Fabrice Grinda, Internet Entrepreneur, angel investor,Co-CEO, OLX “The Trials and Tribulations of Angel Investing in Brazil, Russia and around the world!”
Has made mistakes with everything…has made them all. So here’s some tips about not making them!
Brazil has many successful internet companies; there is a huge business ecosystem. Brazil is growing fast, 7.5% in 2010, largest ecommerce market in LA. Russia has a same thing, amazing internet economy. Is the largest internet population in EU.
But globalisation is fragile, few people live, go to college, experience other countries. There are barriers to trade and travel. And to investment.
After he sold his last company for $80m, made a lot of money. But he lost $6m in the next round of investments And made a lot of mistakes in his angel investments.
Look at ecommerce. You have suppliers, shipping, payment services etc, low risk in US. In Russia, there’s no XML feed, no idea what they have, there is no real shipping activity, It’s COD for payment. You need warehouses, inventory, delivery people steal product, or the cash and the product. So he build courier service…no losses, but only delivers 2 a day. So they removed the second seats and it went up to 5 a day – the delivery people were doing taxi service. Made it impossible to pick up people, then 10 a day. They had to understand the local nuances.
In Brazil, things work with delivery and services etc, but you get sued a lot. Very litigious. Lots of things can go wrong like that.
He lost of first 6 companies., So he decided to change his model. He started making more investment, 7 in 08, 9 on 09, 22 in 10, 35 in 11 so far. The more investments, the more chance of success. Narrowed down on what he actually invest in. It is about 1 in 20 projects he invests in. They only invest in consumer facing companies, in certain geographies, where it fits expertise. Innovation in US, proven models in other areas.
Has 3 buckets of investments. Mostly small investments. Up to 4 projects a year, advise and accompany projects. Full screening, actively involved. One a year, partnership, get really involved. They take a concept that they have identified and get the partners in. They take one hour to assess – do they like the team, the pitch, the product and the deal terms
Lessons learnt: quality of time is more than quantity. They stick to investment principes, have good diversity. They need to be lucky occasional. They need to be patient, exits can take a long time. And most exits are less than $30m