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As VCs edge into Latin America, founders come stateside for an education

It’s a beautiful, quintisentially Silicon Valley sight: a throng of entrepreneurs and investors, paired off with notebooks and wine glasses under the umbrellas and palm trees of Stanford’s business school. The founders are pitching, and the investors asking questions as they do business on a breezy Friday afternoon in Palo Alto. It could be any VC cocktail party in the Valley, except that nearly all of the founders are Spanish-speaking entrepreneurs from Latin America, and they’re here to learn from the startup mecca.

More than 100 entrepreneurs, mainly from Argentina, Mexico, and Brazil, gathered in the Valley Friday to meet with investors and startup mentors. The group was organized through Endeavor, a global non-profit that promotes entrepreneurship by connecting foreign startups with resources and mentors in their home countries. While Endeavor has been around since 1997, the group’s early focus on Latin American markets makes it particularly valuable as Silicon Valley’s investors are expressing greater interest in that market.

But what were Friday’s founders looking to bring home? Sure, a check from investors would be great. But just as many seemed to be looking for a better understanding of the culture in Silicon Valley that they’re trying to emulate at home.

Dave McClure in Geeks on a Plane.

“What I love about Silicon Valley is that it has an ecosystem ready for everything,” said Juan Manuel Alvarado Bustamante. “You have the ideas and the money and the companies all in one place. In Mexico, we still need role models. We need Bill Gates, we need Zuckerberg, we need Steve Jobs.”

Venture capital investors are talking a lot about Latin America right now, and several of them are putting significant money into the market. Redpoint and BV Capital’s eVentures launched a VC firm in Sao Paolo that closed a $130 million fund for Brazilian investments, 500 Startups recently took entrepreneurs and investors to Mexico City, Sao Paulo, and Buenos Aires with the Geeks on a Plane trip, and 500 Startups also  recently acquired a Mexican accelerator. Investors have been interested in Brazil for a while now, and Mexican investments are growing too.

Just how much the folks on Sand Hill Road are heading south is still questionable. As Katie Fehrenbacher noted in her profile of 500 Startups founder Dave McClure, investing in foreign markets requires a serious degree of travel and hard work that not every investor is willing to put in when so many opportunities are right here at home. Several investors at Friday’s event expressed doubt that the trend was more than the work of a few passionate individuals, and several Latin American founders said they’d been told by investors not to bother looking for funding until they’d relocated to California.

But even if investor interest and record in Latin America is mixed, there’s no question that international startups are looking to Silicon Valley for guidance as their own startup cultures grow at home. The Buenos Aires government provided funding for some of its most promising companies to visit the United States for a week, attending TechCrunch Disrupt and meeting with CEOs and investors as well as Endeavor, with the recognition that the exposure could kickstart the country’s economic growth.

“We can see what is happening here, and it generatates ideas for generating business in Latin America,” said Augustin Gau, one of the Argentinian entrepreneurs picked to make the visit. “For us, it’s about coming to the best place in the world, with the most developed market in the world, so we see a lot of things you’re not going to find in Latin America.”

These can be difficult markets to grow companies in, with entrepreneurs facing challenges from high taxes, to local investors taking huge percentages of equity, to cultural norms making it incredibly difficult to accept failure. A big part of Endeavor’s philosophy is that if one or two startups in a region really take off, those founders can serve as the best mentors to other local companies, often better than distant American CEOs. But seeing American counterparts who’ve taken risks and achieved global results is huge, said Santiago Subotovsky, an Argentinian entrepreneur-turned-investor with Emergence Capital.

“The biggest thing they get coming here is the vision of thinking big,” he said.

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