Illuminati Round Table Call Notes:
Dave Wang - ex-head of crypto for the Latin American division of Softbank
Was at SoftBank for 3 years
Led the crypto buildout for the LATAM (Latin American) team
He left to start his own crypto venture capital fund in Latin America
The Fund
$20-30M in capital focused on private and pre-seed opportunities within crypto
Will invest in companies coming from LATAM and that are interested in LATAM
What made you choose the LATAM region?
Dave saw the opportunity when SoftBank first looked into LATAM and started their fund in 2019
At the time (2019), everyone was primarily fighting over deals in the US, India, and China. Valuations in these areas were very high and very risky.
LATAM didn't have much capital flowing into it, with one 1 fund in that area
Lots of ‘low hanging fruit’ found in LATAM
Expanding into Latin America gave high profits returns
The LATAM region - people, buy bread and receive remittances in BTC (to avoid inflation)
In the VC space of LATAM, is the capital internal and external?
General tech in LATAM started to pop in the last 10 years, specifically in the previous 5-6 years
The majority of the business in LATAM is risk-off traditional work - banking, oil, farming, etc.
More people are now turning towards tech and are willing to start these firms
More VCs are seeing this and becoming more willing to invest in these startups; the bulk of the capital is external
As an early-stage VC, what pains have you suffered, and what tips do you have for others?
The investment side - most of the time, you will not directly have to handle the setup as it will already be in place for you and operated by the finance or legal team
You need strong deal flow and strong judgment skills
On the business side - you need to be more than a good investor, you need to be a good business owner and focus on asset management and a good fundraiser
Within LATAM, do you think fintech is the most powerful application for crypto?
Financial services will likely be the first thing to be impacted by crypto
45% of adults in LATAM do not have a bank account (200M-300M people)
APR rates in LATAM are north of 30-40% for repayments
Companies are capitalizing on this by charging less than the standard APR and using the tech for better credit underwriting, and you can expand quickly
Widening access to credit will boost the region's development
Best wallets in the region and what’s best for the project’s treasury
Metamask is the biggest.
Neobanks are popping up in LATAM, the most prominent being Lemon cash from Argentina.
Dave’s reservation on Neobanks is - there's the potential to lose all customer funds if they’re using them to deposit on platforms like Genesis or Blockfi to generate yield for customers and themselves.
Think twice before using such platforms
Look into US Treasuries or repo bonds - can make you 4-6% and is much safer
It's better to have your treasury split between non-crypto and crypto assets to increase diversification - weighted risk
What other sector do you see taking off in the LATAM region?
Dave believes infrastructure has good potential
This creates large-scale monetization as it's easier to do so with infrastructure and is a sticky business
In crypto, there's a big issue of people needing to learn how to monetize a business, so people figure out sustainable business models for projects to generate revenue - not counting token emissions
Copy trading may be a good model
Cash onramps to get into crypto need to be developed first - possibly through remittance services and local stores
Final thoughts
GameFi has the potential to be massive in LATAM as the demand is very high
No bank accounts combined with high demand for gaming creates unique opportunities for crypto wallets to be implemented and solve both sides of the issue
Financial services are the gateway to LATAM.
Latin America VC and Growth with Dave Wang