Why Latitud invested in Darwin AI, bridging the AI gap for LatAm SMBs

This is part of our "why we invested in" series of posts – a glimpse into what we look for when writing the first check for top emerging founders across Latin America. As investors and journey partners, we hope this series will inform and inspire other early startup creators in the region.

TL;DR: investment overview

Latitud is proud to announce why we invested in Darwin AI, a startup leveraging artificial intelligence to enhance sales efficiency in small and medium-sized businesses throughout Latin America. This is co-founders Lautaro Schiaffino and Ezequiel Sculli's second startup providing productivity tools for SMBs in LatAm. Within less than a year, Darwin reached thousands of AI-powered customer interactions.

The market: although SMBs represent 90%+ of companies and account for 60%+ of total employment in LatAm, lack of productivity is one of the reasons behind them only representing 25% of LatAm's GDP. Many SMBs lack the IT infrastructure, budget, and technical personnel required to go digital and leverage new technologies (AI included).

The startup: Darwin AI is bridging that AI gap by providing an affordable, easy-to-use, and AI-powered conversational assistant. SMBs can manage better their conversations with customers without extensive resources, enabling these companies to scale their operations and compete more effectively.

The round: Darwin AI has raised $2.5 million total, in pre-seed and seed rounds. Latitud was the only institutional investor in their pre-seed, alongside a handful of angels, while the seed round was led by Canary and joined by Dalus Capital, FJ Labs, and H20 Capital Innovation.

At Latitud, we believe Darwin AI stands out especially on its founding team, its go-to-market strategy, and a promising market (AI for SMBs in LatAm). Here is Darwin's investment thesis in more detail.

1. Founding team

What sealed this investment was the team. This is not the first rodeo for co-founders Lautaro Schiaffino and Ezequiel Sculli.

Sirena.app was a shared inbox tool for WhatsApp used by mid-sized companies across 25 countries. Lautaro and Ezequiel grew Sirena to a significant annual revenue before having an exit to Zenvia ($30M+, 2021).

The co-founders are now building Darwin for that same customer segment. Their outstanding understanding of the market and ability to execute, especially when selling to B2B SMBs, were key signals that gave us confidence in their ability to become leaders in bridging the AI gap for LatAm SMBs.

2. Go-to-market strategy

Darwin's value proposition is attractive to SMBs: delegating 50%+ of their conversations with customers to the startup's AI, no tech team required. More attractive is their go-to-market strategy to help sell this value prop.

The startup's solution is set up in up to 1 week and integrates seamlessly via APIs with existing communication platforms and CRMs, from WhatsApp to Hubspot. Darwin's conversational assistant works with inbound qualification, outbound reactivation, scheduling, customer support, and surveys. The AI evolves through companies' previous data and with every new customer conversation, both in Spanish and Portuguese.

80% of end customers report a level of satisfaction equivalent to chatting with a human sales assistant, while SMBs see their conversion rate go up by 30-50%.

Backing our previous statements on the team, Darwin has shown impressive traction since the beginning. Customers showed paying intent even before there was a user interface, leading the startup to revenue generation since its inception.

Its conversational assistant has already processed thousands of conversations for companies throughout LatAm, mainly in Mexico and Brazil. Darwin is now on track to process 1M conversations by the end of the year (it charges a usage fee per conversation). The startup presents encouraging growth in metrics such as number of customers and annual recurring revenue (ARR), aiming to surpass $1M ARR by the end of 2024/beginning of 2025.

‍3. A promising market

Darwin stands out from its artificial intelligence competitors due to its focus on the unique needs of SMBs in Latin America.

We believe that the largest opportunity in AI applications in Latin America will be in this SMB market. In other markets, we expect to see what Lautaro calls the Meta-sandwich:

1. At the consumer level: incumbents like Meta will use their products (e.g. WhatsApp, Instagram, and Facebook) to roll out their AI products and achieve massive distribution through integration in the current user experience. Any consumer AI company is already facing huge challenges such as consumer acquisition, monetization, and high and variable costs such as cloud providers, LLM calls, and the use of WhatsApp itself (especially in LatAm).

2. At the enterprise level: the opportunity around AI for enterprise in LatAm will exist, but it will be very hard to build moats. The best AI enterprise companies in the US, Silicon Valley, and the world should be able to sell to the largest companies in Latin America. Will these companies have opportunities to drive efficiencies through AI? For sure. Will these companies be served by local and horizontal SaaS players? We don’t believe so.

While 95% of LatAm SMBs say they'll invest in digitalization, 68% see obstacles to the adoption of digital solutions – the two main ones being a lack of knowledge and specialized workforce.

Darwin AI eliminates both roadblocks and so we see its potential to scale rapidly across SMBs and LatAm countries. The startup has already gone beyond sales and recently added onboarding services to its value prop, expanding on its mission of being the AI player for all SMB needs.

Why we’re excited

Darwin AI's founding team presents the market knowledge and track record to successfully nail their go-to-market strategy and present traction.

Their solution has shown small and medium businesses across LatAm are willing to pay for tech if tailored to their reality – shown in features such as ease of setup and use, integration with commonly used channels, and pay-as-you-go pricing.

We see the capacity and market space for Darwin AI to keep expanding across the region and lead in filling the AI gap for this segment of companies.

A quick word about Latitud

Latitud is your partner from -1 to 0, 1, and beyond 🚀.

With our invite-only community, we gather super promising and early-stage founders across Latin America so they can work on their -1 to 0 (ideation). And as the leading pre-seed venture capital firm in Latin America, we become partners to top entrepreneurs inside and outside our fellowship so they can go from 0 to 1 (early product and traction).

Besides receiving their first institutional check, founders in our portfolio 1. become an even more selective part of our community of founders and mentors, 2. get transformative guidance, especially in fundraising, and 3. form tight connections with downstream venture capital funds.

Latitud is led by operators turned general partners Brian Requarth, Gina Gotthilf, and Tomas Roggio. Through Fund I and II, we've already invested in 70+ amazing startups led by amazing founders (check them out).

Our bet in Darwin AI is another proof of our commitment to backing early-stage startups transforming industries and bringing positive impact to LatAm.

Sounds like you? Then we'd love to have a chat! Pitch your startup here.