Mexicans used to call her "la chica loca"-the crazy girl-back around 1997, when she was one of the leaders of an effort to provide mentorship and capital to entrepreneurs in emerging markets. "The idea that there would be any entrepreneurs in emerging markets, in any high-growth capacity, was considered nuts," says Linda Rottenberg.
Now Rottenberg wears the moniker as a badge of honor. That's allowed when the nonprofit you co-founded, Endeavor Global, has helped foster the growth of companies responsible for the creation of 180,000 jobs, with total annual revenues of $5 billion, in some of the world's rising, but still relatively poor, economies.
"Crazy is a compliment and my corollary is, if you are not called crazy, you are probably not thinking big enough," says Rottenberg, who serves as CEO of the New York City-based nonprofit organization.
As for the 708 "Endeavor Entrepreneurs" that the organization has mentored since its founding-a group that includes a tuna-packing company in a region of Mexico wracked with drug violence-Rottenberg notes that many of them were once considered "crazy" themselves. Entrepreneurship, she notes, has not always been viewed as an admirable career path in many emerging markets.
To be accepted into the Endeavor Global program, entrepreneurs need to have more than an idea. From the time an application is made, the selection process takes 12 months to 18 months. Applicants are required to have raised at least $5 million in capital, which means entrepreneurs trying to get into the program typically have been in business for up to five years.
The 708 entrepreneurs in the program were selected from a total of 30,000 applications received by the organization.
"I think these people think big," she says.
Rottenberg and Endeavor Global continue to think big, as well. In November, they founded Endeavor Catalyst, a nonprofit "supporting organization" that aims to directly invest, through private donations, up to $50 million into some of the standout performers in Endeavor's entrepreneurial portfolio.
Up until then, Endeavor had served soley as a middleman, accepting donations that were used to provide entrepreneurs with mentorship and guidance, and to match them up with venture capitalists. The Catalyst program will allow Endeavor to have a more direct role in helping emerging market entrepreneurs succeed, according to officials of the organization.
It is also one of the latest example of the socially conscious thinking that taken hold in both the investing and philanthropic arenas, where the wealthy are looking to put their money to work for a good, self-sustaining cause.
Indeed, both Endeavor Global and Catalyst are designed to create a compounding, self-sustaining dynamic in each of the regions in which they invest. In the case of Endeavor Global, entrepreneurs who participate are required to give Endeavor between $5,000 and $10,000 per year and 2% of the equity if they sell the business, which provides funds for other entrepreneurs. In the case of Catalyst, returns on investments will be put back to work in the same way.
The organization also notes that there is a more organic compounding effect at work in its program, in which some of its entrepreneurs become mentors themselves, or develop the careers of employees who go on to become entrepreneurs who start the process all over again.
Endeavor estimates that a $1 million donation will in 20 years result in about $9.6 million in direct investments to emerging market entrepreneurs and $5 million to Endeavor operations.
Endeavor notes that its formula has been a success so far, with 13 of its entrepreneurs growing as quickly as the fastest-growing companies on the Inc. 500 list in the U.S. Endeavor has regional offices in 16 areas, including Latin America, the Middle East, Indonesia, Southeast Asia, Greece and South Africa. It has global offices in New York City, San Francisco, Singapore and Dubai.
"One of our goals is to provide added capital into the marketplace to support these up-and-coming emerging market entrepreneurs," Rottenberg says. "For people who are looking to do philanthropic work, you can see the value of your original donation compounded."
Another goal, she added, is to invest in a way that preserves the entrepreneur's incentive to grow. Under Endeavor Catalyst's rules, it can only make an investment as a co-investor with at least one other party, and it cannot be the lead investor. Its equity stake is capped at 10%.
In one of its first deals, for example, Endeavor Catalyst teamed with Intel Capital-Intel's global investment organization-for an investment in Minha Vida, a health and wellness Web portal based in Sao Paulo, Brazil.
Endeavor Catalyst's investment committee will decide on when to cash in on the equity it holds in each of its entrepreneurial investments, according to Endeavor spokesman David Wachtel. Such returns could come in the form of dividends or when a company goes public, he says.
"The idea would be that we would deploy the gains back into new early stage opportunities with the next generation of Endeavor entrepreneurs," he says.
Catalyst's first investment was a $2 million funding deal in February with Globant, a technology outsourcing company in Argentina that was selected as an Endeavor Entrepreneur seven years ago.
Rottenberg describes the company as Argentina's Google-a fast-growing company that was started by four young, tech-savvy entrepreneurs who were turned down the first time they applied to Endeavor for help.
Their pitch was to make Argentina into a technology outsourcing center, in competition with outsourcing behemoths such as India. "It sounded nuts," Rottenberg says. "But they were incredibly confident. We just felt they needed more time."
After raising $5 million from qualified lead investors-a requirement of all Endeavor Entrepreneurs-they were accepted a few years later. Now Globant is one of Argentina's fastest-growing companies, doing work for companies such as Disney, Electronic Arts and Google. And like Google, "they are creating a group of people who are going on to start their own companies," Rottenberg says.
Another recipient of an Endeavor Catalyst investment, AirTies, a company in Turkey that develops wireless networking equipment, was started by a former Silicon Valley engineer who returned to his home country 10 years ago to start his own business-a move that earned him the "crazy" title in his country. "People thought he lost his marbles," Rottenberg says.
Endeavor Catalyst has thus far raised about $10 million and is looking for minimum $1 million donations. Its largest donation thus far was $5 million from the Omidyar Network, a philanthropic investment firm created by eBay founder Pierre Omidyar and his wife Pam Omidyar. Those donating $1 million have included Reid Hoffman, co-founder and executive chairman of LinkedIn; Edgar Bronfman Jr., former chairman of Warner Music Group and general partner of Accretive LLC; and Arif Naqvi, founder and CEO of Abraaj Capital.
Funds given to Catalyst are tax-deductible donations to a 509(a)(3), but Rottenberg views them as investments for socially conscious individuals who wants to actually see their dollars put to work. Donors will receive reports on how the money is invested, how companies that received the money are progressing and what impacts they are having on their economies, she says.
"It's an exciting opportunity if you are looking at it as someone who wants to put your money to work and to make a difference in the world," Rottenberg says.
