The history of DGF mixes with the history of venture capital in Brazil. Founded in June 2001, the manager reaches its 25th year with eight funds, a history of 63 investments and 40 exits, in addition to average returns above the CDI and Ibovespa. For founder Sidney Chameh, the secret to surviving until now – and maintaining his portfolio of investors over time – is precisely this: the return. “This is not a casino, we have a very disciplined investment process”, he says, in an interview with Startups.
Ironically, a DGF was born from a lack of belief in venture capital in Brazil. Sidney was an investment analyst at a bank and returned from his master’s degree in Canada in 1996, convinced that the VC model could work in the country. The bank even raised two funds with a venture capital structure, but the owner of the institution despised the idea. “Brazil is not a country for that,” he said. Sidney convinced the bank to let him handle the funds without extra compensation and made six successful investments. Among them, in Logocenter – which in 2005 would merge with Microsiga and originate the TOTVS.
When the Inter-American Development Bank (IDB) offered a US$10 million fund to the bank, the owner again refused. It was then that the IDB executive asked Sidney to nominate someone with a similar profile to his to run the project. “I reached out to him,” says the founder. The American didn’t understand the joke, but accepted the proposal: Sidney left the bank, founded the DGF with his wife as the first partner – she is a lawyer and needed to sign the articles of incorporation – and raised the rest of the fund from external investors, including former co-workers.
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The first two funds in DGFboth anchored by the IDB, focused on information technology, an area where the manager had already proven to have a good eye. The choice was deliberate: everything they invested in tech was going well; what came off that track, not so much. This lesson would shape the house’s strategy for the next 20 years.
The third fund, created in 2008 but only launched in 2011, brought an important innovation: a structure anchored by Finep that offered a guarantee of 80% of the nominal capital to individuals in the event of a total loss. In practice, it is as if Finep functions almost like a Credit Guarantee Fund (FGC) for the fund’s investors. With this, the DGF attracted around 110 CPFs. On the upside, Finep provided the extra return to these investors. The result was one of the best in the manager’s history: seven investments, no losses.
The highlight of this fund was the Digital Results (today RD Station). When a DGF entered, in 2013, the company had revenues of R$300 thousand per year. When it left, in 2021, the company was going to earn R$200 million. The sale, brokered by Morgan Stanley amid a dispute between TOTVS e Locawebyielded R$2 billion in equity value. In the end, the TOTVS won the fight and investors gained 35 times the allocated capital.
Fund 4, raised in 2014, was the counterpoint. With BNDES and pension funds as investors, the plan was to make 10 to 12 investments. But the Dilma government imposed an informal ban on venture capital applications by state-owned companies and public institutions. “We took a kilo of gold dust for R$1 and they said they couldn’t buy it because it was too risky”, says the founder ironically. The fund, which should have made ten trades, made only three. The return was 1.1x the capital invested – well below the historical average for DGFof 5x.
The experience was traumatic, but it taught us that it was necessary to stay outside of investment committees. Starting with Fund 6, launched in 2018 with an offshore structure, decisions were once again made exclusively by the company’s partners. DGF. Funds 6, 7 and 8 replicated the model established in Fund 3: only B2B software companies, early stage, with checks between US$ 1.5 million and US$ 3 million – reaching US$ 6 or US$ 8 million for the “big winners”.
Recently, the manager released a study carried out in partnership with professor Andréa Minardi, from Insperbased on audited data from DGF. According to the survey, while the tech VC market in Brazil records zero returns in 40% of cases, the DGF reaches just 14%. At the top of the table, 44% of the manager’s investments returned more than 2.5 times the capital, compared to 29% of the market in the same range. In the most successful cases, the net return reached 5.8 times the amount raised, compared to 2.5 times the market, with a net IRR of 26.5% per year over 25 years. Using the Private Market Equivalent method, the company’s funds DGF they yielded, on average, double the CDI and Ibovespa in the period.
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For Sidney, the secret is to put aside the hype and focus on the quality of the companies. Basically, according to him, evaluating a startup is not that different from evaluating a Vale or a Petrobras. “Just ‘I heard that this business is going to do well’ is not enough. Our attitude is always very rational. We are thrilled with the company, we have passion for the company, but we are rational”, he says.
Among the factors that he considers fundamental for the performance of the DGF over the years are “good people, disciplined analysis, close monitoring and rationality when selling”.
The recipe has been successful and has meant that, even in challenging times for raising venture capital funds, the manager has managed to raise new investment vehicles. In Fund 8, raised at the end of 2024 and beginning of 2025, 80% of investors were already part of the base of the DGF. And 25% of the total are former entrepreneurs who received support from the manager, sold their companies and decided to reinvest with those who helped them grow. “It’s proof that we didn’t step on anyone’s toes”, celebrates Sidney.
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The importance of aligning expectations
Despite admitting the importance of the interest rate in raising funds for venture capital, Sidney believes that what hinders the most is “inadequate management”. He cites data from the NVCA (North American venture capital association), which shows that the second and third funds are decisive: anyone who can’t get through this phase doesn’t make it to dry land.
From the third or fourth funds onwards, according to him, a manager needs to live off the success rate, not the management fee. “Funding becomes more difficult when you don’t deliver and are still thinking about larger funds”, he ponders.
One of the problems, for the founder of DGFare overly optimistic markings. For example, the manager invests 10 in a company, declares that it is worth 50, and, at the time of sale, the company goes to 20. “It becomes an exercise in illusion. It lasts for a while, but it doesn’t last forever. At some point, the next funding doesn’t come”, he observes. “We never did that. Our difference was never greater than 10%. In other words, we actually scored.”
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Past and future
Sidney Chameh began his career as an investment analyst, covering public companies. In his last job at a bank, he managed 14 analysts and covered 91% of the Ibovespa. But there was growing frustration. “You just ordered to sell or buy, and that was it, you had no influence on the way the company operated.” Contact with venture capital, during my master’s degree in Montreal, was the revelation that was missing. There, funds entered companies that were still small and could truly influence management: “Go this way, turn around, go that way”. It was exactly what he wanted to do.
When founding the DGFSidney also helped build the institutional structure of a sector that practically did not exist. In 2000, he was one of the founders of ABVCAP, the Brazilian Association of Private Equity and Venture Capital, which was born as the Brazilian Association of Venture Capital. In 2002, he was also one of the founders of the FGV Private Equity Study Center, alongside professor Cláudio Furtado.
With 25 years of experience, DGF does not plan major route changes. The founder recognizes that he will not be leading the firm for another 25 years, but says that the process and values are incorporated into the new generations. There are professionals on the team with fewer years of experience than the company has been in existence, and everyone, according to Sidney, speaks the same language. “Standards of ethics, righteousness, resilience – these are non-negotiable.”
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