Deals

Endeavor brings Silicon Valley to South America's Southern Cone

Venture capitalists may soon be asked to go way outside their comfort zone.

Endeavor, the New York-based non-profit that seeks to promote entrepreneurship in the developing world, launched the Mentor Capital Program (MCP) last week here in Montevideo, the capitol of Uruguay.

The initiative, to be piloted in the Southern Cone nations of Uruguay, Argentina and Chile, seeks to better prepare innovators here to pitch venture capital firms in Silicon Valley and beyond, and to undergo the rigors of the due diligence process. The program also aims to expose more United States investors to new talent in emerging markets.

A small group of select Southern Cone business leaders attended the inauguration as did former US Ambassador (under President George W. Bush) to Uruguay Frank Baxter. The UC-Berkeley alum and one-time NASDAQ board member is currently Chairman Emeritus of the Jefferies and Company, Inc., and lives in Los Angeles. I was also there to cover the event for VentureBeat.

Quinn Fitzgerald of Endeavor opened up the festivities, saying that the program’s goal was that entrepreneurs here could “walk into a room with an investor anywhere in the world and feel confident.” Fitzgerald, a Bay Area native, was previously Entrepreneur Director at the Keiretsu Forum in Silicon Valley.

The MCP intends to pair US investors with those here in the region. Jointly, they will hold periodic conference calls with selected local entrepreneurs over the next three to four months, simulating due diligence, but with the possibility of real investment.

The program’s US Advisory Board consists of Nick Beim of Matrix Partners, Jason Green of Emergence Capital Partners, Joanna Rees, Wences Casares of Bling Nation and Meck Ltd, and Tim Draper of Draper Fisher Jurvetson.

Asked what made the Southern Cone attractive for this pilot, Draper told me there are “a lot of good entrepreneurs there who are very open to new ideas and guidance. It is a big untapped market.” It also marks a return to Endeavor’s roots. The organization began in 1997 in Chile and then had its first success in Argentina in 1998. It shortly thereafter expanded to Uruguay.

The US Advisory Board is also responsible for bringing new US investors to the program.

The MCP’s Southern Cone investors are Pablo Brenner, a partner with Prosperitas, Uruguay’s only venture capital fund, Jose Miguel Musalmen, with Chile’s Aurus Capital, and Emiliano Kargieman, co-founder of Argentina’s Aconcagua Ventures.

Kargieman’s involvement is particularly poignant as his business partner Jony Altszul was among Endeavor’s first selected entrepreneurs in Argentina. They founded Core Security Technologies in their mid-twenties in Buenos Aires. Undeterred by their country defaulting on over $100 billion and the ensuing chaos, they formed what today is a leading software security company based in Boston.

This is an example of the appeal of South American innovators — their surmounting obstacles that would likely paralyze many American businessfolks not to mention developing start-ups amidst limited access to capital.

Endeavor’s focus has always been on networking, but Kargieman told me that when he first got involved, the organization was much less structured. He said that he and Altszul were introduced to folks but did not feel prepared to pitch US investors. He said, “I did not have direct contact with VCs as mentors.”

Now that he is on the investor end, he wants to make sure new generations of innovators have those advantages.

His advice to entrepreneurs last week in Montevideo included avoiding the trap of thinking too small. He said that, “people overestimate the hurdles of building companies,” often starting out focusing on their local markets. He told them that, “selling in the US is probably easier than it is in any country in Latin America, and if you do not realize that, you will have a problem.

Here are the six entrepreneurs in the MCP pilot who attended the launch:

  • From Uruguay, Federico Cella of Lynkos, a service platform for the financial service industry and Raul Polakof of Scanntech, which develops point-of-sales software for large retailers
  • From Chile, Max Grekin of SKM Seaprende a knowledge management services company and Luis Vera of Scopix, business intelligence
  • From Argentina, Adolfo Rouillon of Congelados del Sur, frozen packaged food and Mariano Suarez Batan of Three Melons, online games
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