SoftBank Group Corp.’s Shu Nyatta and Paulo Passoni, two of the managing partners at the SoftBank Group Corp.’s Latin America Fund, recently revealed that they’re leaving to launch their own venture business, which will mainly focus on late-stage startups in the area.
As reported by Bloomberg, SoftBank is expected to support the Latin American fund’s third managing partner, Alex Szapiro, who presently occupies an operating role, to a senior position, an individual familiar with the matter revealed.
Juan Franck, a fund investor based in Mexico City, will also be getting promoted, the source noted. As mentioned in the update, the company is currently considering investing an additional sum in the fund (around $2 billion), the sources claim.
But the recent departures leave the fund in somewhat of a challenging position. LatAm investments have become a solid spot in SoftBank’s extensive portfolio and the firm will have to work to keep the confidence of late-stage startup founders.
The departures have reportedly come 3 months after SoftBank COO Marcelo Claure departed the company following arguments with founder Masayoshi Son regarding compensation and duties/responsibilities.
Claure had created and managed the Latin American fund, among various other responsibilities, and had supported its spinoff.
Rajeev Misra, the London-headquartered CEO of the Vision Fund, said:
“We’re firmly committed to playing a leadership role in Latin America. There is tremendous opportunity and I’m confident our teams across the region are well placed to help us back the next generation of extraordinary entrepreneurs.”
Due (at least partially) to Claure’s advocacy, the fund had been active with significant autonomy after being established in 2019, especially when compared to the larger Vision Fund, based in London.
Partners in that Group have to handle investments by Son, meanwhile, partners in the Latin American fund are generally able to carry out their own decisions without being reviewed (or challenged) by other divisions of SoftBank.
The Latin American Fund reportedly had another type of compensation structure when compared to the Vision Fund.
The LatAm Fund’s compensation was somewhat in line or consistent with various other growth-equity funds, where compensation for managing partners may be in the range of 15% to 20% of the pool of profits that are divided among the investing team members.
As reported by Bloomberg, that all changed when Claure departed, Passoni noted, when a new compensation structure had been introduced without any binding commitments around the share of the gains.
When Claure departed, the managing partners had reported to Misra and a potential step was to move the Latin American fund into the Vision Fund.
Michel Combes, Chief Executive Officer at SoftBank Group International, is reportedly involved with the management of the LatAm fund and has a seat on its investment committee.
In addition to his role at the LatAm fund, Nyatta (in Miami), introduced and managed SoftBank’s $100M Opportunity Fund for startups by founders of minorities.
He reportedly worked at JPMorgan Chase & Co. prior to his role at SoftBank back in 2015.
Passoni (in New York) previously worked at hedge fund Third Point LLC. He had reportedly joined SoftBank Group in 2019.
Nyatta commented:
“Paulo and I are incredibly excited to be entrepreneurs. We’re launching our own fund to keep investing in the most special companies in the region.”
He also confirmed SoftBank’s role in his career, acknowledging the trust that Son and others had in him to allocate considerable amounts of funding.
Passoni said:
“I can’t wait to start helping entrepreneurs again in Latin America. I’m beyond excited to be starting something new with Shu.”
The LatAm fund is reportedly set to invest around $2 billion in 2022 out of its second fund.
The first Latin American fund had (at first) set out to invest about $2 billion, but then expanded to around $5 billion.
Portfolio firms reportedly include NuBank, Rappi, Kavak, and Creditas.
Recently, SoftBank introduced a spinout of the Latin America fund’s early-stage investments into an independent business entity, called Upload Ventures.