Interview with Allen Taylor, Managing Partner at Endeavor Catalyst – Investment Plans And The Upcoming Visit To Romania

Unlocking the transformational power of entrepreneurship in Romania and CEE in general takes intentional matching between opportunities, specialists and investments. It is also our commitment here at Endeavor Catalyst.

With decades-long experience in helping entrepreneurs get to the next funding series and beyond, Allen Taylor is the Managing Partner of Endeavor Catalyst and a strong supporter of emerging markets, which he has seen plenty of during his career. He shared some thoughts with us about the anatomy of real growth, and about Endeavor’s upcoming projects in the region.

You are a Managing Partner at Endeavor Catalyst, and a very active voice in the VC industry. But how did you end up leading Endeavor Catalyst? 

It’s a good story. I’ve worked at Endeavor for 17 years. As you probably know, Endeavor is primarily an entrepreneur support organization, not a fund. We exist to help mentor, support, nurture entrepreneurs and build these ecosystems. I was working at Endeavor in New York City in the global headquarters, from 2006 to 2011.

And around 2011, I put my hand up to move to California to open a Silicon Valley office for Endeavor and it was around the same time that Reed Hoffman, the co founder of LinkedIn, actually joined the board of Endeavor and he was one of the voices championing this idea that Endeavor has amazing companies and since it’s a nonprofit, it raises donations and funds through philanthropy and that we should design a way to invest in the companies.

It was then, around 2011-2012 that we started designing and piloting this fund that has become Endeavor Catalyst. And it was a decision not to hire an outside fund manager but rather to take a bet on somebody from within Endeavor.

Because this was technically new to you, when you started doing this, in a sense, what’s the best part about your role? What do you love most about it? 

I love the entrepreneurs. I think that applies to anybody who gets the chance to work with entrepreneurs, especially really, really good entrepreneurs. This is one way that I’m very lucky. We invest all over the world at Endeavor, we’re in 42 different markets. And I get exposure to essentially the very best, most talented founders and entrepreneurs from each of these places. And it makes me incredibly optimistic. My wife actually teases me. I go on these trips, I go to Egypt, I go to Pakistan, I go to Brazil, and I come back and I say: ‘Man, you won’t believe how good things are going in Egypt’. And she’s like: ‘Do you read the news? Have you seen the headlines?’ When you’re working with tremendously talented entrepreneurs, it’s an energizing role. That’s my favorite part of my job. The biggest thing that changed from when I was working at Endeavor to now running the fund and deploying capital is now we get to put our money where our mouth is, we’re not just supporting founders, but we’re actually investing in them.

Since you mentioned that Endeavor is all over the globe, are there any specific funding gaps in emerging markets that you’re looking to bridge with Endeavor Catalyst? 

For sure! There are lots of gaps because venture capital is essentially stage financing. In the beginning stages, you need the angel investing and the seed funds and accelerators and incubators. And then you need funding, as companies begin to scale. And then you need funding for companies at scale. Once they’re very big, our focus at Endeavor and therefore the focus of our fund is on this kind of middle stage, what we call the scale up phase.

We are relying on other partners to do the early stage parts of getting companies started and incubated and helping entrepreneurs find product market fit, and the businesses selected to Endeavor are starting to grow and scale. But from a company building perspective, there’s still a lot to do, and we focus on helping them not just with that initial product, but to scale a company and how to go from 50 or 100 employees to 500 or 1000. We help them to expand from one market to many markets. And from a funding perspective, that’s where we play; we’re primarily a Series A Series B investor, focused on those scale upstages.

In this context, I imagine that in the span of your career you’ve witnessed businesses, countries and entire regions grow and fulfill more of their potential. Where would you say the CEE is fitting into the global market at the moment? 

This is a good question. I would describe it this way: Endeavor’s own particular history is that we started out in Latin America. So that’s the region we know the best, as we’ve been there for 25 years – Brazil, Argentina, Colombia, Mexico. As we’ve grown and expanded Endeavor, we’re now very active in South-East Asia. We’re active in the Middle East. We have a lot of offices in Sub Saharan Africa. And we’re building out more of a presence in what we call Emerging Europe – countries like Romania, Bulgaria, Poland, and then we also work in markets like Greece, Italy in Spain and Portugal. So we work a lot in Southern and Eastern Europe.

Our view is actually very similar concerning these markets. Which is, if you talk about emerging markets, for most of the last 10 or 15 years, people wanted to talk about China, and about India. And those are the big stories that have already been written in a sense, and now we know China’s story, we know India’s story. Endeavor’s fundamental belief is that there are amazing founders everywhere.

And we’ve seen it happen in Latin America, and we’ve seen it happen in South-East Asia. And so we’re excited to see more of it happening in EMEA, in Africa and in emerging Europe.

And you have some good success cases already, like UI Path. In the last five or 10 years this idea has been emerging that you can build a truly globally successful tech company from anywhere, and it’s truer than ever before. When I started doing this 20 years ago, the only example people would point to was Skype: ‘Look at Skype!’ Because it came from nowhere, nobody expected it. And even today, there are dozens, if not hundreds of examples of successful global companies coming from everywhere. For us, CEE is just part of that because we know the talent is there. And so it’s about getting the networks of mentorship, of know-how, of smart capital around those founders and entrepreneurs.

Would you say that we have a culture of smart capital? Do entrepreneurs in emerging markets know how to look for smart funding and not just funding?

It’s changing. The first thing I will say is that smart capital became a cool buzzword a few years ago. But in reality smart capital is different things to different companies at different stages. And what’s changing for the positive, or what Endeavor is trying to be a part of, is helping entrepreneurs understand that.

In fact, I’ve made more than 300 investments in emerging markets all around the world. But the first question I ask every entrepreneur I meet is: ‘Besides the cash, because that’s the commodity, what are you looking for in a partnership and a partner?’ The idea of smart capital and turning the relationship into a mentor-mentee is important, at the building stages of a company.

The culture for markets like Romania, Bulgaria, Poland, where I’ve gotten to spend some time in the last few years is that entrepreneurs are starting to know a lot more about what they want, what they need, what they’re looking for. And it’s changing for the better.

Would you say it’s exponential? Is it progressive in any way, this growth, or is it incremental? How should we look at it?

I’ll make two points there. It’s a very smart question. The diffusion or the distribution of information is exponential. Meaning that once upon a time nobody had access to information, now because of blogs and podcasts and Twitter the diffusion of information has just gotten widespread. So people at least have the frameworks and the vocabulary and some of the knowledge. The actual thing that matters even more though in our experience is the know-how and the experience of doing it.

One is the framework for knowing about it, and the other one is actually doing it. And that sort of growth is generational. It takes several years of people building the first generation of successful companies to learn, and then they’ll go out and start the next generation of companies. And the generations are not as long as human generations, so it’ll take probably five to 10 years to build something really big and important. And then you get the diaspora networks that come out of those first generation businesses.

I live here in Silicon Valley, we’re probably on generation 11 or 12 of this happening. It’s been happening for a long time, but you can look at markets like Brazil, where Endeavor has been working for 20 years, and they’re very much on the second or third generation of entrepreneurs coming out of Nubank and Mercado Libre and some of the early success stories. And CEE for me is still in that generation one in some sectors, in others it’s starting to be in generation two. And that’s very powerful because not only second time founders, but second time teammates, engineers, executives know so much more on that next turn.

Does it help failing faster? Is it a part of the growth process, learning to fail faster and to build faster and to go through the steps just at a faster pace?

If people are still learning, then the faster you can learn, the better. Sometimes with tremendous speed I think the learnings are lost. It’s almost overwhelming and they don’t learn the lessons, but generally I would say yes. A culture that accepts failure is one that’s going to be able to learn and innovate.

And if you can speed up that cycle it helps. There’s an Endeavor mentor named Mike Cassidy, who has started, built and sold five companies and, you know, worked at Google for a long time. And he has this quote that ‘speed is the ultimate start-up weapon’. There’s some truth to that, especially when you’re building very quickly in a market against an incumbent or an older, slower company. But from an ecosystem development perspective, as fast as you can go while still learning along the way is probably the right speed.

Speaking of ecosystem development, since you’re visiting Romania for the Endeavor Romania’s Annual Gathering in October, could you tell us more about Endeavor Catalyst’s plans of investing in this region? Should we prepare for any upcoming milestones in collaborating with local chapters such as Romania, Bulgaria, Greece, Turkey or Poland?

Yeah, for sure. We are a global fund. We invest all over the world. I’m very excited to come to Romania. It’ll be my first time there, my first trip. We have made one investment there already. We are investors in FintechOS, which was the first company to be invited to join the Endeavor network in Romania. And then we were able to invest in businesses like Alcatraz AI or Payhawk from Bulgaria. (NB: since the interview was recorded, Endeavor Catalyst just announced the second investment in Romania, in DRUID, another Endeavor Entrepreneur selected out of the country.)

And for me, those are two good examples of what we hope to do more of in the future. And so I won’t spoil any news, but we are going to be investing more in the region. And one of the reasons I’m coming is to show you support from our global fund from Silicon Valley, about getting more active in your part of the world, which we’re excited about.

Endeavor Catalyst supports entrepreneurs from emerging markets in a sector agnostic way. But would you say there are any industries or areas of interest in CEE that you find more developed or promising than others? 

We are sector agnostic, but all that means is that we go to where the best entrepreneurs are building the best companies. That can and will be different in Asia versus in CEE. We observe that the first wave of tech companies built in any region tend to be the consumer businesses – eCommerce and the digital infrastructure to support eCommerce, like payments and logistics.

But the interesting ones are what comes next, as the tech wave gets into financial services, education, transportation, moving things and people around even industries like healthcare or agriculture, basically big parts of the economy. As you start to bring tech enablement to them, they are interesting places to invest.

And we invest a lot in FinTech and EdTech and health tech and transportation aka smart cities. But it’s only after you do a lot of those types of investments that you can get to deeper tech investing, and particularly deeper enterprise-like businesses.

Given the talent level that there is in the CEE, the unique advantage there is that we’re gonna get quicker to some of these deeper tech type investments, whether that’s for enterprise software, or for deeper industries, like biotech or even space exploration or robotics and AI. There’s very good talent for some of those things, so I’m excited to make more investments in those areas in the coming years.

Scaling is definitely harder than just creating a good product, and tapping into a global market is still a challenge in this region. How can CEE founders benefit from access to a global pool of like-minded entrepreneurs and what is the added value of having Endeavor Catalyst as an investor on top of already being an Endeavor entrepreneur? 

Ultimately, Endeavor’s program and the way we support businesses through Endeavor Catalyst is very customized, very bespoke. It’s different for every company. But we can identify the three major areas that will end up over time over a 10 year relationship helping almost every founder with right and they essentially are access to smart capital, access to new markets and access to global talent.

And the smart capital tends to come downstream of us but if we’re investing at the A or the B series, and we get super involved with helping the company raise their next round of capital or the round after that, or eventually even accessing liquidity opportunities and the public market. We helped 10 Endeavor Catalyst companies go public in 2020 and 2021 and do IPOs. Two of those were on local exchanges in Brazil and in Indonesia, but eight of those were on NASDAQ and the New York Stock Exchange. And for companies coming from CEE, or from a lot of these other markets around the world, that’s not an easy thing to do. So access to that kind of downstream, as capital is a big part of what we do.

As you mentioned, scaling beyond your borders can be very difficult. And so one of the real value propositions of Endeavor is helping people to scale regionally and then in many cases globally, and become very large players.

And then the last one is about talent – getting the right independent advisors on your board and helping get the right people in your company, bringing the best talent to the business.

Thank you so much for your time and I am looking forward to  seeing you in Romania!

Of course! I’m obviously a big believer and a proponent of the work Endeavor’s doing all around the world.