Luis Daniel Arbulú is a partner at Peruvian venture capital firm Salkantay Ventures. The firm is the largest in the country, with an early stage fund of $25 million and a focus on investing in Spanish-speaking Latin America. Salkantay is one of the 16 investing partners in Capria Ventures, a venture capital fund and network investing in Africa, Southeast Asia, and Latin America.

Brazil and Mexico have been the main markets for VC investment in Latin America for years. Where does the industry stand in other countries in the region, like Peru, that haven’t received as much VC money yet?

The Andean region, Central America, and the Caribbean are still way behind Mexico and Brazil, but the gap is closing quickly because there are regional lessons to draw from just seeing what happened years ago. In 2011, VC investment in Mexico was just beginning, with support from the country’s secretariat for the economy. Four years later, local seed funds had popped up, and international funds had begun pouring their money into Mexican startups. In 2022, even with the reduction of investment amounts, Mexico is a self-sufficient ecosystem with local investors or founders that are launching their third or fourth companies.

The same thing happened in Colombia, though at a faster rate, fueled by Rappi and the startups that it spawned. We’re seeing something similar happening in Peru right now: early stage funds, like Salkantay, are becoming more active, and some startups are creating interesting hubs around them — especially edtech ones, like Crehana.

Climate change–related projects in Latin America are still young, but how appealing are they for investors? 

Latin America could have an essential role in creating technology related to climate change. Since it is a region that disproportionately depends on exporting natural resources, it might not only be directly affected by harsh climate change consequences but the economic effects of the phenomenon could affect it more broadly. It’s a region that is already struggling with water problems. Seen from a VC perspective, these are incentives that could help the region become a lab to find, test, and grow new climate-related technologies that can later be exported to other parts of the world. Latin America could also position itself as almost an HQ of conservation, as it has incredible biodiversity, and the Amazon jungle is the largest carbon bank on the planet.

Are unicorns still key for Latin America to attract more VC money, or have they become less relevant, given how some of the most prominent are struggling with profitability?

Despite there being some schadenfreude related to some of the unicorns’ difficulties in the current context — fewer investment rounds, more companies opting for credit lines instead of VC — the most emblematic startups are still very important. Not only do they attract investment from global funds but they also give back capital to investors, basically become “schools” for new founders, and create support networks. They create what is commonly known as “mafias” — a term I don’t personally like, but that expresses a lot.

Probably the main lesson left by the first venture capital boom of the late ’90s and early 2000s in Latin America is that having local funds committed to the region is essential to keep the ecosystem going. When recessions happen or investment is reduced, global funds tend to go back to more consolidated regions — what they call “flight to safety.” Local funds, in turn, offer consistency in investment, support, and governance. So, having local entrepreneurs behind large unicorns willing to create early-stage funds in their countries of origin is definitely beneficial.