Interview with Eduardo Peláez: A Perspective on Venture Capital and Corporate Venture Capital in Latin America
Alejandra: What led you to get involved in the world of Venture Capital (VC), and how has your investment approach evolved over the years?
Eduardo: My path into Venture Capital was rather unconventional. I began my professional career in investment banking, working on M&A transactions after earning a law degree. This experience gave me valuable exposure to financial structuring and analysis. Later, while pursuing a master’s degree in management in England, I discovered Venture Capital, which was just starting to gain momentum in Peru between 2011 and 2012.
Upon returning home, I engaged with the entrepreneurial ecosystem at its earliest stages, participating in accelerators like UTEC Ventures. I also became involved in angel investing as LP and contributed to funds such as Angel Ventures in Peru and 500 Global’s Mexico branch.
Over time, my investment banking background became a critical asset, enabling me to advise founders not just on financing but also on structuring their businesses. This journey led me to join KREALO in 2021 as Principal, the Corporate Venture Capital arm of Credicorp, where I continue to support fintech startups that strategically align with the group’s goals.
Alejandra: You mentioned your work at KREALO. Could you explain the key differences between a CVC and a traditional VC? Additionally, do you think CVCs have greater chances of success in Latin America?
Eduardo: The main distinction lies in the investor’s objectives. A traditional VC focuses on maximizing financial returns for its LPs. In contrast, a CVC like KREALO seeks both profitability and strategic returns that directly benefit its parent company. For instance, in our case, we invest in fintech startups that can generate synergies with Credicorp and strengthen its position in the markets where it operates.
As for success, it’s challenging to compare the two models directly since their evaluation metrics differ. An investment yielding high financial returns for a VC might not be considered successful for a CVC if it doesn’t provide strategic value. In Latin America, CVCs have a unique advantage: they can leverage corporate infrastructure and networks to drive startup growth. However, this requires clear alignment between the corporation’s strategy and the CVC’s investment thesis.
Alejandra: What is KREALO’s investment thesis, and how does it influence your startup selection and support?
Eduardo: Our investment thesis focuses on fintech, a sector with significant opportunities in Latin America. We target specific sub-verticals within fintech and look for business models that can address structural issues in the regions where Credicorp operates.
Our selection process begins with a clear thesis. We don’t evaluate startups randomly; instead, we identify strategic areas of interest or market challenges and then seek startups aligned with that vision. Before investing, we often run pilot tests or collaborative projects with the group to validate the startup’s potential. This not only mitigates risk but also ensures that selected startups align strategically and are ready to scale with our support.
Alejandra: What barriers do you face when investing in LATAM, and how have you addressed them?
Eduardo: Latin America is a region full of opportunities, particularly for fintech startups, but it also presents unique challenges that require a tailored approach for each market. One of the main hurdles is the size and depth of the pipeline. In markets like Peru, Bolivia or Ecuador, the number of startups with the necessary size and maturity for our investment caliber is limited, especially since we handle tickets ranging from $1 million to over $10 million.
Each market has distinct dynamics. For example, Chile has a sophisticated and advanced financial ecosystem but is limited by its small market size. In the payments sector, traditional methods like credit and debit cards still dominate. On the other hand, Bolivia has seen rapid adoption of new payment technologies, with QR codes widely used for payments instead of conventional POS systems.
We also face regulatory barriers. Countries like Chile and Colombia have advanced frameworks, such as fintech laws and Open Banking regulations, while others, like Peru, lack a legal framework. Our approach has been to thoroughly study each market to adapt our strategy and find opportunities within specific contexts.
Alejandra: Beyond financing and strategic connections, how has KREALO facilitated key partnerships for its startups? Do you have any acceleration programs or other initiatives?
Eduardo: Yes, last year, we launched a pilot acceleration program called The Future of Financial Services. Although we don’t directly invest in early-stage companies due to the size of our tickets, we designed this program to gain exposure to disruptive startups and support the region’s fintech ecosystem.
The goal wasn’t just to identify potential investments but also to contribute to sector development and strengthen our relationships with emerging startups. Out of the 10 companies that participated, at least three or four have shown exceptional performance and could become candidates for our portfolio in later stages. This program positioned us as key allies for entrepreneurs and bolstered our presence in the ecosystem.
Alejandra: Looking ahead, is there a sector, technology, or type of startup that particularly excites KREALO?
Eduardo: We are highly interested in the Mexican market. We’ve already invested in promising startups there, such as an Open Banking infrastructure and a digital microcredit platform called Viva. We plan to continue expanding our activity in Mexico.
Another area that excites us is the intersection of HealthTech and FinTech. We see an opportunity to create financial solutions that complement traditional healthcare systems, particularly in regions with low insurance penetration. This segment combines our fintech focus with significant social impact.
Another area that excites us is the intersection of HealthTech and FinTech. We see an opportunity to create financial solutions that complement traditional healthcare systems, particularly in regions with low insurance penetration. This segment combines our fintech focus with significant social impact.
Alejandra: From your perspective, what are the key aspects for LATAM to evolve into a more mature ecosystem?
Eduardo: Regional integration is crucial. Latin America is fragmented into multiple small markets, which hinders startup scalability. Standardizing regulations, facilitating cross-border operations, and reducing market friction could transform these small economies into a cohesive and attractive ecosystem for VC. Having space for development and scalability is fundamental, and we’ve seen this in companies in Brazil that have managed to grow significantly by operating solely within the country, given its market size. This would be impossible for a purely Colombian, Peruvian, or Chilean company.
On the other hand, LATAM still lacks deeper development in markets that are intrinsically Latin American. While there has been a lot of adaptation and tropicalization of external models, there is still little focus on key sectors of the region, such as mining and agriculture. While these sectors drive economies in Latin America, we haven’t seen enough technological innovation in them. Exploring solutions for these industries could be a major step toward ecosystem maturity.