Transition marked by the expansion of LAVCA’s Board of Directors to include leaders from Darby Overseas Investments,
CVC International, Aureos Capital, and Latin America Enterprise Fund Managers
September 2, 2005 Washington DC – The Latin American Venture Capital Association’s (LAVCA) Board of Directors has voted to elect David E. Thomas, Managing Director of Intel Capital Latin America, as the Association’s new Chair. Mr. Thomas succeeds Richard Frank, CEO of Darby Overseas Investments, Ltd., who has completed his term as chair.
The vote came at the Association’s quarterly board meeting held on July 27th in Washington, DC. Mr. Thomas’ transition to chair was marked by the election of four new Directors. LAVCA’s new Directors are Bruce Catania of Citigroup Venture Capital International, Eduardo Elejalde of Latin America Enterprise Fund Managers, Julio Lastres of Darby, and Erik Peterson of Aureos Capital.
“I take pride in assuming chairmanship of LAVCA,” said Mr. Thomas. “Intel Capital joined LAVCA because of its demonstrated industry leadership and commitment to its program-driven mission. I look forward to seeing LAVCA to the next level.”
Mr. Thomas, based in Intel Capital’s São Paulo office, has a clear vision for his role as Chair of LAVCA.
“Intel Capital believes that venture capital is key to growing emerging market economies as well as closing the technology gap between nations,” Mr. Thomas said. “A clear priority for me as Chair of LAVCA is to help the association be a voice in the region. We need to demonstrate the importance of venture capital for stimulating entrepreneurship and new company formation. In addition, encouraging legal and regulatory reforms is important to our goal of attracting sustained investment to the region.”
Intel Capital Latin America is one of the region’s largest and most active corporate investors. The firm has actively invested several countries and most notable deals include Yavox, Pulso, Spring Wireless, Neovia, Automatos and Certisign in Brazil, Sonda in Chile, Tralix in Mexico, Sysgold in Colombia, and Exactus in Coast Rica.
Mr. Thomas recently spoke with LAVCA staff to further detail his new role as Chair.
Transcript of Interview
1. What is your vision for the role of LAVCA in building the venture capital and private equity industry in Latin America and the Caribbean?
Latin America is a region with tremendous growth opportunities…and I think the timing is ideal for an organization like LAVCA. There is a great deal of interest in the investment environment in Latin America. I think this stems from the wide range of opportunities that exist in the region coupled with the structural improvements in the investment arena that have been implemented in the last couple of years. There is a lot of energy focused on the development of healthy capital markets, investor rights protection and corporate governance. These are the building blocks – the essential elements – that must be in place to attract significant and sustained private investment activity.
LAVCA is really the association for private equity AND venture capital – and these 2 industries, while both benefit from improvements in the essential elements, are at different levels of maturity and have specific needs. Being an advocate of the essential elements should be the primary focus of the organization (capital markets, investor protection, governance). However, the association should also focus on benchmarking and highlighting the success stories that already exist in the region. This will give potential future investors a better idea of the financial risk/reward tradeoffs that exist in the region.
With respect to venture capital, the area which is more relevant to my role as Managing Director of Intel Capital in the region, there are some key messages that the association can deliver in its advocacy efforts. These are: promotion of entrepreneurial culture through education (entrepreneurship curriculum in the schools), commercialization of intellectual property (incentives for getting ideas into the marketplace), promotion of company formation (reduced taxes and costs associated with creating a company) and development of financing options for the various stages (grant, angel, seed, VC, later stage, etc.) of a company’s life. We have already seen many of these changes underway in the region and the investment arena will only continue to improve in Latin America in the coming months/years.
2. As LAVCA’s chair, how do you hope to lead the association in furthering this vision?
I’m very fortunate to be part of one of the greatest investment organizations in one of the greatest technology companies in the world. For over 35 years, Intel has played a central role in a technology revolution that has changed the world, and Intel Capital has invested in over 1,000 companies in more than 30 countries in a unique combination of technology and venture capital leadership. The company recognizes Intel Capital as one of its key differentiators in the marketplace. In addition, Intel is a big advocate of venture capital and its ability to improve the quality of life, accelerate economies and create jobs. I hope to bring some of this experience and knowledge base to the organization as LAVCA fulfills its underlying mission of supporting private equity and venture capital activity in the region.
I also feel that being local, having a physical presence in Latin America, is another advantage I bring to the association. We have local expertise in these markets, which can only help a regional association.
3. What do you see as key priorities for LAVCA in the next year?
There are a few short-term priorities I see for LAVCA. Firstly, I believe the organization needs to continue as an advocate of change in the essential elements (capital markets, investor protection, governance). The organization should do this by actively engaging with policy makers to encourage change.
I also think it is important for LAVCA to research, compile, and communicate the local success stories. Most of the active investors in the region are members of the association. LAVCA really needs to tap into this network, and with the collective efforts of all of us, start telling the Latin America story.
Another priority that I will encourage the association to focus on is the coordination with local associations and groups. While many of the environmental challenges are similar in the region, the underlying economies, cultures, and business practices are very different. LAVCA should pro-actively engage with the local associations and jointly develop clear roles to ensure that our collective efforts have the most impact.
A good example and starting point is the recent agreement LAVCA announced with ABVCAP, the local Brazilian venture capital and private equity association. We all have a vested interest in seeing that our resources get deployed in the most efficient manner possible.
Lastly, membership-based organizations are only valuable if they deliver value to members. Clearly defining LAVCA’s role with respect to local associations will be critical to the association.
4. How would you characterize the association’s current position within the industry?
The association is still at the reputation building stage. I think the priorities outlined above will continue to solidify the organization’s role in the region. Advocacy, clear role definition (in relation to the local organizations) and the ability to share success stories are big steps forward. In this process, LAVCA will continue to build value for its membership base – which is the ultimate key to success for us.
5. What do you hope to see for the association and the industry during your term as chair?
As I mentioned, I would like to see the organization evolve into a regional voice for positive change with a close working relationships with each of the local associations. In addition, I would like to see the organization develop a reputation as a knowledge base for research, best practices, and sound public policy.
If in the next year we were able to grow the association’s member base, attracting not just established players but also those interested in deploying their capital to the region, develop those relationships with local partner organizations, and establish the association’s reputation as a knowledge base, I would consider it a very successful year.
6. Intel Capital is a recognized leader within the global VC/PE industry. How would you describe Intel Capital’s presence in Latin America and the Caribbean?
Intel Capital is a very active investor throughout the world. We look for financially attractive investment opportunities in pursuit of our strategic interests. We have been investing in the region since 1999 and have many differentiating advantages that we can bring to our portfolio companies. These include but are not limited to: technology collaboration, company building, portfolio company access, global network, and investment knowledge. This is also true for Latin America. In Latin America, I would describe Intel Capital as an established, credible, value-add investor.
We want to encourage the deployment of information technology and the general concept of connectivity. We want the world connected – so that you can access content anytime, anywhere on any device. Intel Capital is searching for companies that will help make this happen.
7. Does Intel Capital Latin America have plans to expand or modify its activities in the region in the future?
No. Intel Capital does not have any plans to modify its activities in the region. Our physical presence will continue to be in São Paulo and Mexico City although we will consider investments anywhere in the region—we will look anywhere that is strategic to us. The focus areas for investment will continue to be: (i) the acceleration of broadband deployment (with an emphasis on WiFi and WiMax); (ii) development of the infrastructure for eBusiness (iii) digital home and acceleration of the transmission of data/content to any device, anywhere, anytime. I do not see these changing in the short-medium term.
Intel Capital has always been very supportive of emerging markets – 40% of our investments last year were made outside the United States, as opposed to 5% a few years ago. More than 50% of the company’s revenues now come from outside of North America. This investment trend outside North America is consistent with the general trend of our core business.
8. What have been a few of Intel Capital Latin America’s lessons learned in the region — what key challenges and incentives exist and how do they affect your activities?
We’ve learned that we need to pro-actively pursue opportunities by approaching companies directly. There are many benefits to professional investment capital that may not be well known in the region, so we need to do more to communicate that we’re here, and be more proactive in generating our own leads. We need to do more to make the entrepreneur aware of both the availability of capital and the investment process.
Another lesson learned is that it takes longer in Latin America. Those that have had the most success in the region have had longer investment horizons, and have maintained a local presence even in times of volatility.
9. One of the key identified challenges many fund managers face within the region is attracting institutional investors. As a strategic corporate investor, this is not necessarily an issue for Intel Capital. How might you guide the association in addressing challenges such as this which do not, on the surface, impact Intel Capital directly?
The most important thing the association can do is collect and communicate the region’s substantial success stories, as I mentioned before, as well as the building blocks that have been established in the region in the past few years, which foreign investors don’t necessarily find in other emerging markets. These building blocks — the development of healthy capital markets, investor rights protection and corporate governance — will only improve the investment arena.
About Intel Capital
Intel Capital, Intel’s venture investment program, focuses on making minority equity investments to grow the Internet economy in support of Intel’s strategic interests. Intel Capital invests in hardware, software and services companies in several market segments, including computing, networking, and wireless communications. Intel Capital has invested more than US$4 billion in approximately 1,000 companies in more than 30 countries since 1991. Since its inception, about 160 portfolio companies have been acquired and another 150 have gone public on various exchanges around the world. Intel Capital employs investment managers in about 25 countries worldwide. Last year alone, Intel Capital invested more than US$130 million in about 110 deals with approximately 40 percent of its investments made outside the United States. For more information, visit www.intel.com/capital.
The mission of the Latin American Venture Capital Association (LAVCA) is to promote the growth of the venture capital and private equity industry in Latin America and the Caribbean through research, education, networking, best practices, and the advocacy of sound public policy. Founded at private sector initiative in 2002, LAVCA is a not-for-profit trade association serving a core membership of venture capital and private equity fund managers active in the region. For more information about LAVCA, please visit www.lavca.org.