Sramana: Did you raise funds in Buenos Aires?
Rodrigo Teijeiro: No, I went directly to Silicon Valley.
Sramana: Tell me a bit about what you saw when you came to Silicon Valley to raise money with a Latin American business.
Rodrigo Teijeiro: Normally I decide what I want and go after that directly. In this case, I went directly to Peter Thiel at Founders Fund.
Sramana: Did you go there because you knew he had invested in Facebook and you wanted to tap into that knowledge?
Rodrigo Teijeiro: Yes, that is exactly the case. I had read a lot about how VCs often brought little value, and I wanted to ensure that I could get value added with the right VC. I am a product-driven person, and I felt that Founders Fund had a lot of knowledge around product. In 2007 we met up with them and we had a term sheet the next day. However, it took a while to close the deal because we had to change the architecture of how the company was built.
At that time it was an Argentinean company, so we had to build out a Delaware corp. An agency in Argentina that was working on the transfer with us went on strike, so we could not give ownership of the Argentine company to the American company. That took five months to resolve. In the middle of that another big problem occurred. They were banning meat exports here and had raised taxes for exporting soy, which led to huge riots. That was the first time Founders Fund was investing outside of the U.S., so there was some concern on their part. In January I started looking for other VCs as well and got some capital from angel investors.
Five days after I had all the paperwork signed, I went to San Francisco and the Founders Fund told me that they could not invest in our company because of the situation in Argentina. At that time our business was exploding, so Dean Capital stayed on board and I brought on a bunch of other investors. I made sure that I met every single investor personally. I eventually closed the round. A few years later in 2009, it was impossible to do any other funding of M&A.
Sramana: You had a good, solid business. You were not dependent on capital from an operations point of view and were looking for flexibility, correct?
Rodrigo Teijeiro: There were a few components to raising capital. One was prestige. The other one was that my mind was dedicated to product, scaling, and building the team. I would not have to dedicate my time to monetizing. I had not been able to spend enough time where I thought I needed to be dedicating it. Sales remained stable at $8 million and in the beginning of 2010 I was running out of cash. Facebook had taken over the world, and my balance sheet was not in good shape. In January 2010 I was losing $270,000 a month.