Group Aims to Connect Latino Tech Companies

To network with people who understand the Latin American and U.S. Latino Internet markets, Francisco Gimenez has made do with small parties and Latino business events, scanning the room for the occasional like-minded Latino “netpreneur.”

“If you’re lucky, you can meet a couple of people at each event,” said Gimenez, a UCLA Anderson School graduate and former banker who founded Spanish-language price-comparison site PrecioMania.com with a partner this year.

Now Mexican-born Gimenez has teamed with start-up entertainment site PlanetaLA.com and online advertising company Ad Pepper Americas to launch the Southland’s first networking organization for the burgeoning Latino new-media market.

La Red Club Los Angeles, which means “the net club,” will host its first mixer Tuesday. Word is already snaking via e-mail through the city’s Latino tech start-ups and the local offices of more established companies such as Terra Networks and StarMedia. Separate plans are underway for a similar group that will focus on the Latin American Internet market.

The event is more than another Los Angeles schmooze date. It signals what some say is a crucial evolution of the region’s Latino Internet scene at a time of “dot-com” shakeouts.

Miami has built a hub of Latin America-focused technology companies, attracting both capital and national media attention. Several Latino-focused networking organizations are thriving there, spurring a wave of deal-making. In contrast, Latino tech companies in Los Angeles have remained largely hidden--from the mainstream Internet community and venture capitalists alike--despite their growing numbers and the nation’s largest concentration of Latino consumers and businesses.

Los Angeles is packed with technology networking groups such as First Tuesday and Venice Interactive Community (VIC), but those gatherings have attracted few Latino tech entrepreneurs.

Those mainstream groups are making their first efforts to better understand and include the growing Latino Internet community: For example, First Tuesday’s October panel will focus on Los Angeles as a gateway to the Latin American Internet market.

But entrepreneurs in the field say efforts such as La Red Club (https://www.laredclub.org) will go further to help their companies grow.

For starters, Latino Internet companies face daily issues that are “totally different” from those of general market companies, Gimenez said. Among those: the technical complexities of bilingual sites, currency exchange and security issues surrounding online credit card transactions in Latin America.

Networking clubs will also help bring the scattered Latino tech professionals out of isolation.

“You mean there’s more than six Hispanics out there working in technology?” joked Lionel Pasamonte, director of creative development for the Irvine- and Venice-based Chelada.com, which is focusing on the city’s thriving “Roc en Espanol” scene.

Pasamonte has done his networking on nightclub dance floors, forging relationships with the local representative of Latin music site ERitmo.com and Abelardo de la Pena, founder and editor in chief of entertainment calendar LatinoLA.com.

A gathering place for Latino tech professionals could also help companies recruit talent, said Pasamonte, who is desperate for Latino programmers who are plugged into the Spanish alternative-rock scene his site covers.

The groups also hope to educate venture capitalists and the mainstream tech community about the Latino sector, said Manny Gonzalez, president of ELB Group, a Culver City incubator that focuses on technology companies and initiatives targeting the Latin American market.

Unaware of La Red Club, Gonzalez has been in talks of his own with the Latin American division of Los Angeles-based Internet broadcaster LoadTV to launch a similar networking organization, “but certainly not in competition.”

While capital has flowed from Wall Street into Florida companies targeting the Latin American market, investments from Silicon Valley and Los Angeles venture capitalists in Latino technology companies here “have been close to nil,” Gonzalez said.

“We need to do it yesterday,” he said of the networking groups.

U.S. Latino household computer penetration has increased by 68% in the last two years, compared with 43% in the general population, found a recent study by Redwood Shores-based Cheskin Research. The percentage of Latin American households online has also grown exponentially, with total e-commerce revenues expected to reach $15 billion by 2003, according to a recent report by EMarketer.

The catch-up growth has fueled the birth of hundreds of portals and Web sites in the last two years, some targeting Spanish- and Portuguese-speakers all over the world, others carving a more narrow slice of the Latino market here and abroad, from sports and alternative rock fans in the U.S. to Mexican women in search of beauty advice.

To be sure, recent turmoil in the stock market has not discriminated, taking a toll on Latino dot-coms with poor revenue-generating capacities. For example, Phoenix-based QuePasa.com, a bilingual portal targeting U.S. Hispanics, laid off a third of its staff in May and has seen its stock--traded on Nasdaq--plummet from a high of $26.88 in July 1999, to close down 6 cents at $1.03 on Tuesday.

The market’s rough ride will undoubtedly purge weak companies from the mix, but Latino Internet companies are here to stay. Those that can prove themselves in the current environment should be well-positioned to receive investment capital later.

But first, local venture capitalists need to be comfortable with the market. That’s where La Red Club and other groups like it hope to step in.

“People will not invest in something they don’t understand very well, no matter how good the product is,” said Jose Villa, president of Santa Monica-based Focus Multimedia, which creates Web strategies for Latino businesses and for firms targeting the Latino market.

“There is value in creating an organization like this if you can get people like the Zone Club [which unites Southern California firms with venture capitalists] involved. But it’s going to take some time.”

Gimenez agrees. He launched PrecioMania.com this summer with Vicente Cue, a former colleague at Banamex subsidiary California Commerce Bank. The site has partnered with English-language comparison site PriceGrabber.com and will launch a Portuguese component soon. One deal now being forged grew out of connections made at a Latino book release event.

“We saw that we would make great progress meeting that way,” Gimenez said. “We wanted other people to do the same.”

Fernando Orvananos, a fellow Anderson School alum, had similar thoughts. Orvananos, now seeking funding with partner Servio Acuna for youth-oriented entertainment site PlanetaLA.com, had grown increasingly frustrated with the isolation of Los Angeles.

The two start-ups hooked up with Rudy Kish, vice president of sales and operations for Miami-based Ad Pepper Americas--the Latin American and U.S. Latino division of European Internet advertising company Ad Pepper Media. And La Red Club was born.

La Red Club Los Angeles expects to attract about 300 people to its first gathering. Organizers plan to introduce regular speakers and invite the venture-capital community after the group becomes established, Orvananos said.