Proximity is King

Yesterday I went to BR New Tech meet up. Great event hosted by Microsoft for 200 entrepreneurs and investors.   TKS MSFT!

Aside from the quality of the entrepreneurs, what stroke me was how little the industry really knows about itself. Very few people in that room could claim that they knew what the others were working on and that is a major setback for the community.

3 aspects drive this behaviour

1. Personalization of the company. Brazilians grew up thinking of companies that belong to someone. For that reason, the ideas that generate those companies also belong. There is very limited willingness to bring on partners for new ventures, be they a VC/Angel or another entrepreneur.

This clearly slows down the company’s development as one person will have to master all aspects of the business, whereas you could just bring someone with that specific expertise and get moving much sooner and at a much aster rate. As they are not looking for partners/investors/ideas, entrepreneurs do not share their ideas and, therefore, cannot be helped.

One of the most interesting companies I’m looking at right now, did exactly the opposite. The entrepreneur walked in with an idea and we didn’t like the business plan based on a few monetization problems.  He went home and 30 days latter came back with completely different twist that made much more sense and we are moving forward. 2 things I like about it. 1 an entrepreneur that listens and will let me help develop the company; 2 an entrepreneur that is resilient and will pivot the company if needed.

Entrepreneurs need to understand that they will hardly get it right the first time. So get your idea in front of as many people as possible so you gather feedback and improve it.  This leads me to my next point

2. No industry references. As we are in the industry’s infancy, we do not have the brokers and the success cases mapped out. That makes it really difficult to know who you  should put your idea in front off.

This problem is much harder to solve as it will take a cycle of successes for the real brokers to become known. We did see a good start in the room yesterday with the angel investors but more will be needed. We will know that Brazil matured as a VC market when we have specialized though leaders rather than broad ones.

3. Geographic dispersion. There is no real meeting place for the community to meet and share Ideas. We do not have a  Sand hill road or an RTP where we congregate the community and can walk down the street and meet people who will help.

People underestimate how much value can be created over a simple lunch or coffee. Entrepreneurs can meet partners and investors, investors can exchange ideas and find do-investors and employees can can have the next bog idea.

When Warehouse had to choose its office we made an explicit choice to move away from Faria Lima, PE/IB dominated area of the city,  into Vila Leopoldina.

Vila Leoppoldina feels a lot like the Meat Packing district as it is an industrial area that is quickly converting to residential/office space. Furthermore, it is side by  side with Sao Paulo’s leading university. We took a long gamble that  Vila Leopoldina might actually become Brazil’s version of sand hill road but it is still too early to tell. Lets work for it.

If we can increase the proximity of the entrepreneurs, VCs, Industry References and Ideas, we will succeed in creating a robust industry.


Author: Rodrigo

A VC trying to help build up the industry Principal @ Redpoint eventures doing Seed and Series A investments in Brazil

2 thoughts on “Proximity is King”

  1. Nice Article Rodrigo,

    I also think the risk taking culture needs to be promoted within Brazil
    The current generation is being influenced by stories of facebook glamour but people need to also know its not always smooth sailing in a start up and its ok to fail and pivot your business model

    I like the idea of companies sharing what they are doing and getting feedback – but a few entrepreneurs i have come across here are very secretive with their business ideas and plans – Transparency and openess is important area

    PS- You should install Disqus commenting on your blog – it makes it easier to comment via twitter and facebook

  2. Sirach, I tried but seems like disqus is for paid wordpress users only. I’ll hold until I get more people reading and commenting in order to make an investiment… after all, all VCs want to see some traction before they put money to workd 😉 hehehe

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