I had the pleasure of interviewing a managing partner of Redpoint eventures, the first VC fund with partners in Silicon Valley on the ground in Brazil. A longtime entrepreneur turned VC investor, he’s led deals with some of the most successful, high-growth startups in Latin America, and is a tireless champion of building Brazil’s entrepreneurial and venture capital ecosystem.
Jean: Thank you so much for joining us! Can you share your story about how you got into the VC space?
Early on, I worked as a tech entrepreneur and software developer both
in Brazil and in Switzerland. I then served as CEO of Apontador, Brazil’s leading local search and geolocation company. That hands-on experience in driving the business and R&D efforts makes me a better advisor to our portfolio.
From 2001–2003, I pursued my MBA at the Yale School of Management and was really inspired by my professor, David Cromwell — former head of JPMorgan Capital, who passed earlier this year. I think I was the only graduate from program to go into venture capital, but I fell in love with entrepreneurism and helping promising startups succeed.
I returned to Brazil as an investor in 2003 and was appointed as investment principal of Naspers/MIH in charge of Latin America. One of our early investments in Brazil was a 30 percent stake for $422 million in Abril, Latin America’s largest magazine with a goal of modernizing for a new digital age. I personally led the acquisition of Buscapé in 2009, which remains one of most successful exits in Brazil (acquired for $374 million) and led the first round
of financing for Movile.
Jean: What kinds of startups do you typically work with?
Redpoint eventures was the first early-stage Brazilian VC firm with a Silicon Valley connection that focused on identifying and capitalizing on internet investment opportunities in Brazil. That’s still the case today. Our sweet spot is seed and Series A investment rounds, and our portfolio of startups today is focused primarily on fintech, healthtech, edutech, e-commerce and marketplaces, payments and SMB solutions on mobile and SaaS platforms.
We’re also a co-founder of Cubo Itaú, the world’s second largest entrepreneurial hub, based in Vila Olimpia, São Paulo. The Cubo project, which has just quadrupled in size after launching three years ago, has had a tremendous impact in fostering an ecosystem of technology entrepreneurship and speeding its evolution. Cubo’s quickly evolved into a serendipity hub and a place to make connections. It’s similar in feel to Silicon Valley.
Jean: What do you look for in the management team of your investment companies?
Perhaps most importantly, one of the traits we look for is a good indication of resilience. The single most common trait for entrepreneurs is the ability to hang in there when the going gets tough. A common theme we hear from successful founders is: “We didn’t give up, even when everyone said we were crazy.”
We also look for coach-ability. While we’re in business of selling money to grow the value of startups through new innovation and execution. Our differentiation and value-add is to mentor founding teams and help steer them to success. To be successful here, we need to work with founders who listen, pay attention and consider our advice.
Our approach is not to invest in one founder, but to consider the entire founding team as a whole. Given our focus on technology startups, we love to see at least one of the founders having a technical background. Other traits and background we seek will vary based on the sector. For e-commerce companies, we tend to value creativity and marketing prowess more highly, whereas we’d consider an understanding of risk and compliance more highly for a fintech startup.
Jean: Can you share a story of a successful Angel or VC investment? What were some of the highlights?
My proudest accomplishment and most successful investment was raising the initial fund for Redpoint eventures, an early-mover VC startup to till Brazil’s fertile internet opportunities. We were the first Brazilian venture capital fund established in partnership with Silicon Valley to bring the best practices of venture investing developed there over decades to Brazil to help foster its nascent tech entrepreneurship ecosystem.
PSafe, which develops mobile security, performance optimization and privacy apps, is one of our most successful portfolio investments to date. It’s raised more than $86 million and has grown rapidly since launching its first mobile app in 2014. PSafe has 100+ million downloads and 20+ million monthly active users today. It’s one of the rare Brazilian startups to go big in Brazil, and then relocate to the U.S. Today, PSafe’s global headquarters are in San Francisco. It has reached nearly four million active users in the U.S., now its core market of focus.
Jean: What is one piece of advice you would give a startup?
Treat money with respect. When startups succeed, they go through successive rounds and new investors will look at what was done before. Too little money is the #1 reason for a startup to die. Too much money is likely #2. If you raise too much money at too high a valuation just because you can get it, that comes with a lot of pressure to do well and perform. It’s really important to use common sense about how much to raise and then how to best deploy that capital. New rounds typically happen every 18 to 24 months, and it’s always a great feeling when you close a big one. But when you do, the founding team has to grow into the valuation, and it can be a real trap for some startups.
Jean: Do you have a favorite book that made a deep impact on your life? Can you share a story?
One of my favorite books in recent memory is The Hard Thing About Hard Things by Ben Horowitz, cofounder of one of Silicon Valley’s most respected VC firms. We give a copy to every founder in our portfolio. While many people talk about how great it is to start a business, very few our honest about how difficult it is to run one. Horowitz includes lots of war stories in the book with his trademark humor and straight talk that shows the glamour and the reality that confronts business leaders everyday — from firing friends to poaching competitors and knowing the right time to cash in. One notion in the book that really resonates with me is the concept of differences in behavior of a wartime CEO vs. peacetime CEO, and the fact that very few people successfully manage to switch between the two roles.
Jean: What are your “5 Things I Wish Founders Knew Before They Pitched to Me” and why. Please share a story or example for each.
- The first thing I wish they knew is not to expect to walk away from the first meeting with a check. The introduction meeting with us is an opportunity to get us excited about the idea. A lot of founders attempt to close the deal with us all in the first meeting. With us, it’s going to be a process. The goal should be to get us excited about the business concept and potential for a new approach. They should plan to interact with us many times before we decide to invest or not.
- It’s important to plan that first intro meeting with potential investors well and walk into knowing that it’s key to leave time for VCs to ask questions and interact with founders. Many founders simply talk too much. Especially in Brazil, we see many founders build up to a “grand finale” when pitching us. Instead, we advise flipping that approach to conveying what the startup does, why it’s different, and why it’s set up for success during the first ten minutes. From there, it’s vital to back that initial pitch up with details on the team, the market opportunity, the competitive landscape and then leave plenty of room for investors to provide feedback during the conversation. There should be a ping-pong-like cadence.
- Another tactic that works well with us and other VCs is founders who demonstrate knowledge of our firm. That way, it’s much easier to connect and leave a good impression on us. Founders should do their homework and know the history of the firm. They should have some knowledge on how we operate, our portfolio and investment focus and why we should be working together. For instance, I’d advise founders of e-commerce companies to have deep knowledge of my partner Romero Rodrigues’ history as chairman and CEO of Buscapé.
- One thing that makes a big difference to us before a pitch is founders who come to us through an introduction and come to that first meeting with good referrals; especially when we hear from founders we know who put in a good word ahead of the meeting or drop in during meeting. It shows they’re connected to the broader entrepreneurial ecosystem, and this immediately builds trust.
- The entrepreneurs who impress us the most are present in the meeting. They answer our questions clearly and are active listeners. They really pay attention to the conversation. Often times we’ll pose lots of questions, even obvious ones, and it’s important for them not to “boil the ocean” to answer them. Going back to the importance of coachability, we value it a lot when founders pay attention to our feedback and respond back to what we’re most interested in knowing. It’s quite common for us to ask a question, and the founders pitching us decide to answer us with another topic than the one at hand. Those who don’t do this, and participate with us in a lively, back-and-forth conversation during the meeting really stand out. Also — it’s fine to say, “I don’t know. I’ll get back to you on that.” It tends to be much better than trying to come up with the answer during the meeting. It’s a tactic that shows both confidence and honesty.
Jean: Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. :-)
I’d enjoy private conversation and breaking bread with Facebook COO Sheryl Sandberg. She’s inspiring to me for her role in building one of the most valuable internet brands in the world and has served as a role model for female leadership as a book author and founder of Leanin.org. She’s also been resilient in the wake of personal tragedy with the loss of her husband, Dave Goldberg, and has refocused her charitable foundation in his honor. More recently, she’s remained cool under fire after the fallout from Facebook’s scandal tied to Russian interference in the U.S. election process. It’s been a tough time for the company, but her leadership has served the internet giant well.
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Jean: This was really inspiring! Thank you so much for your time.
-Published on September 26 2018