Podcast Summary: How I Invest with David Weisburd

Episode 204: Going All In – The Risks and Rewards of Concentrated Investing

Date: August 25, 2025
Guest: Rafael (Rafa) – Founder & Managing Partner, Across Capital
Host: David Weisburd

Overview

In this episode, David Weisburd dives deep with Rafael, founder of Across Capital, to discuss the philosophy and practice of concentrated investing, with a special lens on growth equity in Latin America—specifically Brazil’s thriving tech and fintech sectors. The episode explores the evolution of the Brazilian innovation ecosystem, the rationale for highly concentrated portfolios, differences between LatAm and US fintech start-ups, portfolio construction strategies, and reflections on both investing discipline and personal growth.

Key Discussion Points & Insights

Rafael’s Background & Across Capital’s Focus

• Origins & Evolution:
  • Rafael details his journey from Summit Partners and Vulcan to founding Across Capital, combining his Brazilian background and Silicon Valley experience.
  • Their differentiator: deep focus on Latin American software companies, with a “bridge” for US-LatAm business development and talent.
    • “Our time in Latam made us a little bit of a unique animal in the US…” (00:56)

The Brazilian Tech & Fintech Ecosystem

Brazil as Latin America’s Silicon Valley

• Brazil is described as “one of the most successful returns in all emerging markets when it comes to tech.” Examples: Mercado Libre, Nubank, XP Inc. (01:38)
• The ecosystem benefits from a huge, tech-savvy market and increasing talent density.
  • “We’re kicking into this flywheel where we have had exits, folks building $10B+ companies, and they’re onto their second or third go-around.” (01:54)

Fintech Success Drivers in Brazil

• History of banking innovation under chaos—80s/90s hyperinflation led to real-time banking, setting cultural/technical precedents.
• Highly progressive central bank (e.g., Pix with 80%+ penetration), open finance, embedded finance accelerates innovation.
• The dominant, concentrated banking system with high spreads creates clear disruption targets for fintechs.
  • “Pix…provided by the central bank, now has a penetration of 80%+ of the adult population in Brazil…” (03:22)

Case Study: QI Tech

• Infrastructure Play: Rafael frames QI Tech as a “picks and shovels” fintech, providing infrastructure for any company to offer financial services—analogous to Stripe, but verticalized for the local environment. (04:28)
• Capital Efficiency: Grew >200% YoY with 50%+ EBITDA margins.
• “We truly live by this high conviction, high concentration mindset.” (10:18)

LatAm vs. US Fintech Models

• End-to-End Platforms:
  • LatAm companies tend toward full-stack solutions (e.g., lending, banking, custody, fund admin), unlike the US’s specialized or narrow scope startups.
    • “In Latin America, there’s an opportunity to build things that are much more platform-driven and platform-oriented.” (05:38; 05:56)
• Drivers: Scarce resources—capital and talent—mean winners grow moats faster; US has more abundant resources so niches are viable. (06:33)

Concentrated Portfolio Construction

• Philosophy:
  • Across restricts the fund to ~10 positions, focusing diligence, partnership, and clarity.
    • “Concentration forces clarity…when you only get 10 shots, you tend to do deeper diligence. You lean into your edge, right?...It drives a scarcity mindset.” (07:04)
  • No “buying call options” or overly diversified baskets—every position is meaningful.
• Process & Diligence:
  • Massive top of funnel; then “ruthless prioritization” to focus on 2–4 investments per year after sometimes 17 months of diligence with target companies. (08:22)

Sizing Bets & Fund Returners

• Sourcing & Sizing:
  • Larger positions for highest conviction names; QI Tech is a 20% position, built up through multiple rounds as performance and thesis were validated.
    • “From the get-go, we sized this position at 12.5%…we have increased it to 20% as the company has beaten our plan every single time.” (15:00)
• Backing Winners:
  • The strategy includes putting more capital into outperformers, ensuring sizing aligns with conviction and performance.
• Fund-Outlier Effect:
  • A single company can return (or nearly return) the whole fund; but unlike power law venture investing, thesis is built around consistency and downside protection, not unicorn hunting.

Growth Equity vs. Venture: Return Patterns & Downside Protection

• Approach:
  • Growth equity is about consistent 3–5x returns, minimizing capital impairment, with an emphasis on downside protection through business discipline and deal structure.
    • “We’re much more focused on consistency of 3-5x returns, versus chasing something that can be binary…we’re much more interested in finding things that we have extremely high conviction on…” (12:09)
• Discipline:
  • Re-underwriting assumptions at each stage, institutionalizing memos that highlight the 3–5 core drivers (“what really matters” slide), continually checking performance to plan.
    • “Every memo we write, we have a slide…forcing ourselves to pick no more than five drivers of the investment case.” (16:08)

Compounding & The Power of Market Leaders

• Blue Sky Outcomes:
  • Strong execution in the number one market player often unlocks unforeseen expansion and compounding—even if base cases are conservative.
    • “The compounders keep compounding…the value disproportionately accrues to that number one player…” (18:33; 19:10)
• Non-obvious Compounding Forces:
  • Network effects, decreasing marginal costs, data flywheels, and team/talent quality are major levers for ongoing compounding.
    • “As they scale, the value they provide…increases over time and perhaps the cost to serve…decreases over time.” (21:42)

The Impact of AI on Growth Equity

• AI & Dynamic Risk:
  • AI accelerates disruption, requiring even more diligence to avoid “landmines”—moats and defensible business models are paramount.
• Growth Equity Niche:
  • Excitement primarily for tightly regulated industries (like financial services) where AI is an enabler rather than a disruptor.
    • “What may be unique and innovative today…may be disrupted extremely quickly. So moats become increasingly important.” (23:16)
• Bootstrapping Isn’t New:
  • Bootstrap (seed-strapping) culture has always existed in growth equity; AI just intensifies the need to invest in robust business models.

Memorable Quotes & Moments

• On Concentration:

  • “Concentration forces clarity…when you only get 10 shots, you tend to do deeper diligence.” (07:04, Rafael)

• On Scarcity Mindset:

  • “We need to have ruthless prioritization on how we spend our time. That changes the way we source, engage, and pick companies.” (07:40, Rafael)

• On Portfolio Consistency:

  • “We’re much more focused on consistency of 3–5x returns versus chasing something that can be binary…high confidence capital impairment is going to be very low.” (12:09, Rafael)

• On Investing Discipline:

  • “We’re not in the business of getting lucky. We’re in the business of driving consistent returns and having a methodology to do so.” (16:08, Rafael)

• On Compounding:

  • “The compounders keep compounding and the compounding is much more powerful than at times you go in thinking about it…” (18:33, Rafael)

Career and Life Advice

• On Focusing on the Present:
  • “You tend to focus a lot in the future and you don’t realize the future is being built now. So focusing more on the now…whether that’s the networking piece…these relationships compound.” (25:45, Rafael)
  • “Be ruthless about today.” (26:47, Rafael)

Timestamps for Major Segments

• Intro and Rafael’s Background: 00:00–01:34
• Brazil’s Tech & Fintech Ecosystem: 01:34–04:22
• QI Tech & All-in Investing: 04:22–05:29
• LatAm vs. US Fintech Models: 05:29–06:54
• Concentrated Portfolio Philosophy: 06:54–09:32
• Sourcing, Diligence, Sizing & Fund Returners: 09:32–14:34
• Discipline & Investment Process: 15:37–17:53
• Compounding Power of Market Leaders: 17:53–21:35
• AI’s Influence on Growth Equity: 22:55–25:25
• Career Advice & Closing Reflections: 25:25–28:01

Closing Reflections

• Relationship-Driven Business:
  • Across Capital aims for deep partnership with every investment—“builders first, investors second,” focused on enduring, meaningful relationships. (27:09)
• Personal Touch:
  • “Great businesses are built by people and you want to be in business with people you enjoy being in business with. We value that component quite a lot.” (27:41)

For New Listeners

This episode is a must-listen for anyone interested in:

• How concentrated investment strategies deepen alignment and discipline
• Understanding Latin America’s unique innovation and fintech landscape
• Navigating the new risks and opportunities created by AI in growth equity
• Practical insights from an investor who has successfully bridged cultures and markets

End of summary.