Venture capitalist Alex Mendez was born in Argentina. His father was a diplomat, not a rich man, and as his son was graduating from high school, gave him enough money for his first year at Stanford University.
He lived in a garage with an Argentinian family and worked to pay the rest of his way, including by installing saunas and working in the cafeteria at Stanford.
"If you see a sauna around here in a club, it might be my handwork, bolting all that together," said Mendez, who was an executive at Stratacom and Cisco, and is now a venture capitalist whose firm, Storm Ventures, has about $800 million in assets under management.
Mendez's beginning probably gave him some sympathy for immigrant entrepreneurs, which explains something about why he's working on giving some a leg up in Silicon Valley now. That, and the fact that the drive some immigrants have seems to translate to business success: Some 40% of Fortune 500 companies were started by immigrants or their children.
Mendez is one of a group of executives and financiers forming a small firm, PuenteLabs, that they hope serves as a bridge for entrepreneurs in Latin America. (Puente means bridge in Spanish.) PuenteLabs is one more example of a growing worldwide class of entrepreneurs and investors who are working across national boundaries to invest in and encourage innovation.
PuenteLabs aims to have 6-12 startup entrepreneurs as part of the Labs at any given time. The Labs will offer entrepreneurs enough money to relocate executives to shared office space in San Francisco for six months or so, help them find investors and, more fundamentally, get plugged into the Silicon Valley network, said two of the men involved in the project.
"There's basically a valley of death in Latin America after the startup phase," Mendez said. I've heard that before, even from entrepreneurs in the United States who struggle to get the A round of funding. But it's much more pronounced in markets like Latin America or the Middle East. Growth markets lack the ecosystem and the mindset that makes Silicon Valley and to a lesser extent Boston and New York, special. There are thinkers, investors, bankers, and lawyers -- just about everything an entrepreneur needs.
"We would expect them to grow both in the US and Latin America primarily dictated by the needs of the business, but always having a team leadership footprint in Silicon Valley," said Mendez by email.
The approach has been used before, by, for instance, Upwest Labs, which helps Israeli entrepreneurs. But the group behind PuenteLabs, which also includes board members Ariel Arrieta of NXTP Labs and Santiago Subotovsky of Emergence Capital Partners, says that the length of time and the location -- in the heart of San Francisco -- will especially help entrepreneurs find investors.
"VCs are afraid of the unknown. This will take some of the friction out of decision-making, if the companies are here. Sometimes," Mendez added. "I'll even turn down a company in LA versus Silicon Valley. Do I really want to go to LA to have meetings?"
The Lab will first focus on Brazil, Mexico, Argentina, Colombia, Chile, Uruguay, said Mike Hennessey, a former Oracle executive who is also involved. He is working from a desk in Galvanize SF, an 80,000-square-foot building that also houses
He gave two scenarios for the kinds of deals Puente would offer entrepreneurs.
1. Company X needs to raise $10M in capital and works with us to get prepared for the Series A. PuenteLabs invests in the Series A and owns a small percentage of the round at the same terms as the VC. (Of course, the venture capitalists involved probably control most of the terms at this stage).
2. Company Y works with us at the seed stage and PuenteLabs invests $500k in the company through a syndicate (PuenteLabs, angels, and others) as a convertible note or a priced round. PuenteLabs is the lead on the syndicate and manages the process for the investors and also owns equity in the company. In this case we would charge a small carry to the investment syndicate to cover costs of the syndicate (legal docs, tax prep, etc.)
The selection committee includes Allen Taylor of Endeavor, a New York City-based nonprofit that helps fund and mentor high-impact entrepreneurs worldwide, Antoine Calaco of Valor Capital, Ariel Poler, an angel investor and Esteban Sosnik of Co.lab.
The people involved in Puente Labs may fund individual companies, but the Lab itself won't take equity, Mendez said. Rather, it will get a share of the company's eventual profits.
Mendez said that after helping to establish Storm Ventures, he's free now to do some of the things he simply wants to do -- and helping entrepreneurs in Latin America is one of those, he says.
