Work still needed to spur investment opportunities in IT - Riverwood Capital

Wednesday, April 6, 2011

Macroeconomic growth has led to more favorable venture capital conditions in Latin America, but work must still be done to help startup IT companies position themselves for such investments, US private equity firm Riverwood Capital founding partner Francisco Alvarez-Demalde told BNamericas.

Chile and Brazil have developed the most advanced venture capital markets, but private sector players and government organizations across the entire region need to give a hand to small IT companies.

"There is still a lot to do in terms of developing more mature companies for investors like ours," he said. "That has to do with promoting smaller investors at the country level that can support and help - not just with funds, but also with advice in order to help startups to become more professional."

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Last month, Riverwood and compatriot firm FTV Capital completed a US$15mn investment in Argentine IT solutions and outsourcing services provider Globant.

Previous expenditures include a February investment in Brazilian data center company Alog and also the acquisition of Chilean IT solutions provider Synapsis, announced last December.

Riverwood has defined its Latin American acquisition strategy and is actively negotiating with regional players.

"Annual revenues [of target companies] have to be higher than US$50mn," Alvarez-Demalde said. "In terms of the geography, we like regional companies."

"We also like strong IT markets. Brazil is very attractive, but we also like the Andean region. We look at things in Argentina, and we have been working also in Mexico."

The full interview with Alvarez-Demalde can be read in this week's Information Technology Perspectives, for subscribers only.