5 Things I Need to See Before Making A VC Investment: Anderson Thees, Managing Partner at Redpoint eventures
“First, and foremost, it’s about the team: how their individual backgrounds mesh together to create more synergy, how resilient they are, and what they’ve accomplished before. Importantly, we also gauge their ability and openness to listen, accept feedback and adapt.”
I had the great pleasure to speak with Anderson Thees. Anderson is a founding 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 the entrepreneurial and venture capital ecosystem in Brazil.
Thank you so much for joining us! What is your “backstory”?
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. My technical prowess and ability to say that I’ve “been there, done that” (a trait my partners share) serves our founding teams well. We can relate to the entrepreneur’s reality and their roller-coaster rides, especially when the proverbial “stuff” hits the fan. It also equips us to have tough conversations.
I returned to Brazil as an investor in 2003, and was appointed as investment principal of Naspers/MIH in charge of Latin America. 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.
Can you share a story of your most successful Angel or VC investment? What was its lesson?
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 quickly reached more than half a million active users in the U.S., now its core market of focus, and is on track to reach more than 10 million active users there by 2018.
Can you share a story of an angel or VC funding failure of yours? What was its lesson?
One of our earlier portfolio companies, Shoes4You, ended up shutting down because it was a cultural misfit for Brazil. It was modeled as a copycat of Shoe Dazzle, a subscription-based online service based in California, that debuts a selection of shoes, handbags and jewelry each month. While some customers liked the model and they delivered a great selection at an attractive price, it never reached critical mass because it deprived Brazilian women of a ritual they loved: to shop with friends in an experiential showroom. To celebrate by buying shoes, or if sad, buy shoes.
The business lesson here is just because a company is successful in one region doesn’t mean that a copycat model will work in another place with different cultural values.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn?
Early on, Resultados Digitais approached us for an investment. They asked for a Series A investment and we offered a seed round. Another fund offered something in the middle and succeeded. Later, we participated as the lead investor in the Series B round.
RD is now one of most successful, fastest-growing startups in our portfolio. Its mission is to help SMEs create a predictable, scalable growth machine using inbound marketing. When the founders first approached us, the company had less than 50 customers, but by time we committed to the Series-B round its customer base had grown more than ten-fold. RD now has more than 10,000 customers and just hosted its RD Summit, which has become the largest marketing event in Latin America.
I guess the lesson is the constant need to evaluate, recognize and jump onboard with the most promising startups and founders.
Which person or which company do you most admire and why?
One of the business world’s biggest mysteries is the true identity of “Satoshi Nakamoto,” the computer programmer who invented the digital currency bitcoin. That pseudonym could represent a man, a woman, or even a group of people. Last year, Australian entrepreneur Craig Wright claimed he was the shadowy creator of bitcoin with some credible evidence, but there’s still uncertainty about the true identity of its creator. Nakamoto is believed to possess about five percent of total bitcoins. That’s now worth billions of dollars and it continues to grow at a staggering rate. Whomever created it solved a longtime, difficult-to-crack math problem and she, he or they have become almost unimaginably rich, and created an entirely modern currency that could change the world. I’m a geek at heart, and I’d love to know who Nakamoto is and hear the back story of it all.
How have you used your success to bring goodness to the world?
Everything we do here at Redpoint eventures brings value to Brazil — from many of the investments we’ve made over five years to our strategic focus on improving the tech entrepreneurship ecosystem. For example: Creditas is helping to provide more affordable credit to Brazil. Viajanet has made it possible for many Brazilians to fly on a plane for first time. Other companies in our portfolio make it possible for Brazilians to buy insurance, or provide rewards to low-income people, or help university students be more effective with their studies.
Part of our mission from day one was to build a leading VC firm that contributed to a healthy, entrepreneurial ecosystem, and it’s been part of our approach to make investments in promising startups in the not-for-profit sector and those improving efficiencies in the country. It’s why we’re co-founders of Cubo, which will soon be the largest entrepreneurial hub in Latin America with its expansion next year with 210 residents and 1,250 people working there. Since 2015, the startups that operate in Cubo currently have generated more than 650 new jobs in Brazil. Our goal with Cubo was to create a center of gravity for Brazilian entrepreneurism and mentorship, and to create an opportunity for Silicon Valley-like synchronicity.
What are your “5 things I need to see before making a VC investment” and why?
1. First and foremost, it’s about the team
By that, I mean how complete team the team is, how their individual backgrounds mesh together to create more synergy, how resilient they are, and what they’ve accomplished before. Importantly, we also gauge their ability and openness to listen, accept feedback and adapt. For example, Cortex, a data insights platform, has been changing the business as they go and have really been able to adapt and listen to us and the market. The company has doubled its revenues this year and become very well recognized for its services and software.
2. Understanding of industry and market
A founding teams’ knowledge of the industry and market they’re attacking is critical to their success, and it’s one of the key points of evaluation for us to choose the “winning horse” to bet on. For example, one of the key reasons we invested in Minutos Seguros, the leading online insurance broker in Brazil, instead of the 13 other companies we considered was a solid understanding of the industry. Marcelo Blay, the company’s founder and CEO, has more than 20 years of experience in the industry. This, in part, has led to Minutos Seguros’ ability to pull ahead of the pack and bring more enticing offerings to market the fastest.
3. Size of the market
Certainly, the overall market size and whether there’s a big opportunity to tap is at the top of our decision criteria list. We spend a lot of time considering if market size is large enough to enable significant, fast expansion. For example, with Minutos Seguros, only about a third of entire cars in Brazil were insured when we first funded them. Gympass, another portfolio company, is growing very rapidly around globe with its subscription-based membership model that offers people unlimited access and flexibility with workouts in gyms of their choosing. The idea has caught on quickly, and Gympass now provides its members with access to more than 25,000 gyms around the world.
4. The problem entrepreneur is solving
In line with market size, a related criterion is how difficult and important the problem being solved is. For example, Creditas CEO and Founder Sergio Furio saw a massive, untapped opportunity for extending personal loans to Brazilians who own homes and cars, but aren’t using them as collateral. With Creditas’ approach, which is more common in other mature markets, it’s been able to offer much more affordable loans. Brazilians typically pay on average eight to nine times what they should have because loans aren’t secured. Creditas has grown incredibly fast because the problem they’re solving really matters and makes an impact on individuals as well as Brazil’s overall economy.
Passion is a vital aspect of what we need to see before committing to an investment. Without passion, it’s unlikely that entrepreneurs will succeed. It takes a lot of energy and resilience to be a startup founder. Passion keeps them going. For example, Marcelo Blay at Minutos Seguros was passionate about reinventing the broker side of insurance because his grandfather was an industry pioneer. Tiago Dalvi, CEO and founder of Olist, is passionate about helping small entrepreneurs succeed online. His original startup Solidarium, a Brazilian version of an Etsy marketplace, didn’t succeed, but his passion for helping craft people and small business owners gain traction led him to found Olist to democratize access to Brazil’s largest marketplaces.
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 U.S. whom you would love to have a private breakfast or lunch with, and why? He or she might see this.
I would pick Elon Musk because of his vision, passion, and seemingly endless pursuit to reinvent our world and change humanity. I’ve been fascinated with his spunk, entrepreneurial journey and success — from Tesla, to SpaceX, SolarCity and The Boring Company to his desire to establish a human colony on Mars. A reporter once asked him about why he founded SpaceX and wasn’t he busy enough with Tesla. His reply: “It’s not rocket science.” I think a private breakfast or lunch with Elon Musk would be the meeting of a lifetime.
This was really meaningful! Thank you so much for your time.