ArpexCapital

Dream, People, Culture

Resources for Entrepreneurs in Rio de Janeiro

 

More and more resources exist for entrepreneurs in Brazil.   Below I list sources of support in Rio de Janeiro.  Some of these sources provide capital, some provide mentoring and some provide both.

I’m sure I am forgetting some people or organizations; if you are one of them, please accept my apology, add a comment below the post and I will add your name or organization.   I also know some people/organizations are planning to launch soon and I will add them as soon as they are operational.
 
Also, many organizations provide support in Rio from a base in, e.g., Sao Paulo.  I will try to list them in another post.

21212

Arpex

Criatec
 
Confrapar

Devise

Endeavor

FINEP

Gavea Angels

Ideaisnet

Inventta

Nasajon

PUC-Genesis

RioSoft

VentureOne
 
 
 
February 18, 2012 at 07:21 Comments (3)

Five Myths About Venture Capital

 

 
Myth #1 – Venture Investing is a Good Way to Make Money

As the chart below illustrates (courtesy of Flybridge Partners), unless you are in the top 10% of investors, venture capital is a very bad investment, both in gross returns and especially on a risk/reward basis.
 

For the top 5-10% of venture investors, VC is a spectacular way to make money… but only for the top 5-10%. 

Myth #2– Venture Capitalists are Rich

A few VCs are rich but, again, only the ones in the top 5-10%.  Almost all VC make relatively low salaries, especially compared to their peers in investment banking, hedge funds, consulting and other areas in which they might have made a career.   
 
Unfortunately, because their investments will not pay off, that low salary is all most VCs will ever make.  Carried interest from funding the next Google just isn’t going to happen.

In the far right column of the slide below, you see that the number of VC firms peaked in 2001 at 1883.  By 2009, that number was 1188; in other words, 37% had gone out of business.  By now (2012), the failure rate has probably reached close to 50%.  How many industries do you know in the last nine years where nearly 50% of the firms have gone out of business? Not many.
 

If your primary goal is to make a lot of money, you are better off in investment banking or hedge funds, etc.  Only do venture capital if you truly enjoy it.

Myth #3 – You Must Connect to Silicon Valley in Order to Succeed

a.  Here is a list of several of the most valuable/successful companies in the last several years and where they were founded:

Facebook: Boston
GroupOn: Chicago
Living Social: DC
Demand Media: LA
Tumblr / FourSquare / Twitter: NY

b.  The most successful venture fund in the last decade (2000-2010)?  GRP Partners.  Ever heard of them?  Probably not.  Know where they are based?  Los Angeles.

c.  Seven of the top eight venture bloggers are not in the Valley.  The lone member from northern California is Paul Graham of Y Combinator.

Myth #4 – These Days it Costs Less to Build a Large Company

Wrong.  It costs less to build a SMALL company.  It still requires a huge amount of capital, as much as it ever did or more, to build a large company, even in the “capital-efficient” Internet space.  The list below shows some recent winners and the amount of private (non-IPO) investment they raised:

Facebook:                  $2.34 billion
Groupon:                    $1.14 billion
Twitter:                       $1.16 billion
Zynga:                        $800 million
Dropbox:                    $257 million
AirBnB:                       $120 million

Myth #5 – Ideas Matter

Ideas are commodities.  Even seemingly “original” ideas almost always derive from ideas already in the market and, if the idea is good, probably three or four people already have the same idea somewhere else.

Most great companies are not based on original ideas but rather improve on existing ones.  Facebook launched two years after MySpace.  Before Google, there was Alta Vista, Lycos, Yahoo and half a dozen other search engines.  I could go on but you get the point.  As Paul Maeder of Highland Capital Partners points out, even Einstein said he had just one original idea in his entire life. 

So what matters?  Execution of ideas.  Who executes?  People.  Backing the right person is what matters, much more than backing the right idea. As Maeder says, the most important investment calculation is evaluating the entrepreneur and whether “the Force is strong in him”.
February 8, 2012 at 05:01 Comments (5)

Incorporating in the US: LLC or C-Corp?

Last September, I posted on whether Brazilian startups should incorporate in the US and, if so, whether they should incorporate in Delaware.

This week, the Latin American Private Equity and Venture Capital Association had a definitive post by Juan Pablo, a shareholder in the Greenberg Traurig law firm, on whether to form an LLC (like a limitada) or a C-Corp (like an SA) in the US.  

It is one of the first posts I have seen that leans towards forming an LLC (depending, of course, on the details).  Most venture capital lawyers in the US will tell you immediately to form a C-Corp, because this is the standard practice in the US.  As a foreign business, however, that maybe not be the best advice.

I advise a good read of Juan Pablo's post.  

January 28, 2012 at 07:16 Comments (0)

Urgency


Back in the early ‘90s, I had a brief and inglorious career with the Washington Redskins of the National Football League.  It officially lasted only two and half years but it was a formative experience and I learned a lot in a short time.
 
I have found that much of what I learned in sports applies to business.  For example, what I learned about the characteristics of successful athletes also applies to entrepreneurs.

Innate talent matters in both cases but less than you think — the most physically gifted athletes are often not the best players.  I believe talent comprises about 1/3 of what it takes to succeed in sports or entrepreneurship.  Talent derives from genetics and no player or entrepreneur has control over it.

Another 1/3 of success comes rigorous training – physical conditioning, skill development, study of the game and other things that the individual can control.  The player or entrepreneur must maximize his potential in this 1/3 in order to have a chance of success.

The last 1/3 of a successful athlete or entrepreneur comes from… I don’t know.  No one does.  It has to do with energy, belief, destiny, love for their profession… (That last one really matters – how many people don’t love their job but still make it to the top 1%?  Not many.)  

I can't define this final 1/3 but it often manifests itself in two traits: inner focus and urgency.   

By inner focus, I mean that all of the person’s being is directed toward the goal.  Even when he is not visibly working toward it, his being is pointed toward the goal. He does nothing contrary to it.  All the elements of his life fit into the pursuit the goal (not the other way around).

In that sense, pursuit of athletic or entrepreneurial success may seem to be a selfish endeavor.  It doesn’t have to be, but one must surround themselves with people that support the goal and understand the sacrifice needed to achieve it.

Less obvious than inner focus, great athletes and entrepreneurs posses urgency.   I don’t mean hurry or imbalance, just urgency.  They live a half-step ahead of the world. They anticipate what must be done and do it.  Proactively.  They don’t wait, they don’t procrastinate. 

Sports has a tempo, a momentum. So does entrepreneurship.  An entrepreneur’s urgency pushes the tempo and maintains forward momentum in his business.

One can sense whether an entrepreneur has urgency. For example, they ask for help but don’t wait for it. They move forward irresistibly, believing the world with eventually follow.  (It often does, proving the old saying, "Move and the world moves with you.")

Of course, inner focus and urgency are necessary but not sufficient traits: you also need the first 2/3 of the equation — talent and training — but inner focus and urgency are unique traits exhibited by almost all high-achieving athletes and entrepreneurs. 
 
January 25, 2012 at 09:32 Comment (1)

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