JACKIE CARMEL


This year, Endeavor Catalyst celebrated its 300th investment with Noon Academy, a social learning platform out of Saudi Arabia.

In just over a decade, we’ve raised half a billion dollars in capital across four funds and invested in companies from 37 markets around the world, helping to advance Endeavor’s mission to build thriving entrepreneurial ecosystems globally. From day one, we aimed to create a dependable income source to sustainably fund that nonprofit mission, and enhance it by financially supporting Endeavor Entrepreneurs and generating returns (and awareness of emerging markets) to our limited partners (LPs).

Below is the story of how our unique fund came to be.

Endeavor’s Journey to Investing

When we began back in 1997, there was no Endeavor Catalyst. Our first decade-plus of operation was spent working almost exclusively in Latin American and Middle Eastern countries, selecting entrepreneurs to join our community and steadfastly supporting them as they built their companies and scaled-up. In those early years, we often spent a lot of time connecting entrepreneurs from markets like Brazil to investors in places like Silicon Valley or London. In a concerted effort to remain neutral, we avoided investing financially in these companies ourselves.

As Allen Taylor, current managing partner of Endeavor Catalyst and longtime Endeavor employee, covers in an episode of High Net Worth, our original mission was to be like “venture capital without the capital.” We did “all the things you do to help a company, but without actually putting in the money.”

In time, our own entrepreneurs began challenging our beliefs. As they struggled to fund themselves, often due to a lack of awareness or belief in their markets, they began to tell us that participating in the investing portion of their journey would be a beneficial public sign of confidence that could help them raise capital in these emerging and underserved markets. As Endeavor further developed and refined its robust selection process to vet entrepreneurs who wish to join our community, we began to wonder if we should put our money where our mouth is, so to speak. Then came Reid.

“Reid Hoffman, the co-founder of LinkedIn, joined the global board of Endeavor in 2011,” explains Allen. “And in one of the first meetings, he challenged that assumption we had for 15 years, which was, ‘oh, no, we don’t invest in the companies because we can’t pick and choose and we’re helping them all.’ And he said, ‘yeah, but you could design a way to invest in the companies and still support them all.’”

The idea for Endeavor Catalyst was born.

From Beta to Bona Fide Hit

It all began as an experiment back in 2012, a beta. Reid and several others close to Endeavor donated money to start the first $10 million Endeavor Catalyst fund, which was strictly set up as a rules-based co-investment fund that could only invest in Endeavor companies that raised a round of equity meeting certain criteria.

Our first investment was in Globant, a digital transformation company in the Endeavor community, run by four Argentinian founders—Guibert Englebienne, Martin Migoya, Nestor Nocetti, Martin Umaran.

If you’re an Endeavor Entrepreneur like Globant’s founders, you’ve already gone through a thorough vetting process and have ultimately been selected into our exclusive group of scaleups. Once accepted, if you then raise $5 million or more of equity capital (typically Series A or B) from a qualified institutional investor, Endeavor Catalyst will co-invest in the round as well.

“We do not set the terms or negotiate the price because we want to be on the side of the entrepreneur,” says Margaret Pollack, head of capital and investments at Endeavor Catalyst. “But we try to help them find an amazing investor to do that and invest at exactly the same terms and price.”

Our model turned out to be a really good way to invest because every company essentially gets double the due diligence. There is significant due diligence done when companies join Endeavor, and the eventual lead investors perform their own diligence on the actual investment, underwriting, and pricing.

Endeavor does charge a higher carried interest (a performance-based fee common in venture investing) than a traditional fund because of our mission. Instead of 20% – 30%, Endeavor Catalyst charges 50%, which is all donated back to the nonprofit. The goal is for Endeavor to be able to entirely sustain its nonprofit mission on this revenue by the end of this decade. So far, the results have been amazing.

Globant, that first investment Endeavor Catalyst made, became the first Latin American tech company to go public on the NYSE two years after we invested. It now employs more than 27,000 people across four continents and is worth over $8 billion. It helped a generation of new startups emerge in LatAm, some of which are now also Endeavor Entrepreneurs, and continues to play a helpful role in pushing Argentina out of its economic slump. Its co-founders have had the largest multiplier effect of any entrepreneurs in the Endeavor community, directly impacting the creation of 600+ companies.

Endeavor Catalyst’s growth has also astounded us. “We’re now on fund four. We manage $500 million,” says Allen. “It’s turned into a real franchise with amazing investors and LPs.” Under the guidance of its committee—now chaired by Reid Hoffman and members Nick Beim, Nico Szekasy, and Joanna Rees—Endeavor Catalyst has co-invested alongside the leading global and regional venture capital and growth equity funds in the world. It’s routinely recognized as one of the most active investors in Latin America, the Middle East, and North Africa.

The fund has invested in and helped more than 10 countries produce their first $1+ billion company (unicorn). This list of unicorns includes Cornershop in Chile, Go1 in South Africa, Carsome in Malaysia, and Payhawk in Bulgaria.

“Across our 300+ investments, our companies keep reaching new and greater heights, reflecting the quality and maturity of both the business models and founders in emerging markets,” says Maria Enriquez, head of portfolio at Endeavor Catalyst. “1 in 6 companies in our portfolio have reached unicorn status, and 12 companies have listed on a public stock exchange, including dLocal (NASDAQ: DLO) and VTEX.”

Through mergers, acquisitions, and secondary sales, we’ve realized 25 exits that have generated meaningful proceeds for our LPs and for Endeavor through a unique profit-sharing model.

In addition to its geographic breadth, Endeavor Catalyst invests across a variety of sectors, including our most active areas: fintech, enterprise software and services, and commerce. Other fast-growing sectors include healthtech, edtech, logistics, space, and AI.

Catalyzing Entrepreneurial Ecosystems

Companies in Endeavor Catalyst’s portfolio have overcome many barriers. The exits of Peak Games and Yemeksepeti in Turkey are two great examples of companies that navigated through significant social, economic, and political unrest to achieve positive outcomes.

Beyond driving financial returns for all stakeholders, exits like these help transform their entire entrepreneurial ecosystems, highlighting and proving to investors (and future founders) that opportunities abound in these markets.

“We really fundamentally believe entrepreneurs are the agents of change in these places,” says Allen Taylor, on the Latitud podcast. “If we can build the networks of mentorship and smart connected capital around them, they’ll create jobs and wealth, and become role models for the next generation. And that’s what Endeavor’s work is all about. Endeavor Catalyst is just investing into those same Endeavor companies.“

Endeavor’s work has always been about selecting the most giving, best entrepreneurs and helping them dream bigger, scale faster, and pay their success forward—ultimately building thriving entrepreneurial ecosystems in places few believed could nurture and support such innovation. In the last 11 years, Endeavor Catalyst has helped our organization scale itself up to better realize its mission and secure its future.

 


Jackie Carmel is the managing director of Endeavor Catalyst and a longtime Endeavor employee. She is based in San Francisco, California and oversees fundraising and investor relations.

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