Wealthy Family Looks to Shake Up Chilean Venture Capital Scene

(Bloomberg) -- Heirs to one of the largest retail M&A deals in Chile’s history have their sights set on overhauling the country’s timid venture capital industry, and plan to make a social impact at the same time.

It’s time for domestic venture capital firms to stand on their own feet and not depend on the tutelage provided by Chile’s government, according to Andres Pesce, Chief Executive Officer of Kayyak Ventures.

Kayyak, controlled by the Ibanez-Atkinson siblings, plans to spend between $50 million and $80 million in startups throughout Latin America by 2024, particularly those with a specific social or environmental impact, Pesce said in an interview. Most venture capital funds in Chile invest about $30 million at most, he said.

Besides allocating more money, Kayyak wants to break from any dependence on government support.

Chile has promoted the venture capital industry through programs called Startup Chile, created in 2010, which have tried to attract entrepreneur talent to the country and act as an accelerator, or by providing funds through state agency Corfo. For every peso invested in venture capital in Chile, about two more pesos come from Corfo, Pesce said.

“Kayyak Ventures, with its first fund, is the biggest venture capital initiative in Chile’s history. And the first one without Corfo’s money,” Pesce said. “We want to mark an inflection point, to help private capital move en masse to this type of assets.”

Kayyak was formed in 2020 by the children of Felipe Ibanez, who along with his brother Nicolas sold supermarket chain Distribucion & Servicios to Walmart Inc in 2008 for almost $3 billion.

If Kayyak succeeds in helping to build successful startups without any state-support it could convince other local family offices and institutional investors to take a closer look at the industry.

The founders of other successful Chilean startups, such as grocery delivery firm Cornershop or plant-based food producer NotCo, have said that most Chilean investors have lacked the vision of investing in venture capital and they had to go abroad to fund their expansion.

Cornershop was eventually acquired by Uber Inc while NotCo got financing from U.S.-based funds including Bezos Expeditions.

Kayyak has invested in 11 startups, according to its website. Those include Migrante, a financial services firm that provides loans to migrants in Chile, and AgroUrbana, a company that is developing vertical farming facilities for urban centers in Latin America.

It’s also looking to acquire stakes in four other companies, Pesce said, including one that will produce protein from insects to feed salmon farms, avoiding the environmental damage from deforestation to plant soymeal or overfishing to produce the feed.

Kayyak has also invested in U.S. companies such as medical technology company Cytovale and geolocation firm Humatics. The investments in the U.S. should allow Kayyak to expand its network and introduce other venture capital firms to opportunities in Latin America.

So far the Kayyak founders are only investing their own money but plan to open a second fund in the coming years that would be open to outside participation, Pesce said.

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