Scaling Start-up Communities: How Does the Culture of Venture Capital Differ—in Brazil (& Other Emerging Countries) vs. the USA?

Roberto Alvarez journalist to the Brazilian media company Startupi (the Tech Crunch of Brazil) interviewed me (1st 30 seconds in Portuguese, then English) in August at Singularity University (SU). Roberto is one of the 80 GSP13 fellows who learned about exponential technologies and their application to create a team project which solves one of the ten global challenges; I mentored him and many of his other GSP13 teammates this past summer on raising capital & other needs for their ventures. Naturally I am honored and humbled to be a member of the SU community.

Roberto and I talked about multiple subjects including:

  1. What is it that separates the culture of venture capital (VC) in the emerging markets from venture capital in the USA?
  2. What are the risks which investors in the emerging markets ‘buy’ and those that they ‘return?’ How does this compare to investors’ behavior to risk in the USA?
  3. Is the culture of VC in the USA an asset and competitive advantage which American investors can exploit to find and finance the next Gamechanging start-ups from Brazil, Nigeria, Malaysia or other emerging countries? Or do investors in these countries have advantages vs. American VC investors?
  4. Are the entrepreneurial cultures of Israel and India standards which others should follow?
  5. Which business models have the best prospects of raising capital from wealth in the emerging markets?  Is there really any reason why entrepreneurs from developing nations should attempt to raise money from US investors since plenty of money exists in developing countries?
  6. What actions can stakeholders take to impact the venture capital ecosystem and its culture—to shape not only entrepreneurs actions in the market—but the behavior of investors too?
  7. Smart Capital:  What Do You Need—Really?

Apparently the discussion resonated with entrepreneurs from Brazil.  Carlos Estigarribia wrote me “We just watched an interview you (Tom Nastas) gave to Brazilian blog Startupi, and we can relate a lot with what was said.

Our company falls in the ‘disruptive idea from an emerging country’ bucket that local (Brazilian) VC’s don’t invest due to the big risk involved and the lack of ‘american benchmark’ to clone the business model from. We’ve getting great feedback from US and European VC’s but unfortunately not many Brazilian funds showed interest.

I know you currently don’t have any investment in Brazil, but if you want to take a look at our company there’s a 2 minute video that shows the technology, in one sentence what we have; a ‘NFC-like technology that enables proximity based communications on any device.’ The product is live, we’ve got the first paying clients already.

Thanks for your time

Best Regards,

Carlos Estigarribia”

I feel the pain, frustration yet excitement in Carlos.  I’ve seen, heard and experienced such feelings too, doing VC around the world these past 25 years

As I wrote in ‘Engage Risk as Your Friend, not a Foe—to Impact Investor DNA—& Raise $ for Your Venture,’ we have much to do—to impact not only the behavior of entrepreneurs toward risk—but the behavior of my investor colleagues too.

Comments, questions are welcome.

Be well & be lucky.

Tom Nastas

 

 

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