One of many differences

I like to write and it’s been a while so there’s a lot that wants to come out.  I find myself thinking about blogging throughout the day.  It’ll be a struggle to filter what gets published.

This morning I had breakfast with an early-stage investor at 6:45am.  My normal motto is, “Never trust a wake-up call.”  I usually set my phone (no longer, see post above) and get a wake-up call.  This time I just set my phone – three alarms at five minute intervals – and either they didn’t go off or I didn’t hear them.  I think it’s the former because I am a light sleeper these days due to the figurative intravenous tube of coffee I have hooked into my forearm throughout the day.

Anyway, I was 10 mins late and my cheek was probably  still red from the pillow mark when I met up with him. 

You don’t hear a lot about web 2.0 down here, e.g., you don’t find a lot of entepreneurs and investors riffing on cloud computing, agile software development, etc. 

In many ways, the fact that Web 2.0 was never huge down here is a compliment and, regardless, it’s an extremely illustrative point in understanding VC down here: Brazilians don’t tend to invest in things that don’t have viable business models upfront, at least not like Americans traditionally have.    Investors have been much less willing to gamble that, so long as you build up a big user base quickly, the business model will come. 

Because of this, entrepreneurs have not had the luxury of starting businesses that do not have viable business models, ergo there are not a lot of Web 2.0 plays.  (I was running on the treadmill this morning and I saw the General Counsel of Facebook on CNN trying to explain their ham-fisted attempt to claim a right to the material on their users’ pages.  Privacy is a complicated issue but Facebook’s behavior isn’t – they’re trying to figure out how to make money.)

Just to reiterate, the lack of early-stage venture capital, indeed the paucity of venture capital in general, has prevented some of the reckless, high-risk undertakings possible for US entrepreneurs.  I don’t mean reckless in a bad way, I mean it in a swing for the fences type of way.   Reckless entrepreneurs in Brazil don’t last very long.

Anyway, this guy happens to know Web 2.0 well.  He’s got a social networking company that is breakeven and had some interest from US and European buyers last year before the roof caved in.  They don’t need a lot of cash, obviously, but they would like some to implement their growth strategy.  I am going to take a good look.  We’ll see.

If it’s Wednesday, it must be Brasilia…

Interesting place – back in the ‘70s they carved it out of the jungle to force people/development toward the interior of the country.    I guess no one was leaving the coast (why would they?).

I did a stupid thing on the plane from Sao Paulo that put damper on a good day.  As the plane landed, put my notebook down on the seat next to me, on top of my cell phone. When we landed, it was a bit of a rush to get out of the plane, so I quickly stuffed my notebook into my briefcase, grabbed my suit jacket and exited.   When I ran back onto the plane to get the phone, the cleaning crew was finishing up and, amazingly, none of them had seen it.   Hmmm.

After some searching and some not-quite accusatory questioning of the cleaning crew from me and the flight attendant, I gave up. 

I usually have to learn things the hard way and I thought I had left enough things on planes over the years to be done with it.   I am not mad at whoever took it – I am more embarrassed and angry at myself.   Anyway, it’s over.

Good day today. More later.

Here We Go…

Greetings from Sao Paulo, Brazil, population 22 million.

No time for a long intro on this blog – it’s on venture capital in Brazil (and some other stuff).  I’m starting right in because if I try and structure this thing I’ll never get started.  I’ll probably go with some stream of consciousness posts, some quantitative stuff, and lots of in-between .. I’m hoping the end result is an interesting and useful picture of the venture capital ecosystem in Brazil.

My buddy warned me not to be a perfectionist with this – I’m known for sitting down and writing two hour emails, complete with Strunk and White seal of approval.  Can’t happen here, given that I already have three kids headed for therapy because their dad is trying to do too many things too much of the time.  (Actually, they’re good to go, solely because of their mom.)

It’s been a whirlwind few days.  I arrived Sunday night in Rio, twelve hours late, as the Saturday overnight from Dulles got canceled.  Turns out I actually prefer a day flight; you can get a lot done. I dislike, however, arriving at night. I like emerging in the morning to Brazil – new day in a new country, seeing the incredible landscape in all its colors, shapes and sizes. 

Instead it was midnight and I headed for my uncle’s place to sleep.  Actually, my wife’s uncle – I am 100% gringo, my wife is 50% Carioca, i.e., from Rio.  More on the family tree later: suffice it to say, our nuptials were the Big Fat Greek Wedding on steroids – I couldn’t shake a stick at everyone who was there on her side and only needed two hands to count the those on mine.  But the bottom line is that I am one very lucky WASP: I married into a big warm Brazilian family, great people, and I have grown very close to them.  They and their extended network of friends have been generous to me in every way, Exhibit A being my aunt and uncle letting me lumber into their apartment at 1am on a Sunday night to crash for a few hours.

I woke up extra early the next morning to run along Ipanema and Leblon beaches, one of my favorite things to do. Taking in the Cariocas exercising and chatting, the lush mountains that crowd right up to the beaches, the favelas spilling down the mountains, deep blue sky, inhaling the toxic plumes of exhaust from the hundreds of buses sputtering past (hey, it’s not all good here).  Btw, most “public” transit here is actually run by private mom and pop companies – thus the hundreds of vans and buses.   Kind of an unexpected free market twist.

At the end of the run I jumped in the ocean, then bought an “aqua de coco” – a chilled coconut with the top cut off and straw stuck in it – cold coconut water is great to drink after a run.

I showered then cabbed it to Centro (Rio’s downtown) to meet with a fund management company.  These folks are more private equity and public market investing than venture capital but one of the founding partners is big in the Brazilian VC community and has taken an active role in trying to build the VC ecosystem here.  Turns out he is close with my family, something I realized only after I met with him the first time, in December.  Back then, after the meeting, I casually mentioned his name to one of (my wife’s) uncles and he said, “Thomas?  He was one of our best friends growing up…” then proceeded to regale me with stories of their families vacationing together in the mountains of Petropolis as kids.    That kind of “small world” stuff happens all the time here.  Rio is a small town, socially, and Sao Paulo isn’t much bigger.

After Thomas’s partners leave the meeting we chat about a startup company, PVInova, that I am helping to enter the US market – he is helping them as well.  More on that company later. 

I have been trying to set up a meeting with a well-known VC in Belo Horizonte, one of the first VCs in Brazil.  No luck so far, so I ask Thomas to help me and he kindly agrees.  Very nice guy.

I have lunch in Botafogo – near downtown – with a consultant that’s doing deals up in the Northeast of the country.  He is an experienced CFO and has a good network in the northeast part of Brazil.  So much happens in the Southeast – Rio, Sao Paulo and Minas Gerais – that you forget that plenty goes on in the massive area to the north.  And not just agriculture – he is doing hospitality deals and education.  He clues me in the education market and it blows me away. I didn’t know the margins were so high (25% EBITDA).  It reminds me that Advent and GP recently made some acquisitions in that space – those guys aren’t dumb.

Next meeting was at 2pm with Criatec – the largest seed fund in Brazil. 

(Now, however, I’m taking a break.  All this grammatically-deficient writing was done leaning over a plate of bacalhau (fish and potatoes) at the hotel restaurant.  It’s time for desert and some things are more important than writing.) 

Ok, I’m back. Stuffed.  One of the mysteries of the universe is how Brazilians stay so thin while downing some of the most luscious food in the world.  Doesn’t work for me.

So the 2pm meeting… Criatec deserves more than I can give them right now so I am going to do a full post on them later.  They are the largest, some would say the only, seed fund in Brazil. 

After that meeting I head for Genesis, the incubator at the Catholic University of Rio, known by it Portuguese acronym, PUC (pronounced “pookie”).  I meet with the guys from PVInova (I am staying away from using people’s names and, in some cases, companies, until I get permission from them – don’t know what the protocol is but figure that’s a safe way to go).

PVInova also deserves its own post and they will get it – they are a case study in why I think VC has a good future in Brazil. 

While the PVInova CEO and I are having a cafezinho (small coffee), his phone rings and he hands it to me. It’s Thomas from the morning meeting.  He has set up the meeting with the well-known VC in Belo Horizonte.  “And Ted,” Thomas says, “Something funny.  It turns out that he [the VC] was at your wedding.”  Small world.

getting squared away on twitte…

getting squared away on twitter