On January 10th we had the h0nor to receive the visit of Cate Ambrose, President and Executive Director of LAVCA in NXTP Labs. With a great smile and flawless Spanish, Cate shared with us her point of view about Latin America, investments and growth.
What are the things an investor observes before deciding to invest in a Latin American Entrepreneur?
It depends on the kind of investors we’re talking about, if it is a foreign investor from Silicon Valley or a local investor, if angel investors, if government institutions or other. Anyway, if we consider a Venture Capital, they evaluate the team, they look for individuals who have experience: they prefer entrepreneurs who have had a company before, even if they failed but have learned a lot from that experience. Also, what the investors most look for, specially those who come from the US, are the ideas that have been successful in the US and that could be implemented in Latin America, the copycats. Many times it is complicated to translate a successful model outside Latin America and that’s why they value a lot, the entrepreneurs with an international point of view, someone who has lived in Europe or in the United States and who understands the Latin American market in order do adapt the business model to it.
What things can make Latin America a “hot spot” that attracts investors?
One thing that is outstanding about Latin America is its growing market, specially due to the high number of young consumers and the growth in internet use. These characteristics are positioning Latin America as a huge growing market composed of young consumers in which there are unexplored opportunities in areas that are standing out, such as education and health. We can see it by the success of OpenEnglish.com. It is obvious to investors that there is a need and a huge potential in businesses that explore the youth market in Latin America, specially in education. It turns Latin America into a unique opportunity in comparison to the United States and to Europe, where the markets are defined by an aging population.
What is the role and the relevance of the accelerators tin the development of entrepreneurship in Latam?
I hear many people saying in the United States that this accelerator model doesn’t work. In my point of view, the accelerators are playing a key role by just promoting the entrepreneurial culture, which is a very, very important role. Just the awareness of a young person in Argentina, Brazil, Chile, that there are new local companies being featured in the media and that there is the possibility of founding a company instead of just working in a bank, corporation or something like that, is already a huge achievement due to the work to the accelerators. Besides, the accelerators also play a key role by filling a gap in a creative space where there are no clear investors, and in the continuous investments where there is no Venture Capital.
Which are the Latin American countries most wanted by VCs?
The introduction of funds from Silicon Valley to Latin America was, almost entirely in Brazil. It always goes like this, the investors from the United States went to India, to China: they were looking for the big markets. Scalability has always been a very important aspect to investors, just think about Mercado Libre that covers the whole region. It means that if you’re looking for one country where to launch an e-commerce or something like that, Brazil is the biggest market for its consumers and it’s also the one that counts with most of the success cases. On the other hand, in general there are people who think that Brazil has attracted too much attention and that the prices and companies’ valuations there have grown far too much. In this case, the first thing they do is look out for other countries. Also, especially for Private Equity, but in general as well, Mexico is currently a trend. Colombia is still fashionable, it’s been some years: we hosted a small forum in Medellín in Novemeber and I believe Colombia is still in a very early stage for this kind of investments, but the talent in there is excellent and it is being acknowledged around the world. In my point of view it is still soon for an international investor to invest in Colombia, but that can change really fast. Finally, Chile: what they’re doing in there with Startup Chile and CORFO is really drawing lots of attention. It’s true that it’s a smaller market, but tipically the companies are not designed specifically for the Chilean market, as I’ve seen a lot of entrepreneurs from Startup Chile that are stepping out to launch their products in Brazil, where the consumers’ market is.
Profile: Cate Ambrose joined LAVCA (Latin American Private Equity & Venture Capital Association) as Executive Director in 2007. LAVCA is a non-profit organization that aims to support the growth of Private Equity and Venture Capital in Latin America and the Caribbean. Ms. Ambrose speaks and writes regularly about a variety of topics related to public policies and private investments in Latin America and is a regular commentator at CNN en Español. Ms. Ambrose is also special advisor in the board of AMEXCAP (the Mexican Association of Private Equity and Venture Capital).