Inside Peru’s Startup Scene: VC Trends, B2B SaaS & Talent in LatAm with Jaime Sotomayor | Nearshore Cafe

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**Brian:** Welcome, everyone, to another episode of the Nearshore Cafe podcast. I’m Brian Samson, your host. And if you’re interested in Peru and the VC tech ecosystem, wow, this is going to be a great show for you! Before we introduce our guests, I’d like to thank our sponsor, Plug Technologies, plug.tech, a great way to connect talent from all over Latin America with growing US companies. Let’s welcome Haime Sodom to the program. Haime, great to have you!

**Haime:** Hey, thank you, Brian, for having me on your podcast. This is awesome being now on the other side, you know, not being the host, being invited. So for those that don’t, let’s give a quick plug to your podcast. Tell us, tell us about what it is, what people can expect if they listen to it.

**Brian:** Awesome, thank you.

**Haime:** Well, you know, as C Baras, as you can see, it’s in Spanish, and we interview founders, investors, tech experts from all Latin America to understand more of what they’re doing, how technology is evolving, how businesses are going to change. So it’s a great way to keep up on tech trends and help transform digitally your company.

**Brian:** Excellent. All right, thank you. So let’s start with kind of a broad question that will lead us a lot of this way. As someone who invests, who studies the trends of Latin America and Peru, are you optimistic for the next couple years? Pessimistic? Not sure?

**Haime:** I’m super optimistic. Latin America is a space where so much is still, you know, needs to be done. And as technology evolves, we are, and you’ve probably seen it or heard from it in other parts of the world like in Africa, we just leapfrog a lot of the, the, the Tex, the, the tech technologies onto one actually is more affordable, attractive, and actually solves problems. So that’s why in the past you’ve seen or you’ve heard in Latin America, fintech companies have done amazing things, and it’s because, yeah, there’s so many unbanked people in the region. So we’ve seen a boom of that, but there’s so much else to be done now.

**Brian:** Haime, are you working across the continent or spending most of your time focused on Peru?

**Haime:** So I am based out of Peru. I love Peru, and we, afterwards, we can discuss, you know, why. It’s just an amazing place to be. But my focus of investment for Worth It, which is the fund that I’m managing partner, we do investments all across Latin America, even Latin American founders in the US. We find that, you know, the Latino founder is just amazing. So, even though they might be in the US, they’re going to be operating still and having Latin American customers. But we want to work with all of them, and having a foot in Peru, it does help me to find those that probably would have been missed by VCs from other parts of the world. So, yeah, whole Latin America, and our specialty is B2B SaaS. So we found that that’s the space that we now see has a huge advantage to grow.

**Brian:** Okay, cool. We’ll definitely get into that in a minute. Let’s just start big picture, you know, for our audience that is just kind of interested in the ecosystem at large. What does it look like, you know, in terms of volume of capital invested, check like average check sizes, how it might compare to the US, incubators, talent, you know, just kind of give us like a broad sense, and we’ll, we’ll dive a little deeper.

**Haime:** I mean, I, I don’t have the exact figures or so, but I can tell you that we’re still very far inside. But when you see the whole Latin America, including Brazil, it is quite large. There are some different key differences between, you know, investors in Latin America and the US, or even founders from Latin America in the US. There’s a lot of sort of mindsets, from a mindset standpoint, where investors in Latin America might not be so inclined of do, doing way riskier investments that you might find very normal in Silicon Valley or Israel. Founders might not have this vision of “want I eat the whole world.” They might be like, “Oh, yeah, I want to be the, like, the, I want to be the top number one company in Peru.” So it’s that mindset that we’re trying to work to change and say, “Hey, you can be a Peruvian founder, but that doesn’t mean you’re limited to your country. You can sell to the whole Latin American region. You can go and sell to US companies. There’s no real limitation. It’s just your energy and ability to do so.” So there’s that, that part. And then capital. Most of the capital that we’ve seen in coming into Latin America has been from abroad. There is from Latin America, and it started to, to grow more Latin America being invested within Latin America. But it’s been big, big money coming from outside, which has helped to fuel the startup ecosystem. But at the same time, wake us up that if this big, you know, SoftBank and Tiger are interested in Latin America, why aren’t we doing so the same? So we’ve started to see a little bit more inside of Latin America, started betting on ourselves.

**Brian:** That’s really interesting. And I wanted to actually ask you about the cultural aspect of that. I’ve spent some time in Asia, and, you know, there’s kind of family pressure often to take a conservative job, a safe job, a big company type job. And how might that apply to Latin America? And then maybe from a microscope with Peru?

**Haime:** That’s a great question because the the risk, like, the Peruvians or, or, or Latin Americans, they might be very risk-averse, especially because many of our countries have had a series of of bad economical and political moments throughout their history. We’ve been, we’ve had dictatorships, we’ve had really bad precedents with bad policies and terrorism and, you name it, there’s been a lot of hardships. So many of the older generations, they didn’t want to see their kids suffer and, and have them, you know, do entrepreneurship when they can go for a more stable job: go to banks, go to consulting film firms, construction companies, mining, which is one of the main engines of the Peruvian economy. So there is a lot of push from certain generations to not be an entrepreneur and go to somewhere safe because those generations had a suffer through all those hardships. At the same time, many of these, you know, Peruvians, they didn’t decide to be entrepreneurs in the past because it was like a passion project; it was because there, there was no other option. So when you see like the ranking in Latin America of which is the most entrepreneurial country, Peru, like, really high up. But it’s not because these people wanted to be entrepreneurs like a startup founder or something like that; it was because there was no other alternative. So we are, we want to shift more on having opportunistic entrepreneurs, more than because they need to for survival.

**Brian:** Interesting. And, you know, if you could even talk about the Peruvian mentality, like, are there, you know, it doesn’t always have to be tech. Sometimes, sometimes in tech we, we think we’re the only entrepreneurs, but there, there are people that own, you know, clothing stores, and there, you know, single firm accounting, accounting shops, and graphic design, and all sorts of stuff. Yeah, what, what does that kind of risk tolerance look like in Peru? Are there a lot of mom and popop entrepreneur type companies?

**Haime:** So I’ll, I’ll tell you a bit like the main economical drivers of, of Peru, and then we can probably go to then what’s like the most abundant small businesses. So like the largest economic driver is, it’s mining. We’re like number one export of copper in the world, and we, we have such huge reserves of different sort of minerals that, thanks to that, we, we, we have a very strong economy. Thanks to the good management of the Central Bank, which is independent from all the powers, we have like a very good control of the currency. So we have a, we’re sort of in a good place economically. But there’s a lot of, you know, more social problems around, you know, the mining industry. So it’s hard to combine, like, let’s grow as much as we can, but then we have the, the, the, the things that go against that is, you know, the, the, the social problems involved and communities, and most of them want to, you know, they want to get a share of the, of the profits, you know? So there’s a lot of that tension between economical and, and, and social. And then the same happens in agriculture and fishing. They’re all like one of the strongest ones. But then when you see companies, like, what’s the average? It’s like you have 100,000 restaurants all around, small ones, in, in, in Peru: small seeras, which is like more like the seafood one, or chifa, which is like the Chinese Peruvian one. There’s, or chicken rusti. There’s so many small entrepreneurial activities going everywhere: textile printing. Like, there’s someone doing some entrepreneurial work, but again, it’s more like for s for survival. And there’s, I would say that just as you mentioned, like, we don’t have to think always entrepreneurial as tech, tech, tech-driven. I think that even Peru has a great, great advantage now, at least that we are now being recognized as one of the best places in the world for our food. So we have like the top restaurants in the world. We have such a diversity of food. We have so many different types of potatoes. Like, we have more things that we know how to actually use, and our gastronomy is really amazing. One of the reasons why I love living here, breu, we have amazing food, amazing restaurants. So why not? Why aren’t we like the leader in the world of F-Tech, of the most impressive snacks, meals, whatever, while you see in other parts of the world that, that maybe they don’t have those same resources, are, are excelling in that space?

**Brian:** Interesting, interesting. Let’s dive a little bit more into the tech world. So it was really interesting what you said earlier, Haime, about the, you know, maybe like the initial mentality of not trying to eat the world, not trying to grow a $100 billion crazy company, just, you know, conquer Peru, like be the fintech app for Peru, right? So what does that mean in terms of maybe like we’ll start with check sizes, and then how, how some of these founders are even thinking about the allocation of those checks?

**Haime:** So I would say that first it takes also like having someone having done it in the past, that you can see, “Oh, you know, someone already did this, they built a unicorn out of Peru.” So it means like, “Oh, yeah, I can do it myself.” That has, that has been a huge driver, for example, in other countries in Latin America. For example, as soon as Rappi became unicorn status, Bogotá became like this big epicenter of techn technology and entrepreneurship, and you can feel it when you go there. The same with Mexico, Brazil, Argentina, Chile. So we’re like lacking that, you know, we need that, that unicorn. It helps. It helps because it, it shows other people that you can do this. So I would say that now at least from the companies that we’re, you know, we’re, we’re, we’re sourcing, we’re check, we’re looking at, a lot of them when they’re in the early stage, very early stage, they have, in the past they probably wouldn’t need to do much traction to get funding because there was excessive amounts of capital. Now that I think there’s like a really healthy amount of capital, I wouldn’t say there’s little, because if you have a really good company, you’ll get funded for sure. We’re seeing that. So if you, now, one race capital and you haven’t, you know, exited a company in the past, you know, and you can brag about that, you want, you might need to have some traction in order to raise that capital. And pre-seed, which is the stage where we’re investing in, we are seeing rounds that are going between 300 and a million dollars. That’s like the range for pre-seed. And then on valuation side, they might go between three to seven post-money. And you would say, “Well, that’s a really small, small round compared to the ones in the US where they’re, you know, they’re just starting out, they’re raising 1.5, or they’re raising five, you know, out of the bat, and, and valuations are way higher.” So in Latin America, because it’s riskier, if you want to see it, to do business, maybe less liquidity compared to the US, all those different factors, that’s already priced in the, in the valuation. So it’s quite, eventually, really quite an advantage for us to be able to go into a company with a lower valuation, and, well, we’re expecting them to grow Latin America, eventually go to the US, and then you’ll see like a really bump in the valuation and have a better return than if I would have invested in a really high valuation all the way from the beginning. So that, that’s a bit of what’s happening in Latin America. Latin American investors were like really worried about that initial valuation, while I’ve seen in the US, I’ve, I’ve been an entrepreneur in the past, and in the US, and valuations were way higher than, than here.

**Brian:** Let’s talk about the allocation a little bit. Maybe I’ll say the obvious that, you don’t, you probably don’t need to raise as much. It’s the cost of talent is a lot less. Can you, can you comment on that a little bit? And then also as a, as a derivative question, now that software services are so big and the US has starting to go after all this technical talent in Latin America, there’s competition for talent too, and like how that’s driving up the price. And if you’re a great engineer, you know, now you’ve got choices, right? You could work domestic company, a domestic startup, or some international company. So, a lot to digest there, so sorry for the 15 questions, but would, would love your take.

**Haime:** Yeah, it’s a great, good question because talent is something that we, we’ve started to see that Latin America has a lot. Like, I think after Brazil, probably Mexico has the most amount of developers in Latin America, but it’s like just one of the universities out of Monterrey, I think it’s like one-third of all Mexico developers. It’s, it’s a huge amount. Here in Peru, surprisingly, like, not everything is concentrated in Lima. There’s some really good talent coming from Arequipa, which, like, is the second city after Lima, has one-third of the population. So we’re very, you know, we’re very centralized in, in, in, in the capital. But Arequipa, which is just one million, around one million, if I’m not mistaken, of, of, of citizens, they have a lot of developers. So a lot of companies from abroad have started recruiting, opening shop in Arequipa to hire the talent, so that they can develop applications in Germany, in the US, in other places. One of the challenges for hiring that talent, even though it’s remote, is, do they speak English, and how fluent they are, how their soft skills are. So we’ve started to see in the past five, six years a lot of companies developing solutions to help developers get those jobs abroad, because if you don’t have soft skills, if you don’t speak English, then you are limited to developing for development jobs only in Peru, which wouldn’t pay that much. But as soon as you have a good domain of English, you have really good soft skills, then you can get, you can, you know, work remote for a tech company in the US or for, you know, Amazon or Google. And I, I know a lot of people, friends that actually decided to go and live in the US because they came here, they found talent, and you’re going to start earning like five to 10 more times that what you would have done around here. So even though that you might say, “Oh, yeah, we’re in Peru, so it’s cheaper,” you’re still competing for talent worldwide. But the cost of living in Latin America is definitely lower than in the US. It, it also depends on the quality you want, you know. Lima is a nice place to live, Mexico City is a nice place to live. So people also want to prioritize places where they are going to be happy living.

**Brian:** I want to lean a little bit into maybe the arbitrage opportunities, right? And, you know, what are you, what are you seeing more as foreign capital comes into Latin America? Are they looking for like investment arbitrage? Is it maybe more, more talent arbitrage? Do they just want access to markets that they think are, you know, they can take learning lessons somewhere else and replicate it? Maybe there’s something else. I’d love your, your, your thoughts there.

**Haime:** You know, I think international investors are always looking for great opportunities, and markets like the US, Europe, you know, you have a lot of already existing investors. The, the level of competition is just, it’s huge, it’s high. So finding like the best company is very competitive. You have to fight for getting that allocation in that company. It’s quite complicated. But in Latin America, because of the, that there’s not, there hasn’t been that much capital in, there hasn’t been that level of competitiveness, at least in the past. You know, as soon as we start getting more, yeah, it gets way more competitive. But there’s so much talent, there’s so many good opportunities that we’re not getting enough funding. So I think that investors see this like a blue ocean. There’s so much room for more capital to go in and start funding these companies that have, they can be huge. And they can, yes, valuations are lower. That’s great. But for them, it’s like, “Let’s find amazing companies where right now there is an untapped market where there’s just not enough capital pursuing amazing ideas.”

**Brian:** Interesting, interesting. Let’s get it more into your specialty, Haime, of B2B SaaS. What, what should we know about the market there?

**Haime:** Well, one of the things is that companies in Latin America, that’s what my perception is, they’ve been lagging on adopting technology. So, you know, a lot of people, you know, companies still depend a lot of Excel spreadsheets for most of the things, something that I wouldn’t dream to see in the US. Like, everybody over there uses, even the smaller companies use QuickBooks or some equivalent. Here we don’t. Big corporates, they might use, use some ERP or SaaS just like SAP or, or use Salesforce, stuff like that. But then for every single additional activity, they’ll go back to their Excel sheet or a homemade, crappy solution, sorry. And, and all those things, they’re all pronerr, error, error. They’re outdated. There’s so many legacy systems, but they don’t do the jump because the investment required to do that is just too, too insane, too big, you know, too complicated. And what we are seeing now is that technology is becoming more accessible. We needed to do this, you know, leapfrog that I mentioned earlier. And I think AI, no-code, and all those different technologies are actually now becoming one of those solutions. Like, everybody in Latin America uses WhatsApp. So now most companies have jumped from not having like physical stores, having no e-commerce presence, to jumping the web, you know, experience straight to the WhatsApp experience. You don’t need a webpage, fancy thing, you know, Amazon style, when right now, like, the easiest, smartest, most cheap is an AI-driven bot through WhatsApp that is doing the selling, and you’re getting way more conversions, better results. So we’re leapfrogging all the things that you would have thought in the US there’s like a step, you know? You go from physical, you open your, your website, your e-commerce on Shopify, and then da da da. Here’s like, no, jumping straight to mobile-first approach. And we’re starting to see that in different other aspects. So B2B SaaS for me is one of the ways to bet on this transformation of Latin America, because I am very positive that the entrepreneurs are the one that are going to be building those solutions. They’re creative, they’re smart, they’re going to bring something that is easy for corporates and, and, and small and medium companies to implement. And they don’t have to ditch their existing solutions. They can just connect and now have additional possibilities available for them. And, and we can see it from small companies that have a very basic operation, and now they are enabled by this technology, and the solution pays for itself just on improves the margins. So, because, you know, they’re selling way more all the way to big corporates where they have legacy systems and they’re not going to, you know, rewrite everything. But there’s so many other companies that are connecting to them, like, for example, in banking, you know, you want to connect with some fintech that can give you some new functionalities, open up new, new markets. So we’re seeing that. Something that wasn’t happening in the past, I think now, because the right technologies are here, we’ll see a transformation.

**Brian:** That’s awesome. I can’t let you go, Haime, before we talk a little more about Lima. I had the chance to go there. It’s been too long, but grocery store chicken that I had there is still the best chicken I’ve ever had in my life. It was incred. Love Miraflores. It felt like I was in Los Angeles, and, you know, the Changing of the Guard and the cool stuff. But that, I’m just scratching the surface. You know, what, what, what should people know about Lima and then Peru if they ever visit?

**Haime:** Yeah, well, I definitely encourage everyone to come and visit Peru and Lima. I live in Miraflores. I moved to Miraflores because it’s just, it’s like the, it’s, it’s the center of, of, of, of, so. I always tell everyone, like, is this, this is different than when you visit a US city or European city. You don’t stay in the city center, which here in Lima will be the, the, the Lima City Center or Historical Center. That’s like the old town where you got the change of the guards and the, in the Government Palace and, and all the, you know, old buildings, which is nice. I do go often into that area, and it’s, and it’s beautiful, and it’s actually being improved. But the new city center, which I call it, you know, the modern city center, is Miraflores, and it, it’s just in front of the ocean. You got so many nice views. We have amazing restaurants, as I mentioned earlier, top of the world, with really amazing culinary experiences, a fusion of different cultures. So, I don’t know if many of you are aware, but Peru had a huge immigration of African, Chinese, Asian, Japanese. So we have a lot of that in our, in our food. So that if you go around the city, you’ll see so many Chinese-Peruvian restaurants, that that’s why we call them chifa. That’s our, our name for, for that. But also like the one, the best restaurants here in Lima, at least for me, are the, the Japanese Peruvians, the N and, and this just combination of, of, of the Peruvian Japanese is just amazing. So just coming to Lima itself, it’s a gastronomical experience. There’s so many places. Some of them are really hard to get reservations; you have to do it with way months ahead, so plan ahead. But just walking around is very nice. Miraflores is actually very safe because we try to care, take care a lot of, of, of tourists because that’s, you know, what moves all out this, this area. Larcomar is this, this mall which is just in, in the front of the, of the cliff. So you see the whole ocean. It’s just amazing. And of course, if you’re going to come all the way down to Peru and visit Lima, you definitely have to do Cusco, which is one of the most beautiful and energetic cities in the whole world. You’ll do Machu Picchu, take the train. It’s one of lifetime experience. Well, I’ve done it several times, but I would definitely recommend people to do it if they can. It’s, it’s, it’s, it’s very nice out here. And if you like surfing, it’s also a very nice place to come and surf. A lot of people say that. I don’t surf, but they’re like, “You, you’re wasting your good location.” I’m just a few blocks away from the stairs that take you to the ocean, and I’m in a really good place to go and, and do surfing, but I don’t do do it, but I see a lot of people do it, and they have fun.

**Brian:** This is my favorite part of the show, you know, is where we really get to hear the local’s perspective and entice tourism, hopefully. Everything you said, I agree with. It’s, it’s fantastic. I also love Machu Picchu. It was amazing. I’m glad, glad I got to do it once in my life. Yeah, great. Haime, what a blast! Thank you so much for being a guest on the show. Before you go, tell us again about your company, where people can find you.

**Haime:** Perfect. So, the fund first, it’s called Worth It. You can go to worthit.vc. You can see our portfolio, my, my contact. You want to reach out if you have a, if you’re a Latin American founder, you have a company that you want to pitch to us, we’re more than happy to, to listen. If you want to invest in Latin America, I suggest we talk. And if you do understand Spanish and you want to get to know more about the Latin America ecosystem, I invite you to listen to our podcast. It’s called InnovaSAS. You can find it everywhere you listen to your favorite podcasts.

**Brian:** Amazing. Thank you so much, Haime. And another thanks to our sponsor, Plug Technologies, plug.tech, a great way to connect talent all over Latin America. I’m Brian Samson, host of Nearshore Cafe podcast. Thanks again for listening. We’ll see you next time.

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