Posted: April 18th, 2012 | Author: Ted Rogers | Filed under: Entrepreneurship, Random Posts | No Comments »
I have long felt skeptical about business books, especially quasi-self-help books that state common sense with an air of discovery.
Typically, even in the best business books, the 80/20 rule applies: 80% is either recycled truisms or common sense, 20% (or less) is new or interesting.
Soft science, e.g., lack of quantitative analysis often damns these books to mediocrity.
In my opinion, one notable exception is Jim Collins. Someone recently gave me a copy of his most recent book, Great by Choice, and it is valuable. Collins and co-author Morten Hanson base all of their writings on rigorous quantitative analysis. Not all of their writings apply to startups but all of their findings are valuable.
Below is an outline of the book that I made for an internal presentation.
Great by Choice
10X Leadership:
Collins and Hanson studied a group of companies that provided shareholder returns at least 10X greater than their industry peers over a long period
Leader of 10X companies (“10Xers”) share a set of behavioral traits—fanatic discipline, empirical creativity, and productive paranoia—all held together by a central motivating force, Level 5 Ambition
Fanatic Discipline
10Xers start with Values, Purpose, Long-term goals and Severe Performance Standards and apply Fanatic Discipline to adhere to them. All of their actions are consistent with those Values, Long-term goals, Performance standards. 10Xers are relentless, monomaniacal
Empirical Creativity
In confused environments, 10Xers do not look to other people but to empirical evidence to drive their decisions
They use empirical evidence to create boundaries, within which they take bold risk
Empiricism as the foundation for decisive action
Productive Paranoia
10Xers practice hyper-vigilance even in good conditions
They believe that events/markets will inevitably turn against them and they prepare for that time
Level 5 Ambition
10Xers channel their ego into something larger and more enduring than themselves
Their ambition is for the cause, not for themselves
20-Mile March:
The 20-mile March is a set of concrete, clear, intelligent and rigorously pursued performance mechanisms that keep the company on track
One set of metrics creates a floor, a lower bound of performance not to go below and another set of metrics create a ceiling, an upper bound not to go above
If they miss the 20-Mile March metrics, 10Xers are obsessed with getting on track, no excuses
Consistently achieving the goals of the 20-Mile March builds confidence in the organization
External environment is impossible to predict and out of their control; the 20-Mile March gives the company an internal locus of control
Fire Bullets, then Cannonballs:
It is not necessary to be more innovative than your peers
Only 9% of pioneers end as final winners in their market
You must be innovative above a certain threshold but beyond that it doesn’t necessarily help
Fire bullets, then cannonballs
Fire bullets to figure out what will work
Once you have empirical evidence based on the bullets, you concentrate your resources and fire a cannonball
[Note: the Lean Startup method follows this system]
Example: The iPod was a bullet, derived from some empirical evidence, that led to more empirical evidence; then they fired a cannonball: iTunes and iPod for non-Mac computers
What makes a Bullet:
Low cost
Low risk – minimal consequences if the bullet goes awry or hits nothing
Low distraction for the overall enterprise (okay to be a high distraction for an individual)
10xers have a much higher rate of calibration before firing Cannonballs (69% vs. 22% for peer group) – example of using empirical evidence to drive decisions and contain risk
Calibrated cannonballs have a 4x higher success rate than uncalibrated (88% to 23%)
There is a danger to achieving a hit with an uncalibrated cannonball: good outcomes from bad process reinforce bad process
10xers make mistakes but learn and return to empiricism; only fire another cannonball with empirical validation
“In the face of instability, uncertainty and rapid change, relying upon pure analysis will likely not work, and just might get you killed. Analytical skills matter, but empirical validation matters much more.”
“That is the underlying principal: empirical validation.”
(Note: Lean Startup Method again…)
You don’t need to be the one to fire all the bullets, you can learn from the empirical evidence of others.
“More important than being first or most creative is figuring out what works in practice, doing it better than anyone else, and then making the most of it with a 20-Mile March.”
Questions to ask before firing a cannonball:
How can we bullet our way to understanding
How can we fire a bullet on this matter
What bullets have others fired
What does this bullet teach us
Do we need to fire another bullet
Do we have enough empirical evidence to fire a cannonball
10xers fire a significant number of bullets that don’t hit anything; they didn’t know ahead of time which bullets would be successful
Failure to fire cannonballs, once calibrated, leads to mediocre results. The idea is not to choose between bullets or cannonballs but to fire bullets first, then fire cannonballs.
Leading above the Death Line:
Productive paranoia 1: 10Xers build cash reserves and buffers before disasters happen
Productive paranoia 2: contain risk; 10Xers took less of these three risks:
- Death Line risk – failure would result in the death of the enterprise
- Asymmetric risk – the downside of failure is greater than the upside if successful
- Uncontrollable risk – risk completely out of the company’s control
10Xers also manage time-based risk – if risk is growing with time they act
quickly
“Sometimes acting too slow increases risk.”
if the risk profile is changing rapidly, then the speed of decision-making must increase.
Zoom out, then Zoom in:
10Xers remain obsessively focused on their objectives and hypervigilant about changes in their environment; they push for perfect execution and adjust to changing conditions
Zoom Out:
Sense a change in conditions
Assess time frame: how much time before risk profile changes
Assess with rigor: do the new conditions call for disrupting plans? If so, how?
Zoom back In:
Focus on Execution of plans and objectives
Not all time in Life is Equal
Some moments matter more than others
SMaC – Specific, Methodical and Consistent metrics
“We’ve found in all of our research studies that the signature of mediocrity is not an unwillingness to change; the signature of mediocrity is chronic inconsistency.”
Return on Luck:
“Resilience, not luck, is the signature of greatness.”
Who Luck – one of the most important types of luck is finding the right people then building a mutual risk your life relationship with them
Summary:
10Xer behaviors - fanatic discipline, empirical creativity and productive paranoia; Level 5 ambition, never relax when blessed with good luck
20 Mile March
Fire Bullets, then Cannonballs
Return on Luck – 10Xers don’t cause their luck, they increase the chance of stumbling on something that works by firing lots of bullets, then using empirical validation before firing cannonballs
Leading Above the Death Line - They manage three types of risk to shrink the odds of catastrophe
Zoom Out, then Zoom In
Posted: November 25th, 2011 | Author: Ted Rogers | Filed under: Random Posts | 10 Comments »
My two cents about the death of Steve Jobs is that it will coincide with death of Apple over the next three to five years. The decline will have nothing to do with Steve Jobs’s passing, however, but with the limitations of the Apple business model.
Jobs did with Apple what Steve Case did with AOL, only better: he built a magnificent “
walled garden”, an extraordinary — but closed — ecosystem. Eventually, like AOL and like all walled gardens in the information age, Apple will die: no matter how innovative a single company, its innovations cannot keep up with the innumerable innovations outside its walls.
AOL provides a great example of a closed system: it used a proprietary programming language (
Rainman) and limited usage to those who paid monthly subscription fees. Business partners had to pay upfront and guaranteed fees for a place on the AOL platform. AOL was the king of Web 1.0, yet it died a quick death with the ascent of Google's "open" platform; today AOL walks the earth as an harmless corporate zombie.
Apple does the same as AOL did: it uses a proprietary programming language and limits usage to paying consumers, i.e., those who purchase its hardware. As such, Apple walls its garden not with subscription fees but with devices: the iPhone, iPad and Macbook, etc. (At least with business partners, Apple follows the revenue share paradigm.)
Apple has succeeded because, over the last eight years, it has built some of the most elegant, sophisticated devices in the history of mankind. Consumer have devoured them. Its best hope for the future lies in continued domination of devices, such that its operating systems become the world’s default operating systems, much like Windows did at one point. That’s unlikely, however, thanks to Android, HTML5 and the multitude of companies innovating and price-cutting in mobile hardware.
Right now, the big winners of the next five years appear to be Google and, surprisingly, Amazon. Google is a beautiful, open platform but AWS has pushed Amazon's platform even deeper than Google's.
Imagine the access to data that Amazon has, imagine the services it can begin to offer through AWS? Amazon may one day be the most valuable company in the world, due to the openness, and depth, of its AWS platform.
As for Apple, over the next five years, its share of the device market will shrink and with it the Apple platform and the company itself.
“Walled gardens” are beautiful but, because they are shut off from the innovation outside their walls, they don’t endure. Just ask AOL.
Posted: November 9th, 2011 | Author: Ted Rogers | Filed under: Random Posts | 6 Comments »
Every startup scene has it cafes: Palo Alto has
Coupa Café, San Fran has
The Grove and New York has…
Starbucks (on every corner). Below I posted my vote for the two most relevant coffee locales in Sao Paulo. I probably have a bias because our offices are nearby but I’ve spent time in other areas of Sampa and I'd still stick with these two.
Av. Brigadeiro Faria Lima, 2996 – Jardim Paulistano
Octavio is king of the business breakfast/coffee/lunch. On any given day, the place is packed with businesspeople circled around laptops at the low-slung tables. Many of them – entrepreneurs, investors, journalists – are connected to the startup scene.
The Good:
Solid Menu. Octavio has a simple but satisfying menu of breakfast, lunch and dinner. If you want heavier fair,
Rubaiyat, one of the best steakhouses in Latin America, sits right next door (ironically, Rubyai is not Brazilian
churrascaria but rather a steakhouse with Argentine roots).
The Coffee. Octavio’s building resembles a giant wooden coffee cup. It should. Octavio offers great coffee brewed in every manner ever invented by humans. Previously, I favored the
chorreador method, where the waiter pours hot water through a sack at the table. Now, however, Octavio has a
Clover machine. For those who don’t know, that’s a new device that essentially grinds and presses each individual cup of coffee. They are rare – only a few Starbucks in the US have these machines – but for my money they give you the best cup of coffee.
The Wifi. Free.
The Bad:
The Service. The service sucks. It pains me to write that but it’s true. The staff is friendly and skilled but there are just too few of them. If you have spent time in food establishments in Brazil, you will find that ironic: most places have too much staff, often more than staff than diners. Inexplicably, Octavio has far too few. It’s maddening. On good days, you will only get slightly annoyed at the negligence. On bad days, you can wait 45 minutes in between contact with an Octavio employee. Often, you have to stand up and go find one but, alas, there are usually three or four frustrated customers ahead of you doing the same thing.
Hours: it opens at 7:45am. That’s late for a coffee house. 5:30am is optimal. 6am is ok. 6:30 is pushing it. 7:45? Even in Sampa, where people party late, that’s excessive.
Anyway, Octavio Café is still the best – I love it and will keep taking meetings there until the day it closes. I once spent eight straight hours taking meetings there. It was a great day.
Rua Amauri, 286
I doubted whether Starbucks would find success in Brazil. Bringing coffee to Brazil is like bringing soccer to Brazil – it’s already here and it’s better.
Yet, Starbucks has thrived. The one on Rua Amauri seems busy all the time. You may wait a bit longer for your coffee but otherwise the experience compares to visiting to any Starbucks anywhere, which is to say, great.
I think the crowd skews younger at Starbucks and, if you took a poll, you would find a higher percentage of customers from the startup scene at here than at Octavio. Many of the customers come from just across the street at the headquarters of IG (one of the Brazil’s largest portals).
The Good:
It’s Starbucks. Good service, good coffee, good seating.
The Bad:
Mediocre food options. Starbucks offers good sweets but there’s not an ounce of protein in the place, unless you count the stale, overpriced nuts at the cash register.
Hours: I don’t remember what time it opens but I do remember trying to get there early in the morning (6:15ish?) and it was closed.
The Wifi. Not free.
Anyway, if you are in Sao Paulo and want to run into a VC or entrepreneur or, maybe, just work on your laptop in a place that has the startup vibe, Octavio Café and Starbucks Amauri are good bets. They may soon become the Sampa equivalent of Coupa, Grove or, well, Starbucks.
Posted: September 20th, 2011 | Author: Ted Rogers | Filed under: Random Posts | No Comments »
I have always struggled with managing my time efficiently. More than most people, I believe.
As such, I've sought help from a wide-variety time management techniques, most of which I've subsequently abandoned. After compiling a library of half-read books, downloading twenty once-used apps and trying to emulate the systems of organized colleagues, I've selected a few simple techniques that work for me.
First, I divide my tasks into Stephen Covey's Four Quadrants. This keeps me focused on the most important activities each day, while ensuring that I maintain sight of my long-term goals.
Tasks in the "Important but not urgent" quadrant are the most elusive — we tend to ignore these tasks despite the fact that they have the largest impact on our effectiveness.
The second technique is a simple age-old wisdom: plan your day the night before. Specifically, spend the last 10-15 minutes of each work day prioritizing and scheduling your tasks for the next day. It's amazing how much more efficient it is to start the day with a to-do list from the night before — it eliminates distractions and provides continuity from one day to another.
The third technique comes from Tony Schwartz at Harvard: execute the most important task in the first 90 minutes of the workday. The first 90 minutes are when people operate most productively. I try to put items from the "important and non-urgent" quadrant in the first 90 minutes of each day.
That's it: Four Quadrants, Plan the Next Day, First 90 Minutes.
A few suggestions: first, keep your system simple. Elaborate systems with multiple actions often work but they rarely last. Personally, I can't sustain more than three techniques for time management (see above). Find a system that you can sustain.
A second, related suggestion: don't expect perfection. "Nothing's perfect" and perfectionists never stick with anything. My system has gaps and I work my system inconsistently but it's effective and I don't abandon it.
Third, expect to make minor tweaks to your system regularly. I used to search for some unifying theory of time management which, once implemented, would make the universe fall blissfully and permanently into place. Nope.
Maintaining balance, maintaining anything, requires frequent recalibration. Frequent minor adjustments are part of sustaining any system.
Posted: August 20th, 2011 | Author: Ted Rogers | Filed under: Random Posts | No Comments »
Brazil:
· Aiming to stimulate digital entrepreneurship in Brazil, Grupo RBS has launched the first RBS Prize for Entrepreneurship and Innovation. The initiative will offer prizes of R$50,000, R$25,000 and R$10,000 to the top 3.
o http://bit.ly/n1BtRF
· Latin America’s largest group buying site, Peixe Urbano announces that they are going to sponsor a segment of the Startup Farm accelerator program for a startup intending to create solutions using the Peixe Urbano API.
o http://bit.ly/qu6JYI
· Led by founder, Rafael Dahis, Brazilian based social networking user review service for University students, CarrascoMamata, launches, offering students advice on class material, professor evaluations, notes on class style, etc.
o http://bit.ly/nLgGZz
· Recently launched Brazilian startup, Drimio helps brands and consumers to integrate ideas, opinions and content.
o http://bit.ly/qG4ye
United States:
· According to TechCrunch, Facebook is in the process of rolling out its new “mini” news feed to far more users. The miniature real-time News Feed on the right side of the page will be labeled “Ticker.”
o http://tcrn.ch/qVi0kH
· Foursquare announces that users can now officially ‘check in’ to events using the location based service. Foursquare has hooked up with ESPN for sports events, MovieTicket.com for movie tickets and Songkick for concerts to populate its database with official events.
o http://tcrn.ch/oB3Ut8
· Bing launches new Windows app “We’re In.” When you use the app to create an event and invite people to it, the invitation goes out via text message. In addition, the app allows participants to leave in-group status updates.
o http://tcrn.ch/ow4nrv
· Textbook rental leader Chegg announces that it is going digital and will be steadily rolling e-textbooks on its platform. In preparation for it’s digitial debut, Chegg has partnered with many leading textbook publishers.
o http://tcrn.ch/rsxYmK
· Evernote CEO Phil Libin announces that the company has acquired Skitch, a best selling app in the Apple app store. Also announced was the availability of Skitch for Android.
o http://tcrn.ch/qQ14B1
· Google announces that the company will be adding a new weather layer to its popular mapping service, Google Maps. Courtesy of weather.com, the weather layer will display conditions with various icons for sun, rain, clouds, etc.
o http://tcrn.ch/oCyxpv
· In the hours leading up to their Q3 conference call, HP confirmed that the company will be discontinuing operations surrounding the TouchPad and all webOS phones. The company claims that it “will continue to explore options to optimize the value of webOS software going forward.”
o http://tcrn.ch/prwo3Z
VC/Industry:
· Chinese video sharing site, Tudou, which is similar to YouTube, raises $174 million this week in its U.S. IPO. Tudou’s shares were priced at a 58 percent discount compared to rival Youku, valuing the company at $822 million.
o http://bit.ly/pBZcoA
· According to a recent study from Nielsen, the 10 most popular Android apps capture 43 percent of all the time spent by Android consumers on mobile apps.
o http://bit.ly/raAbTR
· Research in Motion, the company behind Blackberry announces the development of their own streaming music service that would run specifically on its smartphones and tablets.
o http://bit.ly/rtr8aN
Posted: May 23rd, 2011 | Author: Ted Rogers | Filed under: Brazilian Venture Capital, posts, Random Posts | 4 Comments »
I once got advice from a successful businessman in Rio Grande do Sul: Leave business in Brazil to Brazilians.
I haven’t taken his advice, although there is a lot of wisdom in it. I guess I like to do things the hard way and, anyway, since I love Brazil and my wife and kids are dual citizens, I’m involved in this country no matter what.
The businessman’s point, however, is well-taken: business in Brazil is indirect, complex and multi-layered. Each of those layers represent ways to lose money.
Some Gringos ask, “Can’t you just get a good lawyer to navigate?” Not really. You need a good lawyer, yes, but you also need a good and honest business partner, a good and honest accountant and a willingness to be present and vigilant yourself.
Few people can find that combination, which makes doing business here highly risky. On the other hand, for those who do find those resources, their businesses operate in a fertile market with high barriers to entry.
Even if one overcomes the bureaucratic/structural challenges to doing business in Brazil, however, cultural differences present a persistent challenge. So I am going to highlight a few historical/cultural differences that may help Americans to better understand Brazil and vice versa. (Unfortunately, since I have not done business in other than those two countries, I cannot include, e.g., Europe and Asia in the comparison).
· Both the US and Brazil are immigrant countries but the two “melting pots” have produced different cultural outputs.
Anglo-Saxon religious refugees founded the US, while Portuguese monarchs founded Brazil. The former brought Protestantism, capitalism and a suspicion of centralized authority – religious or governmental – to the US. The latter brought a strong Catholic culture, suspicion of individualism and profit-seeking, and centralized authority to Brazil.
These differences remain important. In Brazil, businesspeople, even young entrepreneurs, must overcome societal suspicion of individualism and profit. In the US, businesspeople and especially entrepreneurs get cultural support, often to the point of hero worship (see, e.g., Steve Jobs and Mark Zuckerberg).
Anyway, don't flaunt wealth, or a desire to attain it, in Brazil. A little humility goes a long way.
· Despite historical differences, the popular cultures of the two countries have converged.
American movies, TV, music and even sports are extremely popular here. I am still, after many years, surprised by the pervasiveness of US pop culture in Brazil.
At the same time, Brazilian culture has increasingly strong influence in the US. For example, Brazilian cuisine, sports, fashion (and fashion models) have a strong cache in America right now.
More generally, both countries have strong “consumer cultures”, both are heavy online and mobile users and both are early-adopters of new technologies.
These cultural similarities between the US and Brazil have a big impact on venture capital, as a given startup can potentially address the market in both countries (see, e.g.
Foursquare) . In addition, a business idea in one country can be cloned in the other (see, e.g.
Peixe Urbano).
At the same time, a business in one country can fall victim to a competitor from the other (see, e.g., several Brazilian startup competitors to
LinkedIn that will not survive). Keep that in mind and check to see what competitors in the other country are doing.
· In Brazil, historically, the far left is seen as a liberator, the right as a threat. In the US, the far left is seen as the greatest threat.
To be honest, I am not sure how to draw the direct connection between this point and business, much less venture capital but I feel it is deeply important to understand.
Many Brazilians have not forgotten that, during the Cold War, the US often aligned itself with brutal right-wing dictators in Latin America; a lingering resentment remains and can easily be connected to a separate perception of Americans as arrogant and spoiled.
On the other hand, most Americans believe we fought the Cold War, at the risk of nuclear annihilation, to preserve liberty against a totalitarian ideology. For many Americans, seeing a hammer and sickle on political campaign commercials (which happens regularly in Brazil) is equivalent to seeing a swastika.
This divergent political history heavily impacts the relationship between Brazil and the US and between individual Brazilians and Americans. I guess I hope that, by understanding our mutual histories – why we think the way we do – Americans and Brazilians can sympathize with each other and overcome differences.
More generally, by understanding basic cultural similarities and differences, we can do business more successfully with each other.
Posted: May 2nd, 2011 | Author: Ted Rogers | Filed under: posts, Random Posts | No Comments »
All VCs have a targeted proflle for investment – stage, size, industry, etc. As mentioned in a previous post, however, VCs reject the vast majority of deals they see, even if those deals fit their investment criteria.
That’s because a good deal is difficult for a VC to pre-define. Investment decisions derive from intangible factors and the VC's intuition as much as from concrete analysis. A good VC investment is like obscenity: you know it when you see it. You also know when you don’t see it.
A previous post dealt with the characteristics of an investible team. This post addresses timing, expertise and the deal itself.
Timing
A good idea that is too early is a bad idea. A good idea is that is too late is a bad investment.
How do you know if a business is early, late or right? It’s often an intuitive call but if, for example, a rash of similar startups already launched and have a head start of nine months or more, it’s probably late. (Of course, if you can make a huge improvement over an existing company, it’s never too late to enter the market.)
On the other hand, if no business similar to yours exists, it raises questions as to whether you are too early. Specifically, WHY do no similar businesses exist? Ideas are commodities – if you have a great idea, at least five other people have the same one. If there is no comparable business in your market, maybe the market isn’t ready for your type of business.
Yes, entrepreneurs sometimes invent brilliant, non-derivative business ideas but these are the exception, not the rule.
In summary, good deals tend to come at the cutting edge of a trend but not before one.
Expertise
A VC can often dispense with the subject of timing if the entrepreneur and his team know their vertical deeply.
For example, if
Jack Dorsey pitches a mobile business, does an investor need to worry about timing? Not really. Dorsey knows the state of his market better than anyone. Nor does the investor need to worry about technical hurdles, team, competitive analysis, etc.
If an entrepreneur with no background in mobile pitches the same business, the situation has more friction: now, the VC needs to verify every assertion the entrepreneur makes. What are the technical hurdles for the product? Is the market ready (is he too early)? What is the competition doing (is he too late)? Can he build a good team (who does he know)? Etc.
Entrepreneurs with deep subject matter expertise make deals feel right. Lack of subject matter expertise makes deals uncomfortable, even if the entrepreneur has a good idea.
Deal Problems
Sometimes the administrative aspects of a deal, apart from the entrepreneur or business idea, create too much friction.
David Lerner has a thorough list of
commonly-encountered deal problems but, for example, no investor likes to see a complicated cap table. 30 investors, multiple classes of shares, strange option agreements, etc. will bring a lot of trouble in the future.
Similarly, no VC wants to inherit legal issues – an angry ousted co-founder, violations of non-competition agreements, tax liabilities, etc.
Finally, an over-shopped deal makes investors uncomfortable. It may not be fair but, if a company looks for an investment and doesn’t close after 9-12 months, outsiders assume something is wrong with the company. Often, there is a good explanation for why no investment has been made. If so, the entrepreneur should just explain the situation clearly and honestly – but know that new investors will feel skeptical.
This brings up a final point: even deals with problems can get done IF the entrepreneur communicates about those problems in a proactive, honest way. “The truth always makes sense,” so just say it.
On the other hand, if the investor senses that the entrepreneur is hiding something, it will destroy the deal and hurt the entrepreneur’s reputation.
Conclusion
It would help everyone if VCs could predefine exactly what they wanted to see in an investment opportunity but it’s not possible. The characteristics of an investible deal involve intangible factors and the VC’s intuition as much as the hard “investment criteria” listed on fund websites.
When it comes to a good VC deal, like a lot if things in life, you just know it when you see it.
Posted: January 25th, 2011 | Author: Ted Rogers | Filed under: Random Posts | No Comments »
That hammering and banging you hear is construction being done on the website. My vast web development team (me and an intern 
) are upgrading the site — it will look pretty messed up for several days until we are done…
Posted: September 30th, 2010 | Author: Ted Rogers | Filed under: posts, Random Posts | 3 Comments »
I am at the Latin American Venture Capital Association conference in NY today. Most of the conference has been about private equity – PE still dominates investors' mindset about Latin America and especially certainly Brazil. Personally, I think the wave of private equity in Brazil is cresting. If you are going to raise a PE fund, you better do it quickly, because the market is getting very, very crowded. Six months ago, my cousin (he works in a highly respected PE firm in Brazil) told me that deal flow was strong and valuations healthy. Then, just last month, he told me that a ton of foreign PE firms had jumped in and driven valuations to unreasonable levels. It happened quickly but the market has changed – there is still deal flow but valuations are high and getting higher. More ominously, many, many managers want to raise new PE funds for Brazil – I ran into a friend today who works as a placement agent and he told me that his firm cannot keep up with all the requests from groups wanting to raise Brazil-focused PE funds. So the market is not going to get less saturated anytime soon. In sum, We we are well into a private equity bull market in Brazil. This is a problem, since how a fund performs has a lot to do with when it enters a market – historically, the best time is (of course) when prices have been beaten down. You don't want to invest into a bull market. What about venture capital? Yes, there are more people aspiring to do VC in Brazil than a year ago – but still not very many. (I see the same three Brazilian VCs here that attended the conference last year.) Seed VC (as opposed to growth and late stage VC) still feels completely open. No one seems to want to admit that they do early stage VC, for fear that institutional Investors will run away (they might). Well, we like helping entrepreneurs build companies from the ground up: we do seed VC, we like it and we think a fund that executes on it can be very, very successful.
Posted: September 1st, 2010 | Author: Ted Rogers | Filed under: posts, Random Posts | 6 Comments »
Brazil is jumping! Private equity activity by local and foreign companies is intensifying — Carlyle Group showed it means business by doing three big deals in the last few months — and the venture capital side is finally getting the attention it deserves.
Lots of excellent VC firms from the US and Europe are asking for deal flow and a significant amount of local managers are trying to raise funds.
I am happy to say that my partners and I have launched an early-stage fund. It will likely be R$75 million and focused mostly on web services companies . I will post the details about our team, our strategy and the fund itself later this week.
Ate ja!
