Brazil’s currency was one of the worst performers in 2024. Interest rates are at 15%. And a presidential election is looming. So why is Felipe Cruz—a tech-founder-turned-investor at IDC Ventures—more bullish than ever?

In this edition of ION Influencers Fireside Chat, Felipe Cruz, Principal at IDC Ventures, the venture arm of a 30-year-old European asset management firm headquartered in Denmark with offices in Miami and Madrid, talked about trends in the Brazilian market.

Cruz joined IDC in 2024 to expand its footprint across Latin America. His background? He’s a tech founder who built startups, sold them to public companies, and now deploys capital into the region’s most promising ventures.

The conversation peeled back the layers on a market that confuses outsiders: How do you invest when the macro looks this messy? Cruz’s answer is equal parts pragmatic, counterintuitive, and rooted in hard-won local experience.

Here’s what GPs, LPs, and founders need to understand about Brazil right now.

The Macro Paradox: Volatility Creates Entry Points

Let’s start with the numbers that scare everyone.

• Interest rates: 15%. Projected to end 2025 at 12–12.75%.

• Currency: One of the worst-performing in the world in 2024.

• Inflation: Above target.

• Politics: Presidential election year. Incumbent Lula (far left) is running.

For a casual observer, this reads like a sell signal. For Cruz, it’s the opposite.

“When you have high interest rates, it crushes the valuations of lending companies and FinTechs,” he said. “But that also creates a good entry point for us as an investor.”

His logic is structural, not speculative. Brazil’s real interest rate is projected to decline from ~10% in 2025 to 6% by 2029. For illiquid assets like private equity and venture capital, that trajectory implies significant multiple expansion over the investment hold period.

“That’s a good play,” Cruz said. “We have to be cautious—election years are volatile—but the long-term direction is clear.”

FinTech: The Crown Jewel That Keeps Evolving

Brazil is already recognised as Latin America’s FinTech capital. But Cruz emphasised that the narrative is shifting.

The foundations are well understood:

• Central Bank leadership on open finance and regulatory modernization

• PIX, the instant payment rail that has outpaced India’s UPI in per-capita transaction volume

• Massive adoption of digital financial services across 200M+ population

But the next wave isn’t about standalone lending apps. It’s embedded finance inside vertical SaaS.

“FinTech has a lot of our attention,” Cruz said. “But we’re looking at how financial services become native to software platforms serving specific industries.”

AI compounds this opportunity. IDC is actively pursuing AI-native FinTech plays—not for the sake of the label, but for genuine efficiency and underwriting advantage.

Brazil Is Enough. Internationalisation Comes Later.

One of the most common questions GPs ask about emerging markets: Do founders need to be global from day one?

Cruz’s answer is definitive: No.

“Brazil is a very big market,” he said. “Over 200 million people. GDP approaching $2 trillion. It’s big enough to become a unicorn and deliver a good exit.”

His base case for every investment is domestic execution. International expansion—to Colombia, Mexico, or beyond—is a Series C conversation, not a Seed or Series A requirement.

This isn’t provincialism. It’s pragmatism. Brazil’s scale means founders who win at home already win big.

The Founder Profile: Experience > Youth

Cruz was blunt about what he looks for—and what he avoids.

“The most successful founders we’ve met and invested in are very well experienced,” he said. “They are not young guys out of college.”

In FinTech specifically, the ideal founder profile is an ex-financial market professional who understands credit, regulation, and risk before they ever write a line of code.

The non-negotiable trait? Resilience.

“With the volatility we have—regulatory, FX, macro—founders have to endure a lot of stress,” Cruz said.

The red flag? Over-optimism.

“We have to be very cautious about founders who are overly confident they will always raise the next round,” he added. “Venture capital is scarce here. Brazilian startups have way more runway than US startups because they’ve learned to be efficient. That’s the mindset we need.”

Buyer’s Market: Multiples Are Compressed

If you’ve been waiting for a rational entry point into Brazilian tech, this is it.

“It’s definitely a buyer’s market,” Cruz said. “Multiples have compressed across early-stage and late-growth companies.”

The exuberance of 2020–2021—when annual VC deployment in Brazil jumped from single-digit billions to over $10B—is a distant memory. Family offices that were eager to co-invest through SPVs have pulled back. Capital is concentrated in tier-one funds.

For investors with dry powder and local knowledge, the mispricing is real.

Beyond Brazil: The Central American Blind Spot

Brazil accounts for 40–50% of all VC capital deployed in Latin America. Add Mexico, and the two countries represent 70%.

But Cruz pointed to a region that is systematically overlooked: Central America and the Caribbean.

“You have almost 100 million people and a GDP close to $700 billion,” he said. “Spanish-speaking, similar regulation, similar market dynamics. Nobody is looking at that angle.”

IDC is seeding companies locally that can expand regionally within this corridor. It’s an emerging market within an emerging market—and it’s largely untapped.

Rapid-Fire Predictions (2026–2027)

• IPOs? Don’t expect a local rebound. Brazil’s first IPO in years (Beep) happened in the US. If there’s an exit, it will likely be cross-border or strategic sale.

• Most bullish sector? FinTech + AI, specifically embedded finance in vertical SaaS.

• Market environment? Buyer’s market persists. Multiple compression creates opportunity for disciplined investors.

The Bottom Line

Brazil is not for tourists.

The macro volatility is real. The currency swings are violent. The political cycle injects uncertainty every four years. But for investors who can look past the quarterly noise and see the five-to-seven-year compound story, the setup is compelling.

• A mature FinTech infrastructure with room for AI-led innovation

• A massive domestic market that rewards execution without requiring global expansion

• A generation of experienced, capital-efficient founders shaped by scarcity

• Valuations that have reset to rational levels

“We’re bullish,” Cruz said. “Not despite the volatility. Because of what it reveals.”

Key timestamps:

00:11 Introduction to the Fireside Chat
01:52 Overview of Brazil’s Market Attractiveness
04:25 Investor Concerns and Market Dynamics
04:51 The FinTech Landscape in Brazil
09:13 Deal Origination and Founder Traits
13:11 Market Conditions: Buyer vs Seller
13:34 Regional Opportunities Beyond Brazil
16:09 Future Outlook on IPOs and Sectors