The Caracas Play: Venture capital and private equity investment in Venezuela with Francisco Amador

**SPEAKER_1** (0:00)
So good, so good, so good.

**SPEAKER_2** (0:01)
New fall arrivals are at Nordstrom Rack stores now. Get ready to save big with up to 60% off brands like Vince, Steve Madden, Kate Spade New York and Boss. Stock up on the latest trends like animal print, lace and suede. Join the Nordy Club for free to unlock exclusive discounts, shop clearance and new arrivals before anyone else and so much more. Plus, you can buy online and then pick up your order at your favorite rack store. It's fast and free. Great brands, great prices. That's why you rack. Cash rules everything around me. When that line dropped, it changed the whole hustle. Introducing the Sprite Living Tracklist, 50 tracks that shaped the culture from six decades of hip-hop.
Sprite.

**Tobias Carlisle** (0:46)
We're live. I'm Tobias Carlisle. This is Value After Hours. I'm joined as always by my co-host Jake Taylor, our special guest today, Francisco Amador. You know him as Sleepwell Capital on Twitter. How are you, Franco? What's happening?

**Francisco Amador** (1:00)
Doing great. Happy to be here. Happy to finally have a camera on a podcast for the first time.

**Tobias Carlisle** (1:08)
Yeah, it suits you.
Tell us, so there's been a little bit of news. You have been a hedge fund guy. You're becoming more of a private equity VC guy. You're Venezuelan originally, returning to Venezuela to do some PE and VC. Talk to us a little bit about what the opportunity is. Yeah, in Venezuela, how are you?

**Francisco Amador** (1:33)
Yeah, so obviously, very big change. I've been living in the US for 17 years now. I moved basically when I was 18 to go to college and stayed here, always working in finance and eventually investing.
It's interesting because as a Venezuelan, the past probably 10, 20 years, I haven't really been interesting in doing much over there, obviously with everything that had been going on, ever since Chavez and then Maduro were in charge, which is 27, 28 years by now. I had just discarded the opportunity or the possibility of me ever going back and moving to the country. It's just like I had lost all hope.
But then January 3rd happened, which we all saw in the news where President Trump decided to capture, I guess, former president Nicolas Maduro.
Well, that changed obviously a lot of things, including the prospects of the country. Right now, it's a complicated situation that is definitely very much in flux, but in broad strokes, we're currently undergoing a transition overseen by the US government. Where one of the closest persons to Maduro, who's called Dele C Rodriguez, was basically handpicked by the Trump administration to lead the transition. So she's the interim president by all intents and purposes. Now, while a lot of people, especially in Venezuela, were not happy to find out that this was going to be how things were going to play out, I think because of all the mess and the destruction that the Chavista regime from almost 30 years of running the country on their socialist and very much corrupt and inept policies, there's just a lot of cleaning up to do.
It probably made sense to have someone from the inside, who was cooperating to help during this cleaning up process. There's been a lot of reforms that have started to take place, a lot of changes in the different government departments, etc. There's been negotiations that have started with the opposition party and the current regime. But a lot of this takes time. So I think from me personally, as an investment standpoint, and as a career opportunity standpoint, it was really the first time where I saw what was going on, and said there's probably a very big opportunity to do something here and get involved. Probably it's still a little bit early in terms of when I think the big part of the institutional capital is going to start coming back to the country and foreign investment, etc. But I think also from a risk return standpoint, it's pretty attractive because if you're early and you're right, you probably stand to make some very interesting investments, right? So that's kind of how I saw the situation. It's funny because I mean, I've always considered myself a value investor, but this was probably the first real macro call I've had in my whole career. And I mean, in some ways, obviously I'm Venezuelan, so I feel like I understand the situation and the prospects of what potentially is going to happen in the next couple of years. But I felt confident enough where the political and the economic situation were sort of at a very important inflection point. And I mean, if we want to look at this from sort of a classic capital returns, capital cycle framework, like you had a country that was shut out from the international markets for 20 plus years, and now is basically being re-opened slowly. So again, if you think about it from that standpoint, like you stand to sort of pick the bottom hopefully, and sort of ride the wave that's upcoming from here. And just as an interesting data point to sort of bring the point home, I mean, GDP was down, we're talking big to trough anywhere from 70 to 80 percent. So just of that, you can imagine the country has a ton of upside from just the economic growth that can be unlocked in the next 5 to 10 years.