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The J Curve with Olga Maslikhova
Paulo Passoni (Valor Capital) on IPOs, M&A, and AI’s Impact on Startups in Latam
Feb 11, 2025
Paulo Passoni, a leading Latin American investor and key figure in SoftBank's tech investments, dives into the challenges startups face in LatAm. He discusses the shortcomings of M&A as an exit strategy and the harsh realities of pursuing IPOs, revealing that $300M+ revenue is essential for listing. Paulo critiques the $200M acquisition trap, explores how SoftBank's investments reshaped the landscape, and emphasizes the critical role of AI in accelerating startup growth. His insights are a must for anyone invested in the future of Latin American entrepreneurship.
01:43:39
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Quick takeaways
- M&A is deemed an inadequate exit strategy in LatAm, urging startups to aim for substantial growth prior to any sale.
- Startups must target at least $300 million in revenue for IPO consideration, shifting their focus from quick exits to long-term scalability.
Deep dives
The Broken Exit Strategy in LATAM
Mergers and acquisitions (M&A) are seen as a flawed exit strategy for venture capitalists in Latin America, as many startups are encouraged to aim for significant growth rather than settling for smaller buyouts. Founders are often caught in the '$200 million acquisition trap,' which inhibits the development of true unicorns in the region. Investors emphasize the need for startups to seek larger revenues, notably aiming for at least $300 million to consider going public. This encourages a mindset shift among founders to prioritize long-term growth over quick exits.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode