Alumni discuss the challenges of investing in emerging markets
By SARA LANGEN | Illustration by Nicole LegaultEric Acher & Henry Nguyen
Despite a slowdown in economic growth, many investors are still bullish on emerging markets. Opportunities abound for venture capitalists in countries like Brazil and Vietnam. Both markets are growing, with Brazil still building its financial infrastructure and communist Vietnam just introducing market-liberalization policies.
Eric Acher ’95 and partner Fabio Igel founded the São Paulo-based venture capital firm Monashees Capital in 2005 to form close early-stage partnerships with Brazilian entrepreneurs in digital and education spaces. One of Henry Nguyen’s ’01 first jobs was working at McDonald’s, so it’s fitting that the founder of Good Day Hospitality and managing partner of IDG Ventures Vietnam is bringing the first golden arches to Vietnam, set to open in early 2014.
What is the main barrier to building businesses in your country?
Archer: From the standpoint of venture capital, the main barrier is the lack of a “high-impact entrepreneurship” culture in Brazil. We started with a staged financing approach in 2005, investing in young, high-impact entrepreneurs who are building a new generation of excellent tech companies and inspiring other entrepreneurs to change the local culture.
Nguyen: The main barrier comes down to leadership and human capital. Finding talent, nurturing leadership and retaining good people is difficult when you don’t have a large number of people with extensive experience in your industry. Often, you have to import leadership talent. Recruiting Vietnamese who have lived and worked abroad to return can be a good source of talent. Homegrown talent must be nurtured through better education and a focus on training and development.
What is your strategy for handling different regulatory environments?
A: Have a pragmatic mindset. Instead of complaining about it, we learn how to deal with its different forms and incorporate their effects in our planning, which usually means working with longer takeoffs, larger investments and tighter margins. At the same time, I believe that technology will help Brazil leapfrog in many areas, and regulatory reduction is one of them.
N: Our approach has been to be a strong node connecting the business community with relevant governing authorities. Government in Vietnam is oriented toward assisting businesses within existing and sometimes evolving policy, but often not aware of specific matters that affect a business. Communicating these problems and working on solutions is critical.
What is your outlook on the future of foreign investment in your country?
A: Despite all obstacles, I am very bullish about Brazil in the next 20 years. We have a stable economy, large, growing consumer markets, and an established legal system. To improve productivity, we will need sizable investments in infrastructure, technology and education. Foreign direct investment will play a key role in this process.
N: Long term, the future of Vietnam is bright. The people of Vietnam are literate, hardworking, and oriented toward prosperity and success. Vietnam is a nation abundant in natural resources and business opportunities, with a stable political system and a government oriented toward market reform and economic growth. The confluence of demographics, rapid economic development and technology will allow Vietnam to become one of the fastest-growing economies in the world.
Interviews condensed and edited for clarity.