Fabrica Ventures Late Stage VC Fund 1st Closing

“Do not go where the path may lead; go instead where there is no path and leave a trail.” — Ralph Waldo Emerson

I am pleased to announce the first closing of Fabrica Ventures Late Stage VC Fund. The Fund will remain open to new investors for the span of one year

Fabrica is the FIRST Late Stage VC Fund to be raised among Brazilian investors with the goal of delivering extraordinary returns by investing in tech B2B companies in the US.

1) Why tech?

Startup companies with low risk / proven technologies will usually compete in low impact and highly competitive markets. Impressive returns are rarely in their realm. In Brazil, investors are mostly exposed to low impact, i.e., tech-enabled companies. Tech-enabled companies use technology to grow and become more efficient, yet their businesses are intrinsically grounded in another sector — apps for food delivery, for instance. On the other hand, tech companies are in the business of providing high impact (reaching huge untapped markets; Peter Thiel’s “Zero to One”) technology products and services.

2) Why B2B?

B2B companies are usually more resilient. Typically, if they decide to stop investing in growth by not spending money to acquire new subscribers, they can rapidly become profitable. B2B is also an important diversification for Brazilian investors, since the Brazilian markets are heavily tilted towards B2C or commodity type companies.

3) Why the US?

The following tripod is necessary for real innovation: a) Science – which allows the understanding of how and why things work; b) Technology – which transforms theory into practice; c) Capital – which provides the necessary time and materials to develop science and technology. Simply, the US reunites the best tripod preconditions to springboard real innovative VCs!

4) Why Late Stage?

a) Offers asymmetric results — if we are right, we “earn big”; if we are wrong, we “lose small” (Taleb’s notion of optionality).

b) Can experience power law / outlier type gains. It is an alphas-only ecosystem club.

c) Enjoys priority / differential access – Late Stage investors buy before the faceless masses.

d) Superstar startups are staying private longer and thus the value creation phase is shifting from public to private markets.

e) Can calibrate exit timing and, thus, returns – since financing is not anymore a problem for Late Stage ventures, they can choose the IPO timing; they know that investors will always cue.

f) Upholds high post-IPO appreciation probability.

g) Alpha hitchhiking — Sequoia, Founders Fund, Kleiner Perkins, DST, Andreessen Horowitz, NEA, Accel, Bessemer and a few others are the alpha generators funds in the VC industry. In the Late Stage we are able to activate their brands and intellectual prowess.

5) Why Fabrica’s name?

a) Fabric conveys a good connotation of structure, consistency, framework, fiber.

b) Fab is a silicon wafer manufacturing plant.

c) And it is also a tribute to the families of my partners / sponsors which are in the manufacturing business (Fabrica as in Factory).

Conclusion

At the age of 57, I am fortunate to have begun working on my second calling and I could not be more thankful for the investors and dear friends who believed in Fabrica. Actually, Fabrica is a natural extension of my first calling which was improving companies’ productivity and generating value to shareholders, through consulting services and entrepreneurship.

I committed to that new calling 18 months ago, by firstly developing Late Stage VC club deals – Airbnb, Flexport, 23andMe, Coursera and Brex. And more recently I moved to Silicon Valley to fully dive and mingle into the tech ecosystem pool.

There is some art and luck in investing. Business and entrepreneurship acumen, skin in the game and hard work are also necessary but not sufficient for superior investment decisions. Indeed, tailwinds can make a whole difference on top of these conditions. Because of Moore’s Law we are in the beginning of a tech wealth cycle. Momentary dear valuations (as they are now), and possible price corrections ahead, will not change the strong economic blowing wind direction that will propel Fabrica’s tech-B2B-US-Late Stage returns.