1Mby1M Virtual Accelerator Investor Forum: With Rodrigo Baer of Redpoint Ventures (Part 4)

Sramana Mitra: Talk a little bit about what’s in the pipeline. What’s exciting in your portfolio?

Rodrigo Baer: One is a mid-stage company that just raised a $50 million round. They take small merchants and put them under one umbrella to sell into a large marketplace. From the marketplace’s perspective, it’s one store. It’s normally the largest store in all the marketplaces with a very high level of service.

They have 8,000 merchants that fullfil those orders and deliver. From the merchant’s perspective, I’m simplifying the hassle of having to run the systems on Amazon and on Target and Walmart.

Sramana Mitra: This particular company is positioned as a power seller in all of these marketplaces. They have great reviews. As a result, they have better SEO. They are like an intermediary that is consolidating 8,000 merchants. 

Rodrigo Baer: Yes. They run extensive analyses. They advise the merchants on how to better sell in the marketplace.

Sramana Mitra: It’s very cool.

Rodrigo Baer: It’s very complex. Another one places a layer of workflow management in the ERP. They give it to the business person. The business person can create their own workflow. Whatever you want to create that’s repetitive, you can do it in 15 minutes. You get all the metrics. You get all the data recorded. It’s a pure SaaS company and has clients in 192 countries.

80% of all financial transactions in the world still run on COBOL. Financial institutions spend $272 billion a year maintaining the legacy. What this company is doing is redesigning those core solutions on a modern platform. It’s the part you never see in the transaction.

Sramana Mitra: The customer are banks?

Rodrigo Baer: Banks. The system is so robust and flexible that you need a lot of coding power on the other side. We’ve seen large banks starting to use this.

Sramana Mitra: How many startups are operating in Brazil right now?

Rodrigo Baer: I’ve got no idea. We hear numbers between five and ten. We look at 2,300 companies a year. I would venture that it’s way more than 5,000 but unsure that it’s a lot more than 10,000.

Sramana Mitra: What about Latin America?

Rodrigo Baer: The rest of Latin America is much earlier in the process. The development in Brazil is a consequence of 2010 to 2012 where we had three or four larger funds created. That enabled us to create companies at a faster pace.

We haven’t seen that yet in Latin America. Argentina has no funds, rather they have very small funds, which puts them in a position that they’re so diversified. They can’t tell the founder to grow as much as they can because they’re not sure of the next check. In Mexico, the funds are smaller. Colombia has no funds.

We’re not at a stage where other markets have enough founders that would justify large funds. Five years down the road, we can see what’s happening in Brazil happen in those markets.

Sramana Mitra: It’s ironic because Argentina produced one of the most successful companies. 

Rodrigo Baer: Yes.

Sramana Mitra: We’ve had others from your part of the world from time to time. It’s good to catch up. We try to keep our finger on the different parts of the world. It’s really wonderful how many ecosystems have progressed. It’s just a matter of time when other parts of Latin America will catch up.

Rodrigo Baer: The problems of the developing markets are much larger. It creates indigenous companies that can have an impact.

Sramana Mitra: The shift also is that the entrepreneurial mindset has started to develop in these emerging economies. I left India in 1989 to come to college in the US. People were not thinking of being entrepreneurs. That was a rare mindset. Thank you for sharing your perspective.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Rodrigo Baer of Redpoint Ventures
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