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Redpoint raises $130M fund for Brazil

23 July 2012

(Reuters) July 23, 2012 – Redpoint, the Brazilian venture-capital firm created by Redpoint Ventures and, said it had raised $130M for its inaugural early-stage fund.

The sum, significant for venture capital in Brazil, underscores the region’s increasingly high profile among investors. They see opportunity in a country with a large population, a fast-growing middle class, big growth potential and political stability.

The fund will invest in the mobile, media and cloud-services sectors, and will focus heavily on the Internet, in part because Brazil’s Internet offerings are relatively small given the size and engagement of Internet users in Brazil, said co-founder Mathias Schilling.

Until recently, the country has lacked the capital to build out large numbers of start-ups that harness the Internet, he explained. “It’s a tremendous market opportunity,” Schilling said.

The fund has already made a handful of investments in Brazil, including online travel agency ViajaNet; consumer-Internet platform Grupo Xango, social-media marketing company 55Social; trunk jewelry-show seller Sophie and Juliete; and online retailer Shoes4you.

Many of the businesses imitate similar concepts in the United States, which Brazilians have given the euphemism “tropicalization.”

“The copycat model gets a bad rap,” said Redpoint Founding Partner Jeff Brody. “Many of the most successful businesses in technology imitated another.” He cites Facebook, which built a better social network than earlier efforts including Friendster and MySpace.

The fund’s limited-partner investors are almost entirely existing investors in Redpoint and, formerly known as BV Capital. Run by Brazilian-based founding partners Yann de Vries and Anderson Thees, the fund will make around 15-20 investments over its lifespan, Brody said.

U.S. venture firms investing in Brazil include Accel Partners, whose partner Kevin Efrusy spearheaded investments in several Brazilian companies over the last year or so.

Benchmark Capital has invested in Peixe Urbano, a Groupon-style deals site. Insight Venture Partners has invested in several Brazilian companies, including discount-travel site Hotel Urbano and, alongside Accel, in handcrafted-goods marketplace Elo7.

While the Brazilian regulatory environment can prove tough for start-ups, those that manage to cut through the bureaucracy sometimes find their home base a big advantage in recruiting.

Grupo Xango, for example, was able to hire a small group of engineers from Siberia. The team had few misgivings about ditching its snowy homeland for Rio de Janeiro, Brody said.