Podcast: How QED's Mike Packer's eagerness to digitize corporate banking led him to fintech investing in Latin America

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Show notes

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Bill Cilluffo joined QED as a Special Advisor in the fall of 2014 and became a Partner in 2015. He is currently Head of Early Stage Investments after six years as Head of International, leading QED’s Investment teams in Latin America, Europe and Asia.

Prior to joining QED, Bill spent nearly 20 years at Capital One, spanning several roles and leading several businesses. He spent the first 6 years of his career leading Marketing, product development and credit policy for Capital One’s subprime credit card business; ultimately having overall P&L responsibility, and growing the business to become the most significant player in the market. He moved on to spend 2 years in various new business development roles, spanning the telecom, medical finance and small business finance industries. Bill spent 3 years as Deputy Chief Credit Officer for the bank, playing nearly every role there was to play in the central credit function, after helping build the department from scratch in 2002.

Bill then pivoted his career to general management, leading Capital One’s Canadian, and ultimately International businesses, over the course of 6 years. Profitability of the business grew significantly under Bill’s leadership, through new product and channel introductions, acquisitions, and significant cost take out. During Bill’s last 3 years at Capital One, he led its Co-Brand and Private Label credit card business, building the business nearly from scratch to one of the top few players in the US market, through a series of acquisitions, most notably including leading the acquisition and post-merger integration of HSBC’s US credit card business, which closed in May 2012.

Bill graduated with a BA in economics from the University of Michigan, and competed the SEP program at Stanford GSB.

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Bill Cilluffo:

You're listening to the Fintech Thought Leaders Podcast from QED Investors, your deep dive into the world of venture capital and financial services with today's digital disruptors. QED is a global venture capital firm focused on investing in fintech companies all the way from pre-seed to IPO. Fintech Thought Leaders brings together the most talented entrepreneurs tackling today's biggest problems. If you're looking to learn more about what motivates our founders and team members to succeed, you're in the right place.

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Bill Cilluffo:

Hello and welcome to the Fintech Thought Leaders Podcast. I'm Bill Cilluffo, head of early stage investments at QED Investors, and today on the podcast I'm really excited to be joined by Mike Packer, partner and head of Latin America for QED. Mike, welcome to the podcast.

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Mike Packer:

Happy to be here. Thanks for having me.

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Bill Cilluffo:

We go way back, having worked together for both sections of our careers, both here at QED and at Capital One. Let's just start by talking to the audience a little bit about how you got roped into joining us all here at QED.

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Mike Packer:

Yeah. I mean, I should probably ask you how you allowed me to stick around this long. I was at Capital One for 10 years and got to see a lot of interesting things and hopefully do a lot of interesting things there as well. I'm sure we'll talk about a few of them. But my last job there was trying to digitize this small business bank, in particular the lending operations of the bank. We had 40,000 small business customers all over the East Coast to Texas in the US. Trying to transition that and launch new products was a really exciting challenge.

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And this was in 2013-14. And at that time a lot of fintech companies were starting to pop up. I don't know when the term was coined, but it was probably a few years old at that point. The short story of that is we ended up not accomplishing what we wanted to accomplish internally at Capital One, but I saw and was really drawn to the success or the progress that some of these fintech companies were making.

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And so I had a couple moments of truth for myself and really realized that I wanted to do something smaller, not be at a big company anymore, really try to get a little bit more ownership over things, and then wanted to do something in the fintech space. But one of my calls ended up being to Frank Rotman. That led to a bunch of really interesting conversations. I think the idea originally was to try to help the portfolio and see if I could learn investing.

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Still working on the second one, but I think a few portfolio companies have benefited from our work that we've been able to do together, and it's been an awesome journey.

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Bill Cilluffo:

So why investing? Probably called Frank because you knew Frank. You weren't actually allowed to talk to me given my exit agreement with Capital One, so I stayed out of your process.

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Mike Packer:

I'm glad we got that on the record.

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Bill Cilluffo:

Understandable why you made that call, but did you also pursue the idea of operating and joining a startup or was there a particular attraction to investing?

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Mike Packer:

I thought I was going to be an operator in the next phase of my career. I mean, I enjoyed leading an organization, interacting with customers and clients, getting things done, seeing the output of that hands-on. I initially was drawn to the idea of being part of something like that.

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The back of my mind before this transition, when I did my MBA I always thought I would want to explore investing at one point or another, because I really liked this idea of ownership, owning companies, whether it's owning your own company or owning investment, but owning something that you can change the results of or impact the results of. And if you go back even further, I'd always thought about my job at Capital One as a capital allocator.

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At the end of the day, the things I was trying to figure out in any of my jobs was, why should we spend money here, why should we lend money here, or how much capital we put to a certain business. And so tying together a little bit of the always thinking about the returns on things that we're doing and trying to be a capital allocator, learning a little bit about investing in the MBA and wanting to be an owner of what I was doing. And then meeting QED, it all happened a lot faster.

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I mean, it took six months before I came over. And even then, we were like, "Well, what am I going to do here?" At that point, QED was a lot smaller. And so I first just took it on almost like as an experiment. Can I learn investing? Am I going to like investing? I knew I liked a bunch of the ideas of it. And so that was how it started. And then now if I look back on it, I really liked being able to spread my viewpoint out across multiple companies.

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The type of investing that we do, we get really active, really involved. I think about it as an operator still. And I'm obviously not making as much impact as our entrepreneurs and the executives and the teams on the ground, but I do feel like I'm part of the teams. It started to connect the dots in reverse, but not going forward. I think honestly, I lucked into it.

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It got a little ahead of me in my career. I probably thought it was going to be my next stop after going and doing something, but got the opportunity to test it out and I've really, really enjoyed it.

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Bill Cilluffo:

Can you talk a little bit about your journey at Capital One and maybe what are a couple of the main things that stick with you and are helpful as you work on investing today?

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Mike Packer:

I started out in the credit card business, which I made a mistake introducing myself to someone this week. I said, "Oh yeah, I spent five years in the card business." And if you don't talk to someone in the card business, they don't know what that means. But in the credit card business and particularly in subprime card business, which was a big part of Capital One when I joined.

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And I got to see that business from the bottoms up, pre-Great Recession and post-Great Recession, which was incredible experience as a early 20-year-old because you got to see things crash and come back. And fortunately for me, I was right in the middle of a bunch of really interesting decisions there.

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Bill Cilluffo:

You're probably one of the few people out here that say, "Fortunately for me, I was right in the middle of the Great Recession." But I totally understand what you're saying.

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Mike Packer:

So I was 25, 26. You're just reading the headlines. I'm basically running data models and trying to figure out what our accounts are worth on a day-to-day basis, our customer accounts. And then you see the stock price go from 90 to I think it was eight or seven. I don't know if you remember the exact number. It literally felt like those days people's hair was on fire, but I didn't have much of a 401(k) or stake in anything at that point.

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Bill Cilluffo:

But at the end of the day though, I totally get what you're saying. I mean, if you look, there's the individual learning component of it, but you also abstract to looking at Capital One. I mean, Capital One needed that to happen, but had been 15 years of talking to the street about how great it was at managing credit, how good it was at assuming a downturn. But it was the longest run of prosperity in the history of mankind.

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Mike Packer:

That's right.

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Bill Cilluffo:

So Capital One actually needed the recession to prove out that it fully worked and I think passed with pretty flying colors.

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Mike Packer:

Yeah, and then the real lessons on resiliency and why it's important from a just business-building perspective are just totally ingrained in me. And then I think the flip side of that was also how to think about the reentry. When everybody's hair was on fire, everything stopped and it was all about defense. But how do you flip to offense? I had the opportunity to be at the front lines when we decided to go on offense and that was fascinating, because a lot of being in a big business is all about optimization.

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It's all about keeping the lights on, making sure things are working, tweaking things here and there. But at that point, I guess it probably ended up being early 2010 when we started to go again, really felt like it was high urgency, super intense. For me as a, I don't know what the title was or whatever, but somebody who was just starting to be a manager or understand things, be able to interact with the top of the organization, it was just a very exciting time. And part of what was so exciting about that to me was, again, a little bit of the newness, the urgency.

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It was an unsolved problem, which led me to join your group eventually, once things stabilized there. I saw a new group joining across and we went and did partnerships together. It was when I was working for you. That opened my eyes to a whole world outside of Capital One, which we might need to talk about more over beers or sometimes we do. Dealing with partners is hard, but is a huge part of the way things work. And so that was a really pivotal moment for me too, both trying something new again, but opening my eyes to the external world.

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And then we already talked a little bit about the small business space. To try to distill that to your question about what did I take away, I love the intellectual rigor at Capital One. The way decisions are made sometimes could be slow, but they're very data-oriented, very thoughtful, thinking about all the ways that things can play out, and thinking about that as a capital allocator. I mean, that was probably my major takeaway.

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And the other thing is the importance of surrounding yourself with smart people and engaging people, people you get along with and how big of a part of your job that is. I think I had a great experience there. Those are probably two of the top things that came out of that and a bunch of more detailed skills around credit and data and whatnot, but those were probably the major lessons.

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Bill Cilluffo:

You were trying to digitize the bank. Found that you weren't having the success you guys all wanted to in part because fintechs had some advantages and you've got exposure. Are there one or two examples of things that you saw outside that got you particularly excited about fintech that were inspiring as you saw it from the Capital One lens?

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Mike Packer:

I think the biggest thing was on the product and execution side. I think we had a lot of the same ideas. We would brainstorm and do our research and come up with what we thought it should look like, and then we'd go and try to do it and filter that down, morph it into something else. You'd end up getting some no’s as you try to implement something. And these fintech companies were able to just do it. They had the urgency and the ownership over it.

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Not only were they able to build the products that I thought we wanted to build, but they really had a passion and, I don't know, intensity about how they thought about the world. And so I was really drawn to those two things. And again, I think of myself as somebody who had pretty high personal ownership over what I was doing. But when you're in a big company, you rely on a lot of other people below, above, around you to get things done.

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And that was probably the biggest thing for me. And just that iteration led to things that we hadn't seen or thought of in terms of new data, new ways to engage with customers, better ways to think about risk. Those were all things that were happening at that time.

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Bill Cilluffo:

So talk about your early days at QED. We've hired a number of ex-operators to come into QED. I would say the vast majority of us have taken a little while to find our footing. It is a pretty jarring difference in a number of different ways. I'd love to hear about your early days and where were you able to quickly apply these, you already referenced a handful of your learnings from Capital One, versus where was it just completely jarring and you needed to take a little while to figure out what you were doing.

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Mike Packer:

I think it was relatively smooth where problems were defined. Working with Nubank in 2016 on certain projects that they were doing in their card business was a very natural thing to do. It was something that I had seen before. I had confidence in the way that I had done it before, and it was very easy to say, "Hey, I've done this." I think that was easy. And that's still a big part of what we do is connecting dots on, hey, this company's doing this, or we ran into this situation before.

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And so that was pretty natural. Of course, now I've added a lot of experience to that. But I think the harder part for me was just the ecosystem, getting your heads around something that's totally white space. In venture, there's infinite things to do. And so it's all about prioritizing and figuring out how to do those. I think that was very overwhelming. And then just having the confidence or self-awareness that people actually wanted to listen to me or I could influence the way things went.

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I mean, I remember my first visit to Nubank just being completely stunned when David Vélez was like, "So what do you think? What should we do?" And I'm like, "Hey, man, you're the CEO. You should know what to do." In seriousness, he didn't know me. I mean, he knew me from a resume. He knew me because of you guys who I was working for, but he saw that value that my specific experience and the time that I'd spent with his team and he wanted to know what I thought.

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So that was a big moment for me to just be like, "Oh, okay." Now when I think things, I should just say them. Maybe they're not right, but we'll figure out the problem. So a little bit of that confidence in defining the problem I think was a challenge for me. And now maybe it's the other way around. Maybe I'm a little too opinionated on certain things or too stuck in my ways, but those were the things that took me some time to ramp up.

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And then the other side of confidence of where you're spending the time, I think that's another thing that I've gotten more comfortable with is I've seen more things over the years.

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Bill Cilluffo:

Makes sense. I mean, a little bit of an aside, I do think that's one of the things that makes Vélez so incredible as a CEO. I mean, he's just always surrounded himself by massive talent and has never been the type that has the need to be the smartest person in the room and is always listening for input. And when he makes a decision, they move, right?

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Mike Packer:

100%.

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Bill Cilluffo:

You describe one of his true strengths as a leader, which is impressive to see. So in your early days at QED, you already described some of the work you did with Nubank, but you also spent a fair amount of time with our own fintech junkie, Frank Rotman, looking at a handful of things in the US. I mean, can you describe some of the differences maybe?

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And ultimately now you spend the vast, vast majority of your time leading our Latin American business. How did those early days of dabbling in a little bit of places, a bunch of time with Nubank, some time looking at US deals, I mean, how did those early days influence you and lead you to really the Latin American world as your focus?

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Mike Packer:

I think a lot of it was happenstance, maybe a little bit of luck or opportunism. But yeah, I mean, so Frank and I were... In 2016, he was doing a lot of research in the proptech real estate space, so I got to spend a lot of time in that world talking to companies, traveling around, trying to figure out how to screen companies and find companies. That was a pretty awesome thing to see. And of course, working with Frank on a few deals. Actually, I don't think we did any deals, but I think we worked on half a dozen together.

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So just the rigor of seeing how deals are done, it was good to get some reps there. And ultimately, I just spent a lot of time on, I guess at that time, it was our venture build program, now our Belay program, kicking around a few ideas and ultimately help start MotoRefi, which is now Caribou, which was an incredible experience in and of itself. But some of the differences between Latin America and US, you and I were right there together, and we talk about this a lot. But in 2016-2017, it didn't take much to get your head around everything that was going on in fintech.

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And it was very early days of applying some of the hypotheses that we had about digitization, new styles of banking, serving the underserved. These are just major, major themes and still are in Latin America. And so I think because we knew the space, because we saw the opportunities from the ground up, it felt much more tangible to me than the US. And I think that's still true. I mean, you would agree with this, right? I mean, in any of our markets that we're in that are "smaller," we can wrap our heads around the ecosystem a little easier.

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In the US, if you're chasing after a theme or an idea, you might be talking to five or 10 companies that are doing that, and there might be another dozen or three dozen companies out there that you don't know starting up. And so I think that was early on just a huge advantage of trying to figure out how to be the investment decision because your sourcing is much more boxed in. So I was drawn to that and drawn to the size of the problems and the challenges, and then just super energized by all the people that I was meeting.

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And then we just started rolling with it. Once you launched the ScotiaFunds and our desks were full of new pitches and ideas, it was easy to get distracted there.

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Bill Cilluffo:

I certainly didn't realize at the time how big the opportunity was in Latin America, but I still maintain Brazil is the best fintech lab in the world, just the margins that are made in banking and other financial services and how lousy even sitting here today 10 years after fintech really hit Brazil, how lousy the customer experience is for the incumbents. I mean, it's just a perfect laboratory for innovation to make a difference. And Mexico's not far behind.

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Mike Packer:

The regulators have done an amazing job there. When you think about the paths for regulated companies, maybe we could argue India or some places in Southeast Asia have some forward programs. I think in terms of the size of the market, the opportunity for fintech and then how the road's been cleared, I totally agree, it's the best risk-adjusted market in the world for fintech.

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I kind of lucked into it because you guys had already invested in Nubank before I came, but since we've hired Cami there and been building our portfolio out, we just continue to uncover really, really cool opportunities and spaces where I think we can take big bets.

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Bill Cilluffo:

Yeah, it's a great call out of the Brazilian Central Bank. I mean, I know in the early days of Nubank, the biggest worry is that at some point the big banks were just going to make a few phone calls and find a way to get Nubank just squashed, and the fact that that didn't happen. And there were definitely some attempts. The Brazilian Central Bank, the main regulator, has been a huge advocate of competition for good reason.

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In a country where people pay over 100% APR for installment loans, they need more competition. And the rollout of PIX, the real-time payment network in Brazil, is just an unbelievable stunning achievement. Rightfully call that out as another key recipe. So talk about your first couple investments in Latin America in general. I wonder if there's one or two that you could call out as examples. What led you to get excited in those early days?

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Mike Packer:

Ironically, my first few investments were not in Brazil, so maybe that's some feedback for me after what we just talked about. But yeah, I mean, a first few to think about, I was really interested in this small business problem broadly. I mean, small business banking, having seen it from the inside, and then having started to work with Konfio, which was an investment that you made before I joined and we did some work together, continuing to see the theme of how just underserved small businesses are.

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Especially in Latin America, there's an extremely long tail of both businesses and underserved businesses. And so that credit gap was extremely obvious and very large. And so in Mexico and I guess across Latin America, that was a theme that we were following. And two of my first investments that were in that theme were Tandepago and Credijusto, which is now Covalto, and the ability to make a digital product to try to fix distribution, early traction that those companies had had in terms of finding good unit economics.

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All those things just fit really into what I thought would be good investments, and that theme was just full of those opportunities. To just plug Covalto, since we've called them by multiple names, they're the only fully regulated bank fintech company in Mexico right now. So they're up to some interesting stuff. But they were doing secured lending in Mexico.

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And then, Bill, you'd done the investment in Creditas, which was doing secured lending in Brazil, and we saw how well that was working, both the ability to streamline the operations of assessing, securing collateral, doing underwriting, delivering a product that would add value. I was doing a lot of research in different asset classes and, of course, was drawn to the auto space and other geographies, which ultimately led us to Kavak, which was a fun one to find earlier.

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That was a very interesting one for us because they were, of course, buying and selling cars, not really doing fintech at the time. But having seen CarMax over the years and then the emergence of Carvana, we saw that there was going to be a fintech platform put alongside this. And of course, they've gone on to grow into quite a sizable fintech company. They're one of the top auto lenders in Mexico today, which is a crazy stat.

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So yeah, those were a few of the first themes. So it was very much tied to things that I had seen in my past that we had seen in the portfolio. And then from an entrepreneur's perspective, just finding people who were going after these big problems that had a ton of resiliency and tenacity and they weren't going to give up, just to see them, the way they were approaching these problems, the passion that they had for these problems was really inspiring at that time.

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Bill Cilluffo:

Are there any commonalities of the entrepreneurs you look for that are specific traits or attributes, or have you found just, hey, it's all different shapes and sizes and they're all different? Anything you'd share there?

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Mike Packer:

I try to keep an open mind to it, but I think the most important thing for me is that we mesh or get along and understand each other. So there is a portion... I really believe in how we fit together. So if this thing works out, if the investment works out, we're going to be stuck together for 7, 10, 12 years, whatever it is. And I want to try to have good read on that fit. But the things I think that I've found, and a lot of these are commonalities in QED, but somebody who has good command over the details, has a hint of humility in terms of what they know, what they don't know.

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I love people who think in terms of data orientation. What do I need to test to learn this? Where can I find data to support my hypothesis? People don't just totally jump off the cliff without the parachute. They at least have a plan to put together one or pick up one on the way down. So it's a fine line there too, because you want somebody who has a huge vision and passion over those things. But those are probably few of the main common threads that I like to look for.

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Bill Cilluffo:

Oh, that's super helpful. So you described a little bit of the early days of Latin America. We had done a couple investments in Brazil before you got there. I think you were very active in the early days at a few of the non-Brazil investments. How have you seen the ecosystem change? QED actually did the first investment in Nubank before I got here even in 2014 when there wasn't a whole lot going on. What are some of the main ways that you've seen the ecosystem change over the years?

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Mike Packer:

I mean, so just talking about Brazil for a second and then maybe we can talk about Mexico and the rest of LATAM, I mean, it's gotten just so much bigger, just the number of companies. The amount of capital that went into fintech in the last eight years is stunning, especially with the big spike that we saw in 2021. So I think the size and sophistication is the top level thing and it's impacted everything on the way down. And again, Brazil, I think the best thing that's come is just the talent.

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People want to be part of startups. They've seen successful startups. They want to leave big companies. So they want to go to MBA and then come back, or even join a startup from undergrad has become a career path, if you will. And I think that's an amazing testament to what's happened in recent years. And then I think the last thing I'll just touch on in Brazil, but this is also true in the rest of the region is you see a lot more ideas that aren't the X of Y.

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So the business that has been successful or on the verge of being successful in the US or UK or China coming to Brazil, you see a lot more of the unique ideas. I mean, you talked about PIX earlier, several other regulatory changes that have driven innovation that are specific to Brazil. And then I think the combination of talent and that opportunity is unfathomable where it is today versus where it was in 2016. Mexico, of course, is the same thing. I mean, it's gotten bigger, it's gotten more sophisticated.

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In Mexico, the maturing of the ecosystem has been pretty striking. But I think they're still ways behind Brazil, I think mostly on the talent side. Because honestly, we're still all waiting for a couple exits to come out of there. And I think once that happens, the energy on the ground in Mexico City or I was in Monterrey last year, I mean, it's pretty stunning just the opportunities people are seeing. And then that's something you didn't see 2017-2018. It was a lot more caution. It was I think a lot harder to see opportunity, whether that was risk-taking or actual opportunity.

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Who knows? We spend time in Colombia is probably the next market, and then a little bit probably in Chile and Peru and a few other places. Ecuador we're seeing some activity. But all those places are just like another step behind. But still, you're seeing entrepreneurs go and continue to come. Again, I think we've had a very slow year, maybe a year or two of company formation. It's still just strikingly different from what it was eight years ago. So we've hit some version of the inflection curve 2019 or the hangover impact of 2021.

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But people are risk-taking. They're looking to apply innovation. You see this in industry too, right? You see this at the incumbents, whether it's banks or big consumer companies. Everybody's looking to change things and innovate, invest, and that's a big change in the ecosystem too.

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Bill Cilluffo:

So if you look at around the region and pick your country or pick your sector of it, what are a couple of the trends that you're actively watching and personally quite excited about?

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Mike Packer:

I'm going to hit on PIX in Brazil and some of the other changes that are going on there. PIX and the receivables legislations, the ability to use receivables as collateral, I think these two things can change the way payments are done and commerce is done. We've seen a lot of it on the consumer side so far. And I think in the B2B space, we're going to continue to see some innovation there.

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So we're very excited about companies that are trying to find new ways to streamline workflows, streamline payments, streamline credit across these new channels and seeing lots of companies innovate in that space. And then I think across the region broadly in the B2B space, B2B payments, back office, financial tools for businesses, there's a lot of space there. There's a lot of inefficiencies and still the way that businesses have or haven't been digitized in the small business and middle market spaces.

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So we continue to be quite excited about a lot of things there. I very much continue to follow Insurtech. I think it hasn't had a lot of activity by comparison to some of the other trends that we're seeing, but the opportunity from a macro perspective and the need for certain types of insurance is totally there across multiple markets. So we're seeing some innovation and progress there and hopeful that there's going to be some good companies. And then lastly, this category of cross-border payments.

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Global trade I think is just fascinating right now. Cross-border payments are very hard for a lot of companies, again, especially if you're not a large enterprise or if you're not working with a large international bank. And even then things can be quite clunky and slow and hard. So we're spending a lot of time really trying to understand the rails there, where the efficiencies come from, and then how that's tied to actual transactions. So what are these cross-border payments paying for?

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A lot of it is import-export services. And whether it's logistics or actual goods, there's a ton of complexity there. There's lots of things I think fintech and data and platforms can and they're starting to do. And then the last sub-theme there, which is absolutely on fire in Mexico or at least getting a lot of airtime in Mexico, is nearshoring. So that's also a global trend.

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It's not just the US-Mexico, but everyone trying to bring supply chains closer are changing which jurisdictions you have to transact to, how you build relationships across border, how you manage all these things. And I think that trend's going to continue to push change.

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Bill Cilluffo:

I mean, I'd love to maybe go just a little deeper into that. It does seem like as a result of the supply chain disruptions due to COVID and some of the political issues going on in China, Mexico certainly seems very well positioned again beyond fintech, but just globally to take advantage of these trends.

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I know that you sponsored a bit of a field trip to the Monterrey region with a number of our portfolio companies and a number of our internal folks. I wonder if you can just talk about what you're seeing on the ground either for the nearshoring in general, but also then maybe its implications on fintech.

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Mike Packer:

So I went to Monterrey last fall. We just had an incredible trip, but it totally felt like a boom town. It was like everywhere you went, you could feel a version of booming of the manufacturing sector. And there's some crazy data out there about some of the growth in foreign direct investment, manufacturing space, number of companies that have moved in.

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But what's happening is people are moving production out of places like China and Southeast Asia either because they're US companies that are manufacturing and then selling out of the US or companies that are trying to manufacture and sell to the US. And so what's happening is both of those forms of manufacturing are moving closer to the source because of a lot of the supply chain disruptions that you mentioned.

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And the crazy thing about all of this and the biggest conclusion I had is that it's all driven by geography. There's economics, there's politics, there's a whole host of things, but it's driven by geography and control. Companies just want to be able to control things more, and the way that you control things more is bring them closer.

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I mean, maybe there's an analogy to remote work and in-person work here if we want to go that way, but these companies are basically saying, "Hey, I got to get it into Texas, or I got to get it into the US and getting it into Texas or California is a lot easier to come from Mexico than China or Vietnam." And so that's just happening very, very fast. The implications of that I think for fintech are still TBD in my mind.

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I think if you're any company doing commerce in Mexico broadly, this is a tailwind of growth. If you're banking, lending, software to any types of business, you should be around these regions that are booming up. So I think that's one thing that's quite clear is there's a newness. It's a market expansion as opposed to market competition. And I think whenever you can get a market that's expanding, it's a lot easier to grow. So that's one.

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And then I think there's just some opportunity around the building of business. Literally we were in between Monterrey and Saltillo and there'd be these manufacturing centers or industrial centers, and then you need a place for people to live, and you need a place for people to eat, and you need a place for people to stay when they visit, and you need a place to shop, and you need a school. And so everything tied to that is an opportunity there.

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So a lot of that needs to be financed. Again, there's a lot of cross-border opportunities because of where these companies are coming from and what they're shipping to. So I think companies like Finkargo are extremely well positioned to help these companies. I mean, Covalto we mentioned before, Konfio, those types of companies should be able to benefit from this. What if anything comes specifically from it? We're looking for it. So if you're out there, reach out to us.

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Bill Cilluffo:

I love it. Another one investment that's split between New York and Mexico is Nuvocargo, trying to be a digital platform for cross-border trucking wrapped with a number of different payments, insurance, lending types of fintech products.

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Mike Packer:

And Deepak and team were a great help to our trip. We were trying to learn from the portfolio and help the portfolio learn too. So a great call out for Deepak and Nuvocargo there.

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Bill Cilluffo:

We've just lived through an unbelievable boom in 2020 and 2021 in venture and then a pretty serious bust in '22 and '23. Who knows whether the recovery will be this year, whether it'll be next year? Who knows? Have you seen notable parallels between going through the recession when you were running a credit business to now this particular cycle in venture and any particular learnings that the venture world or us at QED can take from that parallel?

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Mike Packer:

There's probably a lot. I think the one truism is the markets are always going to be up or down and reality usually somewhere in the middle. And so both understanding that, that you can't get too exuberant or too down I think is true. In the venture world, I think it reminds me about how long-term this game is and how building great businesses never happens overnight. It's never easy. It's very rarely, I should say maybe not quite never, a straight line straight up.

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And so having the conviction in the business model and what you're doing irrespective of the value of the company or the capital on your balance sheet, I think that's probably the biggest lesson here. The Capital One parallel would be we were underwriting and preparing for a version of that and we proved that to the market that we would make it to the other side.

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And I think companies today who are at profitability or trying to get the profitability or trying to minimize the burn so that they can prove the next unlock is a version of that, right? So proving your business one step at a time, whether you're a seed stage business trying to get the product market fit or you're a pre-IPO business trying to prove sustainable profitability. I think that that lesson goes from one to the other.

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Bill Cilluffo:

I think we have, I don't know, close to 50 investments in Latin America at this point, both through the core QED business, as well as our seed program Fontes. You talked about a number of the early investments that we did. Are there one or two companies you think that we've done more recently that would be interesting to share?

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Mike Packer:

I mentioned earlier a company called Finkargo in Colombia and Mexico, working with companies who are importing goods from around the world, and they're particularly interested in financing those goods and trying to make things more efficient. So right squarely in the zone of an underserved market and something that's going through a lot of change. They're growing extremely fast and have huge ambitions to expand the product and very excited to see what's next for them.

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Cobre is another company ironically also in Colombia and Mexico working on B2B payments and Treasury management, so making payments more transparent, faster, easier, and they're touching on a lot of the themes that we talked about in terms of inefficiencies in these markets around money movement and starting to do some really interesting things in the cross-border space as well. So squarely in theme and right now finding a really interesting market and growing quite fast. I've been in a lot of board meetings the past two weeks.

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There's a lot going through my mind, but saw the hat behind me with Solfacil down in Brazil. Solfacil I think is really hitting its stride as a market leader in Brazil. It's just really exciting to see a company in a market that's changing so fast, getting close to at scale and profitability and seeing lots of opportunity ahead of them. So those are three companies I think that are all hitting on all cylinders across a couple different phases and stages, the Series A, B and, I don't know, C or D company there in those three. They're, of course, not the only ones that are exciting, but those are top of mind.

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Bill Cilluffo:

We spent some time earlier in the podcast talking about the early days of LATAM. For a while it was just me. For a while it was you and me. But over time we've had a number of great team members working on the Latin American business. I mean, we must have 10 people at QED that do something related to LATAM, but we've got two amazing people on the team, Cami and Ana Cris, who are alongside you, dedicated to helping us build this. I wonder if you can chat real quick about the two of them and what they uniquely bring to the table for us.

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Mike Packer:

I feel proud to be part of QED broadly. I think the team's been, is and will be amazing. It's one of the things I think is most exciting about what we do. I have to keep up with Cami and Ana Cris on a daily basis. So they keep me going. They give me tons of energy. They're lots of fun to work with, and they accomplish incredible things. Both of them have great networks. They leverage them to get things done, super efficient, very resourceful, and then they're very curious, intellectually curious.

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So that's part of the keeping up with them part, but particularly I love how relentless Cami is. I think when Cami finds a problem, you know she's going to find an answer and usually it's the answer. And so her ability to hunt things down and get them to endpoints is unmatched and something that's extremely valuable. Ana Cris, I think she's particularly good at seeing multiple angles of things.

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First of all, she gets very hard things done, and I think in part because she can see not just the investor perspective or the entrepreneur perspective or the customer perspective, but be able to blend those perspectives together. And so a lot of times I'm getting additional perspectives from her or challenges on wanting to look at a problem a different way and definitely makes me a better problem solver working with her.

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Bill Cilluffo:

Well, the LATAM team continues to grow since both Ana Cris and Cami have become new mothers in the last year. We're building our team for 25 years from now in Latin America, so that just shows how committed we are to the long-term. Well, Mike, it's been awesome talking to you today.

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I mean, we talk together all the time, but it's usually about urgent, timely topics. So it's great to take a step back and be a little retrospective. You encounter literally hundreds of entrepreneurs out there and see pitches all over the place. If there was one piece of advice that you would share with an aspiring new entrepreneur, what would it be?

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Mike Packer:

I got to give two, so I'm cheating already. I think if I had to give one, I think it's keep going. You're not going to have all the answers. Actions are going to give you the information to know whether you're on the right track or not. Everything's not going to go the way you want it to go, but just keep going. Find the thing that works and then keep going. Find the next thing that works. I see a lot of entrepreneurs who they either get caught up in their idea or thesis and it's hard to get off of that.

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And I think the other thing which is tied to some of the other things we talked about, I mean, you got to be yourself as an entrepreneur, but you can't be alone. You got to find a support system, whether it's a co-founder or a mentor or advisor or investor. Don't feel like you have to be alone because it's a long, long journey. Like I said, you got to keep going and go forward with somebody you can trust.

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Bill Cilluffo:

That's a great piece of advice, Mike. It's been amazing talking to you today. Thank you for joining the pod. And to all of our listeners, take care and thanks for listening.

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Mike Packer:

Thanks, Bill.

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Bill Cilluffo:

This has been the Fintech Thought Leaders Podcast, your window into the world of venture capital and financial services with today's digital disruptors. QED is proud to provide the best fintech advice you can get. To learn more or to read the full show notes from today's episode, check out qedinvestors.com and be sure to also follow QED on Twitter and LinkedIn @qedinvestors. Thanks for listening.

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