Driving the Entrepreneurial EcosystemWed, 02/21/2018 - 12:27
Q: What is the dynamic through which Endeavor integrates entrepreneurs, mentors and investors?
A: We have three different audiences. First, the advisers and the founders´ board which consists of 13 businessmen who believed in Endeavor’s response to the national poverty problem. Some of the founders are Pedro Aspe, Emilio Azcárraga Jean and Lorenzo Zambrano. Our Chairman is Sergio Rosengaus, who built the only Mexican unicorn, Kio Networks. We then have our local network of mentors, made up of senior managers from large consulting firms, CEOs of the best technological companies and former Endeavor entrepreneurs who have deep expertise in specific industries. They donate between three and four hours of their time per month to help us select and coach entrepreneurs. The third group is the entrepreneurs themselves. We search the country to find people we believe are capable of transforming an industry.
Q: What is Endeavor’s criteria for selecting entrepreneurs?
A: Endeavor focuses only on high-impact entrepreneurs or those who become successful and repay their success by mentoring, inspiring or investing in the next generation. We have three main selection standards. First, we take a close look at the founding team. We consider their trajectory, passions, leadership abilities and their capacity to inspire through their stories. Then we evaluate their business model; we look for innovation and a very clear value proposition. Finally, we look for a turning point that justifies why Endeavor should accompany that entrepreneur to the next stage. In the end, we choose the entrepreneur that the country needs.
Q: What filters do you apply to find such a specific profile?
A: We evaluate between 600 and 800 companies and by the final stage we choose from six to 10. The process has three stages. First, each entrepreneur is interviewed by 10 mentors who asses the leader’s potential, the business model and the project’s inflexion point. In this stage, we eliminate around 50 percent of the applicants. The second phase is a national panel in which we gather between nine and 12 companies. The mentors then decide which ones will go to the international panel to compete with the finalists of the 30 countries where Endeavor works. Every year, between six and nine Mexican companies are chosen.
Q: What entrepreneurial profile does Mexico need and what type of ideas are you looking for?
A: It is about what we need in terms of history. Mexico has a lack of recent success stories regarding entrepreneurs. That is why our methodology is based on the multiplying effect of high-impact entrepreneurs, an effect that has two stages. First, entrepreneurs become very successful by transforming their sector. In the second stage, the entrepreneur repays his success by inspiring, mentoring or investing in new entrepreneurs within the local ecosystem.
Q: How do you finance your operations?
A: We have three financing sources. First, our events represent 30 percent of the income. Next is our relationship with brands through cooperative sponsorships. Finally, we have the entrepreneurs monthly give back. The smallest companies pay MX$5,000 per month and the big ones MX$30,000. However, smaller companies get all the attention and the big companies act as mentors. Also, there is an Endeavor catalyst fund in San Francisco, which is a coinvestment vehicle that invests in Endeavor’s entrepreneur rounds alongside professional investors.
Q: What are the main obstacles to entrepreneurial success?
A: Endeavor looks for entrepreneurs who have scratches, those who have already failed and recovered. For us, failure is a very important part of the process and we want to work with people who can overcome that. I have never seen a system that punishes failure as hard as that in Mexico. The probabilities for an entrepreneur to trip on their first try are very high and in Mexico we punish them so hard that there is never a second try. In Mexico we do not recognize success. We think those who succeed did it because they cheated, stole or because they had contacts, instead of recognizing their story.