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How Hard Is It For A US VC To Fund A Company In Brazil?

Question: How hard is for USA VCs fund an abroad startup? e.g. Brazil. There are not so many VCs here, so I would like apply for investors in the USA. Have you seen that before?

US-based VCs tend to fall into two categories – those who don’t do any deals outside the US (other than Canada) and those who do. So before you start talking to VCs, make sure you which category they fall into. For example, our firm – Foundry Group – doesn’t invest outside the US while our friends at Union Square Ventures do, although their portfolio is concentrated in Europe.

Assuming a firm invests outside the US, you should be able to easily check from their portfolio whether they’ve invested in your country (in this case, Brazil). If they haven’t, it’s a long shot that they will. If they have, they are likely a good target for you.

As US VC firms have expanded to Europe and Asia (especially China and India), they have built local teams in the countries they are expanding to. In some cases, firms like FIR Capital are affiliated with a VC network (in this case, the DFJ Network).

I don’t know anything about the Brazilian entrepreneur or VC market although a quick Google search for VCs in Brazil turns up some good data about firms both in Brazil as well as US firms that have invested in Brazil. Not surprisingly, there’s also some data on Quora. And in my exploration, I found Rodrigo Baer, a partner at Warehouse Investimentos in São Paulo, who is a VC blogger (and has been added to our VC Blogger sidebar). So there is plenty of info out there about VC firms investing in Brazil.

The basic message is “know who you are talking to and where they like to invest.”

August 20th, 2011 by     Categories: Uncategorized    
  • Eric Willis

    Hello Brad,

    Thanks for the interesting post. I am here in Sao Paulo. There has been a recent and rapid surge of U.S. VC activity here Brazil over the last several months. I know multiple founders located here in Brazil that have successfully closed a round or in the process of closing a round with a U.S. based VC firm. The average size of the rounds and valuations has increased significantly as well. Redpoint Ventured actually held a couple of events here this week. Lots of entrepreneurs from all over the world are migrating here because the market is so large and still growing quickly. A large eco-system does not exist here like in some pockets in the U.S., but it is rapidly growing…. and seems very promising.

    Cheers,

    Eric Willis

    • http://www.feld.com bfeld

      Super. If you know of other firms and or companies that are investing in Brazil toss ‘em up here in a comment for all to see!

      • http://www.savelocal.com.br Eric Willis

        Accel Partners has done a couple of large deals in Brazil. Arpex Capital has an office in Sao Paulo . Initial Capital is now doing seed deals in Brazil. Redpoint lead a large round in Viajanet a couple months ago. 

        • http://www.savelocal.com.br Eric Willis

          Also Carlos Pires from Atomico is really active in Brazil. In terms of the actual Brazilian VC community…..not foreign VCs… here are few 

          Monashees Capital
          Performa Investimentos
          Fundo Criatec
          Gavea Angels
          Base Capital Partners
          Inseed Investimentos
          Astella Investimentos
          Real Capital Partners
          Borse Investimentos

          There are some accelerator programs like Startup Farm, Startup Rio, Aceleradora.net 

          • Akua Ajayi Tafari Walters

            The Real Question i would Love answered is why a lot of US and international based VCs dont look at companies from the Caribbean, my company ( Ultreya Logistics) has been trying for months to attract the attention of VCs from all over the world to take a look at our product (SmartTaxi), why do you think that is @bfeld:disqus @tedmrogers:disqus @ryan_mcintyre:disqus @jasonmendelson:disqus @commkitchadmin:disqus

          • jasonmendelson

            No idea. We don’t invest in any foreign companies, so we aren’t good folks to tell you why one area might be biased over another. With plenty of U.S. deal flow to keep us busy, we chose to stick solely to the country that we understand laws, currency, etc. Nothing against any particular country.

  • Naval

    Here’s one (self selected) directory:
    http://angel.co/brazil/investors

  • http://www.vc-brazil.com/ vcbrazil

    Brad — very psyched to see this question and your answer to it, which is spot on.

    Some more color: two years ago growth capital was difficult to find in Brazil, seed capital was almost impossible.  Now, growth capital for quality companies is plentiful and seed capital can be found with a little effort, both from Brazilian investors and a few American sources.  The ecosystem is evolving rapidly.

    Fyi, most US investors (and some Brazilian) will want to reconstitute the Brazilian entity as a Delaware corporation and invest there — a bit of a hassle but doable.  More Brazilian startups are preempting the issue and forming as a US entity from the beginning.

    ArpexCapital (my firm) will go from napkin sketch to large Series A (or even beyond if it makes sense).  We are entrepreneurs that have hit for the cycle in the US and Brazil and we get deeply involved in helping early-stage companies.

    For any entrepreneurs (or investors) out there looking for a port in the storm, poke around my (shamefully dormant) blog at vc-brazil.com or shoot me an email at trogers at arpexcapital dot com dot br.

    Last point — the World Bank rates Brazil 127th out of 183 economies for ease of doing business.  Some here chaff at that ranking but, regardless, “Brazil is not for amateurs” http://www.nytimes.com/2011/07/05/opinion/05iht-edcohen05.html. 

    For those who want to participate in the ecosystem here, it’s good to keep that in mind.

    Abraços,

    Ted

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