Sao Paulo — After a long winter for Latin American startup IPOs, the outlook for 2025 is looking more favorable for technology companies going public, according to Hernan Kazah, co-founder of Kaszek, the region’s largest venture capital firm.
In an interview with Bloomberg Línea, the experienced investor argued that the environment for fresh IPOs has improved due to US interest rate cuts, even if they come at a slower pace than originally expected. The prospect of a more business-friendly Donald Trump administration will also foster new listings, he adds.
“The market is changing and has improved with the interest rate cuts in the United States. They’ve been slower than we expected a year ago, but it’s happening. This helps, along with signs of greater stability, such as a clearer American [business] policy,” said Kazah.
Kazah co-founded Kaszek in 2011 alongside Nicolas Szekasy, both co-founders of MercadoLibre with Marcos Galperin. “It’s also clear that it will be a more pro-business and pro-M&A government.”
According to Kazah, while the major shift in the capital markets should consolidate in 2026, the changing trend will be noticeable by the end of 2025. “In our case, in Latin America, a new class will have chances to go public by the end of 2025 - and this will be even stronger in 2026,” he said.
The venture capital firm has a portfolio of 130 investments, including Brazilian startups like QuintoAndar, Wellhub (formerly Gympass), and Creditas, Chile’s NotCo, and Mexico’s Kavak.
Some are “ready” to go public and have been waiting for years for a favorable market window for listing, while others in the portfolio have had to reinvent themselves to face the last two years of scarcer credit amid interest rate volatility.
According to Kazah, the focus is on going public in the United States, following the path taken by companies like Nubank (NU) and MercadoLibre (MELI). Kaszek invested capital in these companies when they were still private, while they are now now listed on the New York Stock Exchange and Nasdaq, respectively.
Kaszek has raised about US$3 billion across nine investment vehicles in just over a decade. Historically, Brazilian startups have been the destination for about 60% of investments.
IPO Pipeline
With high interest rates and many uncertainties about monetary policy direction, a long queue has formed over the last two years of Latin American startups waiting for an IPO window (Initial Public Offering) or for mergers and acquisitions (M&A) - the two most common exits to provide liquidity to funds and return money to investors.
According to CB Insights data, there are currently 1,249 unicorns globally, as well as new technology companies with valuations equal to or greater than $1 billion. That implies a more mature group likely to make moves toward public markets. CB Insights estimates that 110 of them have a high probability of listing on exchanges, and 25 of M&As.
These numbers provide an indication of the size of pent-up capital, which has made it difficult to restart the venture capital market itself.
The funds use third-party capital - institutional investors, also called Limited Partners or LPs - who seek returns on deployed resources. Depending on the managers’ track record, they reinvest profits in search of new opportunities.
In the past year, despite market liquidity difficulties, the Argentine fund manager said that Kaszek returned resources to investors, a movement he expects to repeat throughout 2025.
The main returns came from selling stakes in startup Contabilizei to private equity fund Warburg Pincus - which disbursed $125 million and became the main shareholder of the business - and from capital distribution through the sale of a fraction of stakes in MercadoLibre and Nubank.
Focus on B2B Fintechs and Infrastructure
According to Kazah, 2024 was also positive on the investment side, with investments in about 15 startups from Kaszek.
The firm led investment rounds in companies such as Zig, in an extension of a R$155 million Series B round; fintech Kanastra, with R$100 million raised; BrandLovrs, with R$35 million; and Argentine Pomelo, with US$40 million.
The investments marked the closing of Kaszek Ventures V and Kaszek Ventures Opportunity II funds. Both vehicles still have resources, but only for follow-ons.
Starting this year, the firm begins making investments with resources from funds raised in 2023, totaling around $1 billion. These include $540 million for early-stage investments in Kaszek Ventures VI, and $435 million for late-stage companies in Kaszek Ventures Opportunity II.
“We always try to keep an open mind to react to entrepreneurs, as they are the ones in the battlefield looking for new great opportunities. That said, we are quite optimistic about fintechs, but in the B2B area, and also in infrastructure,” he stated.
Half of the capital should be invested in startups in Brazil, Kaszek’s main market. Another 25% in Mexico, and the remainder divided among other countries in the region.
“Mexico took a while to take off, but it finally happened. It now has a very rich entrepreneurial ecosystem,” said the experienced investor.
Argentina, the home country of Kaszek’s founders, is also closely monitored. “The right decisions are being made, but the market remains fragile. We need more continuity on this path for it to become interesting again,” he said in an indirect reference to the evolution of the economy and business environment under Javier Milei’s government.
The thesis defended by Kazah - and also by other managers - is that after the transformations in the relationship between digital banks and end users, it’s time to improve the relationship between institutions, B2B. And also to perfect technologies that remain “hidden” - such as operations’ backoffices - to enhance information traffic and reduce business frictions and costs.
Climate tech investments are also on the firm’s radar, which has in its portfolio Mombak, a startup that develops biodiverse reforestation projects in the Amazon.
“The only way to solve this problem is with technology, it won’t be with reduced consumption,” he said, referring to what has become a kind of mantra in recent years.
