Julio Vasconcellos & Mate Pencz - Investing in Latin America

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_3** (1:37)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of Oshanose Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:02)
My guests today are Julio Vasconcellos and Mate Pencz, who are partners at Canary and Atlantico, leading early stage investment firms in Latin America. They're also both successful entrepreneurs. Mate is the co-founder and CEO of Brazilian real estate unicorn Loft. Julio was Facebook's first country lead for Brazil, an entrepreneur in residence at Benchmark, and the former founder of Peixe Urbano, which sold to Baidu. This conversation was a great opportunity to dive into the state of investing in business in Latin America today, and what the opportunity set looks like on the ground.
Please enjoy my conversation with Julio and Mate.
So Julio and Mate, great to have you both here to talk about the investing landscape in Latin America. It's one of those funny places that I have somehow never been really. I've never been in South America, I've been in Central America and have just developed a fascination with the whole region with a number of amazing companies that have been built there like Loft, Mate, you and Florian and I had a conversation before about what you're building there, but just more writ large. I think it's a great opportunity to talk about the entire part of the world, the interesting opportunities, the interesting challenges that present themselves there. So Julio, maybe I'll begin with you to just frame this whole thing for us. From your perspective, you're now running Atlantico Partners, which is a firm entirely focused in this region and are one of the leading investors down there. Maybe you can just give your broad perspective on what is interesting about Latin American investing today. And then we'll go into tons of interesting data that you guys have put together on why it's so distinctive.

**Julio Vasconcellos** (3:34)
Latin America is obviously a huge region. Over 600 million people talk about a GDP of $5 trillion.
Also, the region, which is pretty globally leading when it comes to thinking about economies and access to technology, right? We have internet penetration that's higher than China and India.
I think digital usage and adoption, that's one of the highest in the world. So definitely fertile ground for technology and innovation. And the reason I would say that we're super excited. I spent nearly half of my 15-year career in Silicon Valley and decided to pack up my bags and go all in in the region. Thinking about it from the long term of what's next in the next 10 years, 15 years, what's going to happen here. And when we look at all the value that's been created and all the companies has been created in Latin America, and we compare it to other regions in the world, we see that tech penetration is significantly behind where it is in developed countries like the US, but also in even more developing economies like China or even India. Just to give you a few stats that we collect that we track every year, if you look at just the size of all the public tech companies in the US, and you compare that to the US GDP, just to level set a little bit, it's a little bit over 50% that tech penetration index. Even somewhere like China, it's 20% and India is 15%. Latin America is 1.5%. I have no idea whether Latin America is going to be as big as the US, but certainly, I think we have a great shot of being at the same level as India and China. You're talking about an order of magnitude increase that when you consider how much that's worth, that's measured really in the trillions of dollars when you talk about the next 10 years.