The latest edition of G5 Talks interviewed Paulo Passoni, who talked about his career and challenges. Passoni is a Managing Partner of a SoftBank fund dedicated to Latin America. The fund focuses on investing in Latin American companies with high growth potential aimed at impacting financial and social realities by through innovative technologies. He spoke to Levindo Santos and Renan Rego, Partners, and Fernando Donnay, Portfolio Manager, about his career, high-impact entrepreneurship and the venture capital industry in Brazil. G5 Talks is a project through which business leaders exchange experiences and learnings with the team at G5 Partners. Passoni, with a degree in Business Administration from FGV, began his career in investment banking at Morgan Stanley. He later had the opportunity to attend a joint MBA and Masters in Public Policy program at Harvard University, and then began working in the investment industry, at Eaton Park Capital Management, in New York.
A few years later, Passoni joined Third Point Management, becoming responsible for investments in emerging markets, with a focus on Latin America. “At Third Point I felt at home. I made few investments, from 7 to 10 per year, always following the “long only” strategy. I only bought what I thought would be worth more in the future, either in debt or equity. Among my investments, the greatest return came from anchoring IPOs and maintaining the shares. In this scenario, two types of IPOs offered the best returns: privatization, when governments sell assets, or growth equity”. Passoni, who grew up in Jardim Ângela and attended a local public school until entering high school, spoke about the challenges and opportunities that helped shape his career, highlighting the encouragement he always received from his family in valuing education and sport. “My parents worked really hard, I witnessed that, and they invested in my education. I believe it’s the challenges in life that make you special, it’s not the easy things. If you have a difficult journey, you have an even greater chance of becoming extraordinary”. Passoni also said that sport was essential for his development, both personally and professionally. At a young age, he played professional volleyball for the Banespa team, from São Paulo.
“The extremely competitive environment, in which you have to get back on your feet all the time, is very good in preparing us for life. Either you’re good or you’re out. Banespa made me want to win. This caused an essential impact for my life”, he recalled. After ending his volleyball career, Passoni, who was still young at the time, moved to Ohio (USA) for a one-year exchange program to learn English. When he returned to Brazil, he attended college at FGV. “I really wanted to study Marketing, not Finance”. However, life definitively took him to the financial market, especially after an internship at a company in Berkeley, California, where he worked during his education at FGV.
Brazilian entrepreneurs and new businesses
Passoni commented on high-impact entrepreneurship in Brazil. According to him, the disruptive entrepreneur is “still an outsider”. “Typically, this entrepreneur is either a foreigner who lives in Brazil or a Brazilian who lived abroad and came back to start a business. A person needs to be crazy to think and believe that with hard work and dedication they will disrupt a relevant market in Brazil [laughs]”. He added: “everything was even more difficult about six years ago. What impresses me is the resilience of entrepreneurs, their ability to attract resources, always working with talent and perseverance”. Passoni also stated that he believes “we are already in wave 2.0 of high-impact entrepreneurship. There is already a lot of interest coming from students graduating college, many want to become entrepreneurs. This is very good. It’s a great career and, today, we have plenty of capital available to support good initiatives”. Passoni, who helped build a portfolio for Softbank with more than 20 invested companies, including Banco Inter, Rappi, QuintoAndar, VTEX, PetLove, MadeiraMadeira and Creditas, explained that the market expects that two thirds of the investees will multiply their invested capital from five and ten times. According to him, the pandemic helped several of their investees grow, particularly those who were able to offer digital alternatives at a time when we needed to adapt to social isolation.
“Several of these innovations are here to stay and will provoke processes that need to be constantly changed. But mistakes will happen, too. You don’t always get things right”. For investors keeping an eye on this market, Passoni explained that it is important to understand the use of technologies within the local context and structure a business model that makes sense. Preferably, think about opportunities that are scalable and have the potential to go beyond local borders. “We have examples of business models that were created in Brazil and nowhere else in the world, such as Gympass and Hotmart”, he concluded. That is the way to go.