In this episode of the McKinsey on Start-ups podcast, McKinsey senior editor Daniel Eisenberg speaks with Lara Lemann and Monica Saggioro, co-founders of MAYA Capital, an early stage venture capital firm based in Brazil, about the challenges and opportunities in the Latin American start-up ecosystem. An edited transcript of their conversation follows.
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Daniel Eisenberg: When Lara Lemann and Monica Saggioro first met some five years ago, it didn’t take long for them to bond. Both women were keenly interested in the prospect of helping to spur more business innovation, and in turn economic development, in their native Brazil as well as in other parts of Latin America. As they exchanged ideas, they concluded that a lack of early stage funding was severely limiting opportunities for entrepreneurs, particularly female founders, on the continent. By 2018, they had decided to tackle the challenge head-on by creating their own venture capital fund, MAYA Capital, focused on leading the first venture round of teams “solving Latin America’s most relevant problems,” as they put it. On today’s episode, Lara and Monica talk about the hands-on approach they take with their portfolio companies, what they look for when making investment decisions, the issues facing the broader Latin American start-up ecosystem, diversity and inclusion in the start-up world, and more.
Before co-founding MAYA, Lara Lemann transitioned through the public and private sectors in Brazil and invested in various sectors as an angel. She is Brazilian and Swiss and has an undergraduate degree from Columbia University.
Earlier in her career, MAYA Capital co-founder Monica Saggioro worked with innovation and new business development at larger organizations such as Restaurant Brands International, Whirlpool and Goldman Sachs. She is Brazilian and has an MBA from Harvard Business School.
Daniel Eisenberg: Lara, Monica, thanks so much for joining us today.
Lara Lemann: It’s a pleasure, thank you for having us.
Daniel Eisenberg: Lara, tell us about what MAYA Capital does and how the two of you came to create it.
Lara Lemann: MAYA is a venture firm. We support top talent solving Latin America’s most relevant problems through entrepreneurship. This means that we usually lead the first VC check in companies from various sectors and various countries from the region. And then we support founders and their teams as they scale, usually through very hands-on support that’s focused on hiring, strategy, and fundraising.
Monica and I met in 2016, while I was investing as an angel in Brazil and Monica was testing a couple of different things during her MBA, including various business models. And we initially connected over healthy food and sports, two things that we both really enjoy.
But over the two years, our conversations eventually evolved to topics of female entrepreneurship, female empowerment, and the opportunity that we have to transform Latin America by empowering entrepreneurs. Eventually, while we were having these conversations, we compared the ecosystems that we were living in—me in Brazil, she in the U.S.—and we ended up realizing that there was this massive funding gap in the early stage, across the region.
We ended up deciding that the best way for us to catalyze this transformation that we were after was by enabling entrepreneurs that were tackling large-scale problems. So eventually that’s how MAYA was born, in 2018, and since then we’ve invested in 27 companies as of today. Most of these are in Brazil, but seven of them are outside, in Chile, Mexico, and Colombia.
Daniel Eisenberg: Monica, tell us how your past experiences led you to joining forces and co-founding MAYA.
Monica Saggioro: Sure. First of all, thank you for having us here.
We bring very different experiences. Lara had spent some time investing as an angel here in Brazil. And I have more of an operating background. Before MAYA, I spent roughly ten years working with innovation and new business development across Latin America.
I started my career at Whirlpool, the appliances company. We launched the Kitchen Aid brand in Brazil. After a couple of years at Whirlpool, I transitioned to work for Burger King Corporation, under their Restaurant Brands International Group. There I was leading franchise performance and growth, helping a lot of the franchisees across the region turn around restaurants, and helping them expand across the region.
After a while, I decided that it was time for me to start my own business, outside of a large corporation, so I pursued an MBA in the United States. And a lot of things happened throughout my MBA. First, I did test a couple of business models, and studied some theses that we ended up investing in with MAYA. Second, I started falling in love with the intersection between finance and tech, which later became a good starting point to what became MAYA. And I think the most important thing was that I met Lara. And we spent the two years, while I was getting the MBA and she was here in Brazil investing as an angel, exchanging ideas about business models and opportunities in the ecosystem. And then we decided to combine her investment background with my operating experience to launch MAYA. But I’m going to let Lara talk about her background, as well.
Lara Lemann: Well first, I’m Brazilian and Swiss. I grew up in between the two countries. And the juxtaposition of this very small, very rich country, and this massive country that’s rich in natural resources but poor in every other sense, just always kind of blew my mind.
I was intrigued by how to solve for this gap that I saw. Initially, I started my career working in the public sector, but I realized fairly quickly that the status quo would not be sufficient to bring about the positive transformation that I hoped to see in my country.
So eventually I transitioned to the private sector. And this is where I really realized the potential that entrepreneurship has to actually drive innovation, which, in turn, drives development. I eventually started speaking with multiple founders. This led me to start investing as an angel, and that’s when I connected with Monica, who was testing a business model at the time. And then our conversations evolved to, “What could we do together?” And that is where MAYA was born.
Daniel Eisenberg: What’s the origin of the name and the meaning for you?
Monica Saggioro: We wanted something short and sweet, a Brazilian word that was short, easy to pronounce in different languages, and also had an available URL. MAYA fit all these criteria. It basically means “mother” in Tupi-Guarani, which is the Brazilian native language. But it means a lot of positive things in other languages as well. In Maori, it means “courage”. In Sanskrit, it means “magic”. It means “truth” in Japanese. We really like the very positive meanings that it brought. It’s something easy and catchy and, yeah, we love our name.
Daniel Eisenberg: Lara, let’s talk a little about the investment focus and funding. Where have you raised money from so far? And in your view, what prompted the investors to cast their lot with MAYA?
Lara Lemann: For our first fund, we raised mostly from family offices and high-net-worth individuals in Brazil, Latin America, Europe, and the U.S. And then we also raised a lot from entrepreneurs. I assume what the family offices saw is that we’re building something different at MAYA.
MAYA was born with the Latin American focus; it’s actually the first one in the region to have done so. We also have a dedicated, hands-on approach. We really enjoy adding value to our portfolio companies, so that’s actually something that’s a part of our thesis.
This is really what differentiates us not only in the current ecosystem, but also in the future. For example, we dig deep in our analysis process. We really understand the team, we understand the market, and we understand how we would add value before we invest.
We then stay close to the teams in the early days, and we help them with the go-to-market, and eventually also with the growth. Then, finally, we dedicate half of our fund for follow on, so we actually have capacity to double down in their follow-on rounds as they scale.
On the other hand, we brought on a lot of entrepreneurs to our LP base, and it’s because we saw that people who are thinking about being entrepreneurs don’t speak to funds immediately. They go speak first to other entrepreneurs to get insights and eventually even connections.
So bringing on these entrepreneurs to our LP base has been a great help for our deal flow. And what I think really excited these entrepreneurs is that in the early days of MAYA, the initial conversations that we had with these successful founders wasn’t to fundraise. But the question we most asked was, “how would your trajectory have been different if MAYA had existed when you were fundraising?”
We used these answers to develop our thesis and develop our portfolio support approach. And we continue to ask that question today.
Daniel Eisenberg: Monica, what prompted the decision to focus on seed stage and Series A?
Monica Saggioro: We spent a lot of time studying the market, and comparing the entrepreneurial ecosystem in Latin America with other emerging countries, and also with the United States. We came to realize that there was a huge investment gap, and a lot of this gap was focused on the seed stage.
Two moments, actually: One “Death Valley” in the earliest stage, pre-seed or seed. And a second “Death Valley” post-Series B. We decided to tackle the first one on the pre-seed/seed because we had realized that 80 percent of start-ups died because they could not raise adequate capital in their first years.
Another interesting data here was that we checked the number of start-ups and the number of VC funds, and compared that across different regions. And we calculated that there were roughly 12 start-ups per VC fund in the United States, versus 80 start-ups per VC fund in Brazil and in Latin America.
We checked this number recently, and it has remained the same. Which means, for us, that even though we’ve been seeing more investors coming into the ecosystem, we have also seen the quantity and the quality of founders increase in the ecosystem.
So we need to bring more investors to the region, urgently. And we need investors helping these founders progress.
When we decided to start MAYA, it was a matter not only of filling this gap, but also making sure that we were helping founders progress in their journey. This means helping them find the first clients; helping them think strategically about fundraising; helping them understand their go-to-market in the most efficient way.
We want to make sure that founders have the right resources to test their initial hypotheses, and also that they can find the right support for this journey, which will probably take many years.
Daniel Eisenberg: And Lara, you talk a lot about the founders. When you’re assessing potential investments, doing diligence on start-ups and their founders, what are you two looking for in particular?
Lara Lemann: What we look for in founders can be summarized in three quick words. We call them team, TAM (total addressable market), product. So in terms of “team,” we’re checking the motivation of the team, the leadership capacity of the team, the grit that the founders have, and, most importantly, their capacity to attract talent. Because, at the end of the day, the business will only succeed if they are really capable of attracting and then engaging people that are, in most cases, better than them in certain specific situations.
We test that usually by doing references. We just really dig deep on the founders to understand if these are people that we want to work with for probably the next seven to ten years.
In terms of “TAM,” we’re looking at market size, market dynamic, the growth of the market recently. We do a bit of analysis on the competitors and the benchmarks and also understand how these markets have evolved outside of Brazil.
Finally, in terms of “product,” what we’re doing here isn’t necessarily understanding the solution, because at the end of the day we want founders that are obsessed with the problem and not a solution. But we do want to understand their idea, the founders’ idea for go-to-market, the economics, and basically how they’re going to create a sustainable model, how they’re going to be ten times better than any alternative.
Monica Saggioro: And Daniel, I just wanted to complement that by noting that even though we run thorough diligence on founders, they should also diligence the funds they’re talking to. This is a super-long-term relationship, and they need to make sure that they’re partnering with the right people.
So they should be talking to other founders and understanding how these VC funds have actually helped founders; understanding how much runway they have to follow on the subsequent investment rounds of these companies; or how much these potential investors are actually hands-on and what type of support they bring to the table. These are all very important points that founders should ask about the funds they’re talking to.
That’s exactly where we chose to be more active, at least compared to the other seed-stage funds in the region. We help founders a lot with commercial angels, something what we call “the billion-dollar angels.” We want to make sure that we connect founders with potential clients, potential partners.
We help them a lot with fundraising, helping them think through the strategy and bringing the best people to the Cap table. We also help them in hiring, so we run a lot of interviews and we’re always constantly, actively chasing the best talent.
We have a formal team of advisors composed of founders of many of the unicorns here in Latin America today, and they help us with more strategic guidance or better understanding of some specific sectors.
These are a couple of ways that we’ve been able to execute what we call our on-demand, hands-on approach.
Daniel Eisenberg: Lara, on that point, is your platform’s focus on advisor support something that you feel is a major way to distinguish yourself from other VCs in Brazil and Latin America?
Lara Lemann: Certainly. I love that you mention the word “platform,” because that’s exactly how we’re seeing the support that we’d like to provide to our portfolio, whom we call “Mayans.” Monica mentioned a little about the more hands-on strategy support where we’re helping with fundraising, the introductions, and hiring.
But the support we are providing goes far beyond that. We’re also looking at how we can use our community to enable founders to help themselves. Monica and I can come in at strategy points, like fundraising, like strategic introductions, and key hires that they need, but most of the help a founder needs is in the day-to-day: how to implement the solution, how to work together with a certain team member.
And there they don’t necessarily need someone from the outside looking in, but much more just someone who’s been through that before. And we have a portfolio of 27 teams that are most likely going through similar situations.
So we’ve created a Slack channel and we do events where we encourage these founders to interact with one another and share their experiences and their learnings. Additionally, we also have what we call our ecosystem effort, where we create forums, events, and write content that help guarantee we’re seeing better-prepared founders in our pipeline.
One example of this is our matching program, where we had 20–25 people who are thinking about entrepreneurship, but don’t yet have co-founders, and don’t yet have a thesis. So we put them in the same room, and over a month, we ran a couple of events and just helped them get to know each other, explore a couple of theses.
Daniel Eisenberg: Monica, are there other approaches or methods that you use that you think are distinctive?
Monica Saggioro: I do think that our approach of staying closer to founders makes tremendous difference. We measure our NPS with founders, so we are always monitoring their opinion and where we can be more active, less active.
We can measure that impact through the number of referrals of founders to MAYA through our portfolio companies.
They actually send us a lot of super-qualified deal flow. Today, the conversion coming from the Mayans is roughly three times higher than the average conversion in our pipeline.
But I think there are a couple of other points that differentiate us as well. We were born focusing MAYA across Latin America, and positioning MAYA as the leading fund across the region. This makes a difference because we’ve been able to help companies not only expanding outside of Brazil, but also coming into Brazil, which is important.
I think another point here is diversity. We are one of the very few funds founded by females, and we’re trying to think about diversity across different variables as well, not only the gender lens. And founders do like having a different perspective.
If we’ve been able to prove that diversity does lead to higher performance, I think having diversity in your Cap table should also do the same.
Daniel Eisenberg: Let’s talk briefly about some of your latest investments, Lara, and what made those particularly compelling candidates?
Lara Lemann: Well, it’s difficult to choose which start-ups to mention here, because we are super-excited about all of them. But I think I can talk about two that are more well-known.
The first one is Belvo, a leading open-banking API platform in Latin America. They’re the easiest way for users to connect their accounts to a FinTech app, basically. The team, which is led by Udi and Pablo, they’re super-experienced in tech, finance, and in entrepreneurship. They went from NASA to Revolut. This was one of the more impressive reference checks we did, people at NASA telling us that the team is among the smartest people they’ve worked with.
What excites us here is basically it’s a large and growing market. The open-banking regulation is moving super-fast in Brazil and in Latin America, very much in line with the trends that we have seen in Europe. And this ends up opening lots of doors for first movers like Belvo, who are very successfully surfing this wave.
In terms of product, Belvo’s is unparalleled. And the traction that they’ve been garnering more recently has been super-exciting to watch. Monica, do you want to mention NotCo?
Monica Saggioro: Sure. Another interesting company here is NotCo. I don’t know if you’ve tried their products, but they are available in Brazil, in Chile, Argentina, Peru, and now in the United States. They basically replicate foods that take animal protein by only using plants.
What really differentiates NotCo is their technology. They have a machine learning system that combines different plants’ ingredients to form the protein molecule. This gives them superior quality and speed to develop new products. They started with what they called “not mayo.” And then they launched “not milk,” “not ice cream,” “not burger.” They continue to launch products all the time.
NotCo also has the elements that we always look for in founders. Mattias, the founder and CEO at NotCo, had founded another company, and we really value second-time founders here at MAYA.
This is a massive and growing market, so we’re super-excited to see new plant-based options. And NotCo is able to not only create products faster than the average, but also create products with much better quality.
The goal here is to imitate the flavor that you would find in regular milk, ice cream, or burgers. They’ve been able to create products that taste real, with super-natural ingredients. And they do that at a much faster pace, than competitors.
Daniel Eisenberg: And it aligns with what you guys originally bonded over, healthy food and healthy living.
Lara Lemann: Exactly.
Daniel Eisenberg: Let’s zoom out to talk briefly about the broader start-up and VC ecosystem in Brazil, and Latin America. There’s obviously a lot of innovation flowering in the region. What do you think is helping to push innovation forward?
Lara Lemann: We always talk about the ecosystem as a flywheel. We think that the more examples of success there are, the more talent will be attracted to tech jobs. And as more talented people migrate to these sectors, so does capital. And then this capital can fund the next successes, and so on.
We’ve seen examples of success in Brazil a couple years ago, and Mexico more recently, and in Colombia also. And this is very much attracting top talent towards the ecosystem. So today one in three undergraduate students in Brazil wants to work in technology or start their own company.
Which is something totally unprecedented. And this in turn attracts different capital options. We connect often with international VC funds because we see them as natural co-investors in the future. More and more, we’re being contacted by big U.S. funds that are interested in leading subsequent rounds, bigger rounds for Latin American companies.
In addition, we’re seeing more exit options. Brazil has had some successful IPOs. There’s been a huge appetite for tech companies in Brazil, in Latin America, and even for these companies in the U.S., with companies like Stone and XP, for example, on Nasdaq.
Then obviously it wouldn’t be a VC podcast today if we didn’t mention SPACs. Just since the beginning of this year, we’ve seen four or five SPACs with a focus on Latin America. And that obviously provides a really great way for the companies in our portfolio, and in the ecosystem more generally, to become these successes that we need to continue moving the flywheel.
Daniel Eisenberg: What would you say is the biggest gaps these days in the ecosystem, whether it’s in Brazil, or, more broadly speaking, Latin America?
Monica Saggioro: There’s still a significant funding gap. Even though we see the number of funds increasing in the region, I think we need to be careful here because of two things. One, not necessarily all these funds have enough runway to support the companies throughout their journey.
And, second, even though the number of venture funds has increased, the number of companies has also increased. We continue to see the best talent flowing to tech. So we need to continue to see more capital coming to the region, as well.
I think, in the end, the investment gap in seed stage has improved a little bit. But there’s still a huge gap, or “Death Valley”, post-Series B. That’s why most of the founders in the region need to look for capital outside of Brazil, or outside of Latin America.
It’s interesting to see funds like Andreessen Horowitz, DST, GGV, and Lightspeed showing more interest in the region. Ideally, we would also have capital originating in the region to support these founders.
Latin America still faces a lot of economic and political issues. Whenever this happens I think it tends to scare a lot of these investors from other parts of the world. So ideally we would have more investment from inside the region supporting founders, regardless of the situation that we find economically or politically.
Daniel Eisenberg: Lara, how much of a difference is there between Brazil and Spanish-speaking Latin America, in terms of the ecosystem or specific sectors that are most promising for start-ups.
Lara Lemann: We don’t see that many differences because we see that inefficiencies that are relevant in Sao Paulo probably also prevail in cities like Bogota and Mexico City, for example. One of the main differences that we do see is the size.
That’s less relevant when comparing with Mexico, but companies that are starting in Colombia or Chile, for example, usually need to target Brazil in their go-to-market relatively early, just to make sure that they’re tackling a large enough TAM.
In terms of sectors, we don’t see that much difference, basically because we see that the populations in the countries are suffering with the same problems. And we’re investing in companies that are using technology to create innovation, and that necessarily isn’t that dependent on minor structural realities, but much more macro-scenarios, which we see as overarching in the region.
Daniel Eisenberg: COVID is obviously, sadly, still very much a part of all our lives across the globe, and certainly in Latin America. How has the continuing pandemic impacted the investment landscape?
Monica Saggioro: COVID has certainly been a very tough lesson for everybody across the globe. Here at MAYA, when the pandemic first started, we spent more than three weeks just talking to portfolio companies, helping reduce costs, running webinars to talk about ZBB (zero-based budgeting) and cost-reduction plans. I think both in MAYA’s portfolio, as well as across the globe, we saw founders not only react super-quickly, and learn how to run very lean operations. But they’ve also managed to find new opportunities to tackle, given the new reality that we’re living in.
If you check the performance of venture capital funds, you see that a lot of funds actually performed well when investing right after crisis moments. And this comes because of a couple of factors, but the key one is the fact that whenever we face such disruptions, and I think this pandemic was a clear example, new needs emerge. In the end, new companies need to emerge as well, need to be founded to solve these new needs, or these problems that actually become opportunities.
Daniel Eisenberg: We’re coming up on time, but I want to return briefly to the point you raised earlier about diversity. How would you characterize the entrepreneurial and financing gender gap in Brazil and the rest of Latin America? And how do you work to address that gap?
Lara Lemann: In a study that was done earlier this year, that MAYA actually participated in and helped run, it was found that less than 5 percent of start-ups in Brazil are founded by women. So there’s obviously a massive gap there still.
We don’t have a gender lens when we’re investing. But at the same time, our pipeline is differentiated simply because we are two women and because we speak about this subject with a certain frequency. Women naturally gravitate towards MAYA when they’re thinking about starting companies.
Today almost 40 percent of the companies in our portfolio were founded by women. It’s not at 50 or above, where we would like it to be. But it’s getting there.
In addition, we also launched Female Force, which is an initiative to replicate the same flywheel I mentioned earlier of providing examples, talent, and support, but in this case specifically to female founders. It’s a platform where women who are thinking about entrepreneurship can come to have punctual mentoring—we call it “Office Hours”—with other successful women who have experience either in fundraising, in product, in team management, whatever they may need at that time.
And then eventually, when they do think about starting companies, we speak to them. Even if we don’t invest, we try to add value in some way to make sure that they have the guidance necessary so that someday, hopefully, we can invest in them.
Monica Saggioro: As investors, it’s super-important for us to be neutral, and one interesting study from Harvard Business Review1 is that investors usually ask different questions to female and male founders. This applies to both male and female investors.
We tend to ask promoter questions to male founders, and preventive questions to female founders. For instance, to men, we would be more likely to ask about, “How are you growing?”, “What’s your vision for increasing market share?”, “Where will you be in five years?”. And for women, we lean more towards questions such as, “How are you going to become profitable?” “How will you defend yourself from competitors?” and things like that.
So when we found that out, we made sure that we implemented a more neutral investment process here at MAYA. And today this is super-important for us. We always ask the exact same questions to every founder, and we usually ask them to fill out a form so we can read the answers without any bias of who is giving these answers.
Daniel Eisenberg: I’m wondering where you two see MAYA five years from today. What do you need to happen for you to look back and feel really proud of what you have accomplished over the next five years?
Lara Lemann: Daniel, I promise that MAYA’s story will go way beyond five years. We always say that “this is just the beginning, we’re just getting started.” There’s so much opportunity to be tackled still, and so much work to be done. But in five years, particularly, I imagine we’ll have a series of funds under management and an ever-stronger portfolio of founders really working towards the transformation of Latin America.
And that’s what success, to me, is: empowering exceptional people to reach their maximum potential, either by capital support, or whatever they may need, and as a result really enabling this change throughout the region. Monica, you want to complement?
Monica Saggioro: For me, I would love to see that MAYA has really changed Latin America for better; that it has inspired the next generation of founders; and that it has also delivered above-average return to our LPs. So I think if we do those three things we’ll be on the right path. And I think Lara is totally right: This is just the beginning, so I think you’re going to hear much more from us in the next years.
Daniel Eisenberg: We are eager to hear that, and keep watching where MAYA goes. I want to thank both of you, Lara and Monica, for joining us today. It’s been a great conversation.