Antler, US$ 500 million fund, arrives in Brazil to hunt embryonic startups

At a time of retraction in investments in startups, a new fund is arriving in Brazil to bet on ideas even before they are put into a PowerPoint. It’s Antler, founded in 2017 by Norwegian Magnus Grimeland in Singapore.

With offices in 18 different cities in Asia, Europe and the United States (in Austin, Bolder and New York), in addition to a presence in Toronto, Canada, Antler started an operation in São Paulo, earlier this year, under the command of Brazilian Marcelo Ciampolini.

In just five years, Antler has invested in more than 400 startups around the world through 12 funds that together have raised US$500 million. Now, Ciampolini, who is the general partner of the fund to Brazil, will start raising a new fund of up to US$ 50 million with Brazilian and international investors.

“We want to invest in entrepreneurs who have a good education and have worked in a big tech, in the financial market or in a large corporation and want to undertake, but don’t know where to start”, says Ciampolini, when NeoFeed. “They don’t even have PowerPoint and we help make the deck.”

The plan is to invest in very early stage Brazilian entrepreneurs through a training program that is very reminiscent of the strategy of the American accelerators Y Combinator and Plug and Play Tech Center, as well as that of the 500 Global fund (formerly 500 Startups).

Like Y Combinator and Plug and Play Tech Center, which select entrepreneurs in batches and then decide on their investments, Antler has a similar training strategy. But, unlike the two previous examples, the fund invests in entrepreneurs in whom it believes they are capable of forming a startup even before the idea.

How does this happen? The fund attracts people with the potential to become entrepreneurs through training courses. In the world, each office has two “batches” per year. In Brazil, the first course will take place in September. Lasting almost three months, the idea is to evaluate candidates and help them find co-founders and develop ideas that can become a startup.

The profile of “students” that Antler seeks are people who have attended good colleges, or who have CTO training, or what Ciampolini calls a natural entrepreneur, capable of doing a lot with a little. Those selected will receive a scholarship, the value of which has not yet been defined. In the US, it’s $3,000 a month. “I also want to meet the entrepreneur outside the Rio/São Paulo axis”, he says.

At the end of the course, the “students” form pairs with those who would like to found a startup and present the company’s idea, which undergoes analysis by an investment committee. “We evaluated people and their ability to take this idea forward,” says Ciampolini. Approved projects receive a check for $150,000.

Antler, who claims to be thesis agnostic, takes a 10% stake in the startup and puts the entire team to help structure the new company – the Brazilian team is being formed, but will also have the support of the accelerator’s international team .

Afterwards, Antler presents the startups chosen for funds that invest in seed money for new captures – now with Powerpoint ready. In this case, Antler always participates in subsequent rounds to avoid diluting its participation.

In this first selection, according to Ciampolini, the goal is to attract 80 people so that they can have 40 ideas (startups) to be presented to the investment committee. On average, the investor estimates that he will sign his first 15 checks in Brazil – a total of US$ 1.5 million. “Brazil is the biggest barn of unicorns in Latin America”, says Ciampolini, justifying the arrival of the Antler in the country.

Antler’s global portfolio includes Singapore’s Airalo, which enables card-free mobile telephony for travelers in more than 190 countries. In subsequent rounds, Sequoia Capital and Rakuten Ventures invested in the company.

Another startup is the fintech Marco, founded in Miami, which provides credit to small and medium-sized companies in Latin America that want to export to the United States. The startup raised $82 million in equity and debt, and attracted several funds after Antler’s contribution.

The list is extensive and includes Arcadia, Kayyak Ventures, Village Global VC, Flexport Ventures, Tresalia Capital, 342 Capital, Struck Capital, Florida Funders, Fox Ventures and Arpegio.

The more than 400 startups that make up Antler’s portfolio are valued at $1.8 billion, according to the company. Asked if the strategy is known as “spray and pray”, for betting on many companies in the hope that some will succeed and justify the investment, Ciampolini says no.

“We are not investing in this way”, says Ciampolini, who was the founder of the fintech Lendico (now renamed Provu), bought by the Lone Stars fund in 2018. “We have a assessment which evaluates 10 different questions. The investment decision is based on data.”

In Brazil, the greatest example of a “spray and pray” fund is Bossanova Investimentos, founded by João Kepler, who has invested in more than a thousand startups. In the United States, this is a model followed by several funds. The Y Combinator accelerator, for example, has over 4,000 investments. The 500 Global, more than 2 thousand. And SV Angels and Plug and Play Tech Center add up to over a thousand contributions each.

Low tide?

The macroeconomic scenario, with the increase in interest rates, as well as the correction of the value of tech assets on the stock exchanges, which in some cases exceed 50%, have made investors more cautious in their investments. Many call this movement “low tide”, due to the slowdown in investments.

Due to this scenario, the main venture capital funds in the market have issued recommendations to startups in their portfolio to preserve cash and try to be rational in spending. The reason? Hold on longer with the money raised, avoiding new rounds so as not to be forced to carry out a “down round” – taking the resources at a lower valuation than the previous round.

Sequoia Capital, for example, one of Silicon Valley’s most influential funds, has warned startups in its portfolio that this is a “crucial time” of uncertainty and change. But he warned: “This is not a time to panic. It is time to pause and reevaluate”, wrote the manager. “Don’t see (the cuts) as a negative, but as a way to save money and run faster.”

AY Combinator also sounded the warning bell and told his lunges to “prepare for the worst”. He added: “The safest move is to plan for the worst,” he wrote in a letter sent to startups in his portfolio. “If the current situation is as bad as the last two economic crises, the best way to prepare is to cut costs and increase your ‘runway’ in the next 30 days.”

Despite this scenario, investments have not yet slowed down drastically in Brazil. In the first four months of 2022, Brazilian startups raised $2.3 billion, down just over 4% from the same period last year, according to Distrito, an independent startup ecosystem.

In the first four months of 2022, Brazilian startups raised US$ 2.3 billion, a drop of just over 4%

What explains this slight drop is the fact that the main managers have cash on hand – what in the market is called by the jargon of dry powder. For this reason, they are not stopping investments, they have just become more selective in the analysis of new contributions, reducing the value of checks and the speed of funding.

The challenge now is to get new money. And there is no shortage of managers who are in the process of raising funds from investors. One of them is Mindset Ventures, which invests in startups in the United States and Israel, which is seeking US$ 100 million in its fourth fund.

Oria Capital, owned by Jorge Steffens, will also start raising US$ 100 million for its fourth fund, as well as Barn Investimentos, which is seeking US$ 100 million to make more investments in greentechs. Headline, by Romero Rodrigues, is also behind more than R$800 million together with XP.

Another fund that is on the market in the process of raising is Kamaroopin, owned by Pedro de Andrade Farias, who joined Pátria, which is taking its first steps in venture capital – the manager is focused on private equity and has recently raised a SPAC .

Source: Neofeed