Nearshore Americas

Two Brand Name Silicon Valley VCs Set Up Joint Fund in São Paulo

Source: Deal Book

Redpoint Ventures and BV Capital’s eVentures have begun a new venture capital firm called Redpoint eVentures based in São Paulo, Brazil — the latest illustration of the country’s growing Internet start-up ecosystem.

Yann de Vries and Anderson Thees are its founding partners. Mr. de Vries was head of corporate development for Europe, the Middle East, Africa and Latin America for Cisco Systems until last year and was previously a BV Capital eVentures principal.

Mr. Thees, who is Brazilian, was previously chief executive of Apontador, a site similar to Yelp. Before that, he was vice president of business development at BuscaPe, a price comparison site based in São Paulo that was a pioneer in Brazil’s start-up scene, one of the few survivors of the first dot-com boom.

“You will see a number of investments” from the joint venture in the coming months, said Mathias Schilling, a co-founder of BV Capital’s eVentures, whose portfolio includes Groupon and Angie’s List, and was involved in Groupon’s entry to Brazil.

BV Capital is based in San Francisco but also has international dedicated funds with the name eVentures in Europe, Russia and a combined one for China and Japan.

Starting a local firm often signals interest in raising a local fund, in particular given BV Capital’s background, but Mr. Schilling declined to comment.

For Redpoint, based in Menlo Park, Calif., the new venture signals a shift in its strategy toward Brazil. The firm’s United States portfolio includes WebTV and Netflix. It has also been a frequent guest in Brazil’s start-up scene, even holding “speed dating” sessions with a large number of entrepreneurs in São Paulo and Rio de Janeiro.

While that did not directly lead to any investments, a Redpoint founding partner, Jeff Brody, told DealBook the firm had already invested more than $40 million in the country, including four Brazilian Internet companies and two more that were about to close.

Last year, Redpoint invested $3 million with IG Expansion in 55Social, a social media marketing company.

Redpoint made its first investment in 2010, a seed round in Grupo Xango, which was followed by a financing round made with BV Capital and Index Ventures. The three firms invested a total of $6 million in Grupo Xango, a holding company based in Rio de Janeiro that has interests in the cloud, security and e-commerce space.

For the last couple of years, Redpoint partners have frequently traveled to Brazil, often visiting for a full week each trip, saying the lack of direct flights from San Francisco to Brazil makes a weeklong stay the only efficient way to conduct business there.

But in addition to seeking to ease the demands of such travel, Redpoint also expects Brazil to steal a page from China’s Internet start-up ecosystem playbook in the coming years. Mr. Brody said that when Silicon Valley firms first took to China, they either tried to create or buy investment teams.

“Now 10 years later, it is all about being local,” he said. “That same evolution is likely to happen in Brazil and quickly.”

Still, there are advantages to partnering with another foreign investment firm rather than a Brazilian one.

First, Redpoint points to its relationship with BV Capital. It has partnered with the firm for several years in many markets and was drawn to the firm’s international experience. Additionally, Brazil’s venture capital industry remains nascent, with few players focused on early stage Internet companies.

Mr. Brody said Redpoint did not have any serious discussions with local firms and that “I could not hire a Brazilian V.C. with 10 years of success with exits because he does not exist.”

Other international Internet investors have a local presence in Brazil, including Intel Capital, Boston-based Flybridge Capital Partners and London-based Atomico Ventures, which has been in the country since 2010.

Redpoint eVentures plans to focus on early stage companies in the consumer Web, e-commerce, mobile, media and cloud services sectors. Redpoint itself had already invested in three Brazilian companies before they had either revenue or products.

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It will also focus on Brazil-based entrepreneurs rather than pan-Latin America.

While Redpoint eVentures is keen on the Brazilian Internet start-up market, it is also aware of its drawbacks and believes that a local presence will help tackle some of them.

Bureaucracy remains mind-bending, for starters. “Brazil today is much worse than it ever was in China,” Mr. Brody said. For example, the Grupo Xango deal took six months to close. Redpoint’s subsequent investments have taken less time, some around six weeks, but Mr. Brody says that it remains difficult to get bank accounts opened, file the entity formation and transfer money.

Brazil also faces a shortage of engineers. Yet Mr. Brody says it has become easier to hire executives for portfolio companies, noting that in the past year and a half “there has been an awakening among traditional executives” that entrepreneurship can be a more viable career option.

The Brazilian technology blog earlier reported the Redpoint eVentures formation.




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