SoftBank Latin America Fund announced today that it is spinning out its early-stage Latin American investment arm into a new autonomous entity, dubbed Upload Ventures.
The new fund will back early-stage companies in the region at a pace of about $100 million per year.
Last September, TechCrunch exclusively reported on the hiring of Rodrigo Baer and Marco Camhaji as part of the fund’s strategy to focus more on early-stage investing in the region. At that time, SoftBank said that the pair would be reporting to then-COO Marcelo Claure, who resigned earlier this year over a compensation dispute with SoftBank founder and CEO Masayoshi Son.
The move was significant in that the hires represented an expansion of SoftBank LatAm Fund’s mandate and meant that the firm was now backing companies at all stages in the region. But now, according a source familiar with internal happenings at the fund who wishes to remain anonymous, SoftBank decided it wanted to stick to its core thesis of investing at the growth stage because early-stage investing became “distracting.”
Baer and Camhaji and new venture partner Norberto Giangrande created, and are serving as managing partners of, Upload Ventures.
The Latin America Fund remains intact, according to the source, who said it will continue to deploy funds. Originally, it had raised $5 billion and once that was deployed, it planned to invest another $3 billion in LatAm startups. That money will continue to be deployed and Upload Ventures will conduct its own raise with SoftBank Latin American Fund currently serving as “the largest limited partner” in the new fund.
The early-stage companies that SoftBank Latin America Fund has invested in thus far will now migrate to Upload Ventures. Those startups include Abstra, Arch, Birdie, BotCity, Digibee, D-Uma, Indaband, Medway, Neivor, Nilo, Salu and Worc, among others. Also migrating is SoftBank Latin America Fund’s 12-person early-stage team. Giangrande, an angel investor who has backed Nubank and others, is joining Upload as a new venture partner.
Paulo Passoni and Shu Nyatta, managing partners of the SoftBank Latin America Fund, said the move was inspired by the “huge success” of the original fund.
“In just over six months of operation, we received more than 1,100 pitches and announced investments in twelve companies with great growth potential,” the pair said in a statement.
Since 2019, the Japanese conglomerate has invested billions of dollars into the region. Claure previously told TechCrunch that by 2023, SoftBank would invest close to $30 billion in the region per year.
We don’t often see a dedicated fund turn into a standalone, separate venture firm, although we do have examples with GV-spinout Plexo Capital and NEA-spinout NewView Capital. It makes sense for ambitious investors to incubate funds inside of an institutional partner for a few years while the firm gets a good insight into fresh deals. In this case, the Latin American Fund still exists but its newly-formed early-stage team is what is being spun out.
Now as a spinout, Upload Ventures can add money from new investors to its investing balance sheet and perhaps build out a brand separate from the sometimes-controversial conglomerate. Since SoftBank is still the largest limited partner in Upload, it gets to keep an eye on LatAm markets from the early-stage and later-stage perspective.
It’s been a difficult 2022 so far for SoftBank. Besides Claure’s departure, Nvidia’s $40 billion deal to acquire Arm was called off, the two companies and Arm owner SoftBank announced in February. Also in February, the Japanese investment conglomerate revealed that its quarterly earnings plunged by 97% compared to the year prior although it did — at least — return to profitability.
Last month, SoftBank shifted the structure of one of Claure’s most notable contributions — a $100 million fund for founders of color — into an evergreen investment vehicle.
The latest move out of LatAm comes around six months after Claure clashed with SoftBank executives and reportedly pushed for the Latin American arm as a whole to be spun off. At the time, SoftBank Son told Bloomberg that there was “no discussion of spinning out SoftBank’s Latin American Fund.”
SoftBank declined to comment beyond its press release, and Claure did not respond to a request for comment.
Note: This article was updated post-publication to clarify the structures of the Latin America Fund and the newly-created firm, Upload Ventures.