Dot coms discover another Eden

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Dot coms discover another Eden

Latin America has the world's fastest-growing population of internet users. Growing nearly as fast are the internet companies feeding that demand and, on the back of that, venture capital and private equity firms trying to get in on the ground floor. Mark Piper reports

Foremost among the attractions is the idea that investors that feel they missed the dot com boat in the US can still get in at the beginning in Latin America. The mantra is that Latin America now is where the US was three years ago ­ some versions reckon it's four.

Chase Capital Partners was in at the beginning. A would-be Latin portal called StarMedia was looking for funding in 1997. "It was extremely difficult," recalls Steve Heller, StarMedia's CFO. "There was no such thing as the Latin internet in the minds of the international investment community. There was no capital available."

It has reached the point now where early-stage start-ups would rather get local angel financing than international venture capital. But three years ago, Latin America's moneyed classes were generally the most risk-averse in the world. Most of them were happy with a Citibank money-market account in New York or Panama.

When Heller did find prospective investors, he was generally given short shrift. "With the Latin investors," he says, "it was: 'There is no Latin internet, why would I invest in it?'"

Eventually, Heller found a possibility in New York. His general problem had been that Latin funds didn't feel comfortable with dot coms, and the dot com world knew nothing of Latin America.

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