(Bloomberg) -- Upload Ventures, a Sao Paulo-based venture capital firm backed by SoftBank Group Corp., is boosting its investments in companies that use artificial intelligence while avoiding capital injections in credit fintechs and others it considers too risky.
“There are a lot of opportunities in AI as a productivity facilitator in several processes in sectors such as banking and health care, but agritechs and credit fintechs have a lot of risk,” Carlos Simonsen, co-founder and managing partner at Upload Ventures, said in an interview. “There will be no more Nubanks,” he said, referring to Nu Holdings Ltd., which has gone from an obscure credit-card startup in 2013 to the most valuable financial company in Latin America.
The great nephew of Mario Henrique Simonsen, one of Brazil’s former finance ministers, Carlos in 2021 co-founded Corton Capital, a private equity firm focused on small companies that are expected to grow at a faster rate than competitors. Corton was later incorporated into Upload Ventures, created as a result of a 2022 spinoff from a SoftBank fund that invested in early stage companies.
Upload Ventures now has two funds in the investment phase. One has about $120 million and focuses on early stage companies. It has about 20 firms in its portfolio, and Upload aims to invest in about five more. The other fund prioritizes companies that already received rounds of capital and have growth potential bigger than their market peers. It has $200 million in committed capital, of which $50 million comes from TIM SA, the Brazilian unit of Milan-based Gruppo TIM.
Upload also manages $250 million from legacy funds already fully invested.
“We try to buy stakes in local tech firms that can become global or businesses aiming to have a very big presence in Latin America,” Simonsen said.
One example was the first investment made by the TIM-backed fund, a Palo Alto-based AI-powered retail media platform called Topsort Inc., which is looking to grow in Latin America by offering an auction engine for online marketplaces and retailers with multiple brands.
Upload is making purchases as high interest rates in Latin America and the US reduce investors’ appetite for venture capital. After reaching a peak of $9.3 billion in the last half of 2021, venture capital investments in Latin America amounted $1.8 billion in the first six months of this year, 18% less than in the last half of 2023, according to Lavca, the region’s association for private equity.
“We are in an investment phase,” Simonsen said. “We have capital to invest at a time when many of our competitors do not. There are a lot of companies knocking at our doors, so we need to avoid falling into the temptation of doing investments too quickly. We are keeping a high bar.”
The lack of initial public equity offerings from Brazilian companies since 2021 “greatly hinders the dynamics of fundraising,” he said, because venture capital investors “no longer have a significant way out of investments.” That’s one of the reasons Upload tends to prioritize companies that are easy to sell on the secondary private markets, he said.
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