Building Billion-Dollar Firms in Latin America
WHY YOU SHOULD CARE
Latin America’s fast-growing middle class makes for a great investment opportunity, if you’re smart enough to see it and skilled enough to manage it.
By Wesley Tomaselli
Wenyi Cai goes to plop down in a chair in a cramped, bare-bones office with white walls, sticky notes and black scuff marks. I pin her at about 29, but to be polite, I pass over the question. Plus, she’s just jumped off a call with an investor that she admits was stressful. “Do you want this one?” I ask, hastily pushing the more comfy chair toward her. “No, it’s fine, whatever,” she shoots back. “Let’s do this. So, I’ve got like … what? Fifteen minutes.”
Cai, who is actually 30, is in a rush because she and her four other partners are out to build businesses through venture capital, but not Silicon Valley Cool. Her Colombia firm, Polymath Ventures, is all at the unglamorous end of the business, searching for ways to build scalable companies and services in underserved markets for Latin America’s emerging middle class. After our chat, Cai bolts from the two stories of tight office space atop a motorbike garage in a hardscrabble neighborhood in Colombia’s capital of Bogota. I tag along. Her next meeting? At an operations center of the firm’s first venture: a taxi garage. Cai says Polymath aims for every venture to succeed. “Our threshold is: If we do not think we can build a billion-dollar business in a 15- to 20-year time frame, we don’t do it,” she tells OZY.
Polymath tries to find big, deep, unmet human needs. “You don’t want to build vitamin supplements; you want to build painkillers,” Cai says.
It’s high risk. Patrick McGinnis, managing partner at Latin America specialists Dirigo Advisors, says that success will take “a thoughtful combination of strong execution, effective use of capital and flexibility.” And patient investors. Adds Polymath partner Ash Kirvan, “There’s not a huge amount of early-stage risk capital in Latin America,” so Polymath scouts the globe for investors. Private equity and venture capital firms committed US$8.9 billion through 233 investments in Latin America in 2013, a six-year high and 13 percent more than 2012, according to the Latin American Private Equity and Venture Capital Association.
Cai wears black leggings and a collarless long-sleeve shirt patterned in orange flowers, her round face framed by long jet-black hair. No makeup. More business chill than business casual. She responds to nearly every question with one of her own. Cai dreamed up Polymath in 2012 with her partner María José González as “a company builder,” where Polymath personnel work inside the new companies with regular staff for long stretches. “Is the end about the money?” she asks rhetorically. No. For her the focus is organizations that embody values shared by people who do important things. Polymath’s game is based on an idea-generation process it calls Seed that tries to find big, deep, unmet human needs. “You don’t want to build vitamin supplements; you want to build painkillers,” she says.
With an initial investment of $600,000, the group raised an additional $4 million to build five businesses worth $25 million in a little less than two years, says Cai. She’s versatile. “Wenyi is one of these people who can jump into just about any conversation and play — and succeed most of the time,” says Kevin McElroy, a designer who left his New York City consultancy in early 2013 to come aboard Polymath as a partner.
I like it more raw.
— Weyni Cai
The firm’s first venture, Táximo, is a transportation company that aims to create a trusted brand by eliminating the dangers of taking a taxi in Bogotá and other Latin American cities, where passengers face the risk of robbery and assault. It’s beefing up the booking, maintenance and hiring processes. Polymath also built a financial services company called Aflore in a Latin America where around 65 percent of people are unbanked. Polymath identified a middle-class demographic that’s “creditworthy but disenfranchised,” unable to get access to credit for home improvement, education or buying a motorcycle. One of its latest is Kidu, a fee-based after-school education program for children ages 6-12. Táximo takes in $7 million annually operating in four cities around Colombia. By the end of the year, it will move into Lima, Peru, and is planning for Mexico City next year.
Cai says she got hooked trying to figure out smart people: “What inspires them?” Her conclusion? Put people from different disciplines together to solve problems. Before Polymath, Cai helped lead the startup of the e-commerce platform Milo.com, which sold to eBay in 2010 for $75 million. Then she chose the developing world over Silicon Valley. She loved the early-career adventure of working in the Middle East, visiting gas stations to estimate throughput by talking to station attendants. “I got thrown out of a few, and there was one person in Muscat [Oman] who claimed that I was CIA,” she says. “I like it more raw.”
Her family moved from her native China to the U.S. when she was young, but she loved reading ancient Chinese military history, like the classic Romance of the Three Kingdoms, where she says she learned a lesson: “It’s not about winning or losing wars. It’s about what kind of people you’re able to bring on to your organization.”
Indeed, she repeatedly insists that Polymath is a team. It will have to be a strong one to maintain focus over 15 to 20 years, to make a billion dollars out of a taxi business.
Photography by Juan Felipe Rubio for OZY