Growth, Margin, Impact: Latitud Principle #2

Not that long ago, investors and startups agreed on a “switching gears” playbook.

First, chase growth at all costs.
Later, tighten your belts to break even.

But then… a bear market met the rise of artificial intelligence.
And that playbook is now dead.

At Latitud, this is our second conviction:

High velocity, high margin, and high impact aren’t just compatible — they’re inseparable, even at the earliest stages. We back startups with the ambition to achieve this trinity since their pre-everything phase (our first conviction).

The most promising founders already understood the new rules of the startup-building game: lean teams deliver high traction and revenue per employee. (From our own portfolio of LatAm-born founders: Hyperplane had 30 employees when it was sold to Nubank. BHub is leaning out the team as it surpasses $20M in ARR.)

Here’s an intro to how founders are actually pulling this off.

High velocity

When building:

AI has redefined startup speed. Lovable hit $17M ARR with 15 people in 2 months. Cursor scaled to $100M ARR in one year, and $300M in two, with just 30 people.

Non-technical people can now ship a decent V1 in days and weeks, not months.

Technical people maxed their efficiency, as basic code is outsourced.

Which means… no more excuses. Everybody is launching and scaling their something much faster. We’re in the fastest race ever seen to hack and lead industries.

When selling:

Software as a service took off to the point of fatigue in markets such as the US, while adoption remained a challenge in Latin America.

Artificial intelligence presents a rebuilding opportunity in the US, and a leapfrogging opportunity in LatAm.

In the US, AI-first or SaaS that incorporate artificial intelligence will achieve high velocity by making companies rethink costs with both software and payroll.

Traditional SaaS required two investments: subscribe and then hire/train people to run it. AI Employees collapse both into one, their eyes set on taking over not only the software market but also the (larger) labor market.

In Latin America, the low cost of human labor decelerates this trend compared to the US. But there’s no turning back, as (1) scale decreases the cost of technology and (2) AI offers increased accuracy and precision.

In our latest report, we crunched through data from the International Labour Organization and the World Bank to estimate that the impact of artificial intelligence in the region’s labor market could approach $400B.

We see a particular opportunity for high velocity in making use of UIs that are familiar to Latin Americans, such as WhatsApp. Portfolio startups such as BeConfident and Magie have been applying this combination of AI + WhatsApp to great success.

LatAm SaaS ideas that once failed to penetrate their target markets will be reborn as AI-first winners.

High margin

Lean teams delivering large cost substitution for companies translates into high velocity coupled with high margin.

When your product replaces entire workflows, you can price based on payroll savings, not just SaaS subscription benchmarks. For your customers, that also means their service margins (avg. 35%) can approach software margins (70%+).

You should focus on building top-class AI products, but also on incorporating these thoughts when defining your pricing strategy and later adding new layers, as you conquer larger shares of their target industry.

High impact

Doing this correctly means that you’re combining user and margin growth as you expand your value proposition.

It also means that you can reach markets that weren’t in your roadmap before.

We see two big stories here:

(1) LatAm-born founders now see an evenly leveled global playfield. Founders across countries are armed with the same tools to build and sell.

More than ever, we believe selecting ambitious and resilient people, giving them the right playbooks, and supporting them in forming the right connections will be the key differentiators. Geo barriers have lost power.

(2) LatAm-born founders see more opportunities inside their region. Industries once resistant to software are now willing to try out AI applications, especially if embedded into familiar UIs.

We see founders tackling niches that foundational models can’t service with adequate personalization. Some massive, underserved examples are health, law, etc.

What do these paths have in common? Bold, scrappy, hungry talent born in LatAm. Doing more with less has always been the norm. Artificial intelligence is just a power-up.

Conclusion: doing it all, pre-everything

At Latitud, we help you do it right – from pre-founder to pre-scale.

You can think about how to achieve high velocity, high margin, and high impact even before you actually become a founder.

For that pre-founder stage, when you’re still thinking about what will get you that successful combination, we designed The Latitud Fellowship.

Our fellowship is a program that turns thoughts into products in just 9 weeks. We select dealmakers and builders with a commitment to solving a problem, and ambitious enough to build and sell their solution in America’s largest markets.

Each one of the eight selected pre-founders gets their first check ever – $62.5k from us to cover rent and noodles while they shape their thesis, launch their MVP, and level up their networking and fundraising game by colliding with top operators, founders, and investors in LatAm (São Paulo/Mexico City) and San Francisco.

In just over two months, our fellows go from pre-founders to super early founders. They graduate with thesis clarity; first users and iteration cycles in their MVP; and all the playbooks and connections they need to take the startup world by storm.

That’s when founders should consider raising their first institutional round. They need to compromise just enough dilution and raise just enough capital to test their product’s value and customer acquisition channel further, keeping it as quick as possible.

That’s when our fund comes in. Latitud’s Fund II invests in the super early founder stage.

We’re comfortable leading your pre-seed round, investing alongside and even before angels. We pick entrepreneurs building AI and software-first businesses aiming for high scalability in LatAm, the US, or beyond. Although sector agnostic, we have a soft spot for fintech, vertical SaaS, healthtech, marketplaces and e-commerce enables, and proptech.

Think of our ideation program but on steroids: more capital, longer support, and even more tailored intros. All of our tested playbooks so you can go from zero to one and set yourself up to raise the best seed round possible down the line.

Some of the companies invested in by Latitud include Hyperplane (exited to Nubank), BHub, Pomelo, Tapi, Finkargo, and Stark Bank.

About Latitud

Latin America spans the greatest range of latitude on Earth — from the deserts of northern Mexico to the glaciers of Patagonia. No other region covers so much vertical ground, crossing climates, cultures, and time zones.

But to us, latitude is more than geography. It’s a metaphor for ambition.

Latitud backs world-class talent before anyone else sees them. As the first-check partner for LatAm founders building good shit for the region and beyond, our high-risk, high-conviction checks have become the most trusted signal for global, top-tier VCs betting on LatAm-born founders.

We back those who dream aggressively and act decisively, solving deep, complex problems that transcend borders, industries, and languages. From pre-founder to pre-scale, we support the region’s boldest entrepreneurs as they chart both their starting point and their north – their latitud and longitud.

Latitud Principles is a series about our core fundamentals as a pre-seed venture capital fund. Here, we dive deep into why and how we back the earliest stages of LatAm founders and tech conquering the world. Stay tuned for Latitud Principle #3 and beyond.