. However, this painful process will result in real change in corruption long term. People are getting the message. It’s a good process but it hasn’t been without its ups and downs. For instance, the currency has been all over the place. The uncertainty has definitely given us pause.
Since the time we’ve been in Brazil, we’ve seen interest level from investors go up and down. I guess for some investors it’s an opportunistic thing. For us, Brazil is core to our strategy. We’re not going to go away. We might not do a deal for a year or two, but we aren’t running away. That’s one of the nice things about the global strategy – you can stay away from a market if prices are crazy or conditions aren’t right for other reasons.
Brazil is still a super exciting story. There are a lot of great companies getting formed. There’s a general feeling that the economy might have hit a bottom. There seems to be a sense that the bleeding has stopped.
What’s next for Amadeus in Latin America?
I went to Argentina twice last year, as opportunities are starting to emerge there. We’ve also got our eye on Mexico and Colombia. We’re still investing out of our current fund and the portfolio we put together validates our thesis. The strategy is working and we plan to keep pursuing it.
Pat Burtis joined Amadeus in 2006. Based in San Francisco, he focuses on high-tech companies in the US, Latin America and Europe.