Boosting Emerging-Market Entrepreneurs

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Attracting Big-Name VC

It's perhaps not surprising that Endeavor companies have started attracting big-name venture capital investors who hadn't yet looked to these emerging markets in search of deals. Silicon Valley venture firm Draper Fisher Jurvetson has started looking at Brazil for deals. Beim says they wouldn't have looked to Brazil if it wasn't for Endeavor entrepreneurs making a splash there.

Deals from U.S. investors can bring better terms compared to what Endeavor entrepreneurs can find in their own countries. A big part of the mentorship process is teaching these entrepreneurs the kinds of financing that can be good for the company, and also what will take away their equity share and discourage growth.

"Most Silicon Valley VCs will say you should give 30% to 40% in entrepreneurial equity and a pool of stock options to attract new talent, but you are lucky if you get 5% in these deals" in developing countries, says Rottenberg (see BusinessWeek.com, 5/28/07, "Extreme Investing: Inside Colombia").

Passing On The Benefits

Endeavor's entrepreneurs might have been successful without its help but participants say their businesses grew quickly because of it. Altszul, for one, says he could never have made contact with the Bolivian businessman who became CORE's angel investor were it not for Endeavor. Nor could he have found the management team in Boston to take his company to the next level. CORE, which has been growing by 100% a year for the last four years, has seen its revenues jump from $500,000 in 2000 to around $10 million in 2006. It now has 40 employees in Boston and 100 programmers and researchers in Buenos Aires.

To pass on the benefits he accrued from Endeavor, Altszul is doing something Endeavor can't do without giving up its non-profit status. He's starting Aconcagua Ventures, one of Argentina's first venture capital firms, to provide the same services he's gotten from Endeavor, and to popularize fair-equity investing in Argentina. Altszul says that by investing in companies similar to what CORE was in its early days, he can create a self-sustaining, high-tech sector in his home country.

By giving companies access to good terms on equity investments, Altszul says he hopes to continue a virtuous cycle that will bring more jobs, wealth, and international recognition to entrepreneurs in developing countries such as his.

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Jeffrey Gangemi is a freelance writer based in Mendoza, Argentina.