The Latin America PE/VC Report recently spoke with Daniel Rosas, President and CEO of Colombia-based TES America about the growing opportunities for entrepreneurs in technology-related areas and his path to building a sustainable company with a social impact.
LAVCA: Please give us some background on TES America.
Rosas: TES America was founded in Bogota in 1999 and has its roots in serving the telecommunication industry in Colombia. The telecom industry consists of wireless telecommunications carriers, operators and equipment manufacturers, fixed communications, point-to-point, wireless broadcasting, satellite and digital TV. The industry is unique in that its applications are applicable to the efficiency and maintenance of operations of numerous other sectors.
At its core, TES America is a group of electronic and computer science engineers who create customized, industry-specific solutions and systems. Our strengths have developed by designing, optimizing, and monitoring telecommunication networks.
Today we extend our expertise to other sectors most notably Oil & Gas, Mining, Health and the Public Sector. We work with clients such as Tigo, Telefonica, Alcatel and Nokia-Semens (telecom), Petrobras and Ecopetrol (energy), Carbocol (mining) and various public entities.
We have created a “Telemedicine” division which we are establishing as a separate business from TES America. With Telemedince we have developed systems that allow patient diagnoses content and data to be shared through Telecommunications and human/machine software interfaces – a revolutionary tool that allows hospitals in rural areas to increase their effectiveness on patient care. Telemedicine represents a clear example of how our expertise would revolutionize the efficiency and effectiveness of operations in a new sector.
LAVCA: How did you come up with the business idea?
Rosas: The idea came after the privatization of Colombia’s telecommunications’ sector. This factor coupled with my experience, passion and related technical skills acquired in Mexico over eight years as a Telecommunications engineer, allowed me to develop competitive services and knowledge that I integrated with the engineering talent and human capital in Colombia. Our business is more than just providing services and products; it is about nurturing and developing the human capital of Colombia while contributing towards the efficiency and effectiveness of strategic industries which are critical to Colombia’s growth, and that of Latin America in the international arena. Our vision is social impact and high quality job creation in a constantly evolving sector.
LAVCA: Who is your competition and what do you see as TES America’s competitive advantages?
Rosas: From a corporate perspective, we are not aware of any competitors that offer the breadth and depth of products and services. However, for any given product/service, our competitors range from OEM engineering divisions, such as Siemens Engineering, to local engineering companies and OSS developers (Operational Support Systems).
In addition to having an attractive cost/quality ratio, our competitive advantage derives from four key areas:
- R&D: TES America invests in Colombia’s most talented and trained engineers by financing the research and thesis work of young engineers throughout universities in Colombia. We also invest 20% of revenues into our own R&D staff through the training and hiring of talented engineers.
- Neutrality: Unlike the majority of competitors, we are not tied to any OEM and therefore offer impartial and objective services regarding technology.
- Technology expertise: TES America has developed leading expertise in telecom technology, hardware integration and software development.
- Customization: TES America is unique in that its solutions are customizable to the specific needs given a client’s industry and area of expertise.
Our most pressing strategic challenge right now is reinforcing our organizational structure to extend our expertise to foreign markets.
LAVCA: What sort of financing have you received thus far?
Rosas: To control the quality of our output we have so far had a disciplined approach to growth by re-investing our own profits entirely into the company. Our innovation work has backing from the Science and Technology governmental body (COLCIENCIAS) of Colombia.
LAVCA: But you are currently preparing the company to fundraise in the second quarter 2011. What types of investors do you plan to approach? How much capital are you seeking?
Rosas: We are seeking USD $2M for TES America and USD $500K for Telemedicine. We hope to partner with “smart capital” investors with a long-term view that can provide financing but also a network which will facilitate new market entry. We are not looking for pure equity investors seeking attractive returns in a short time frame.
We are open to both international and domestic source of capital and plan to target these investors via our own industry and personal contacts, but also with the help of Endeavor Colombia to broaden our network.
LAVCA: How do you plan to put your next round of financing to use?
Rosas: This will depend on who the supplier of financing is. If, for example, we find a suitable investor for the Telemedince division, we would use the investment to take the product/service and extend it to new markets. We have analyzed the drivers of adoption for rural intra-hospital consulting (rural populations, density of physicians and per-capita healthcare expenditure) and found that the best initial targets for this practice are Colombia, Argentina, Peru and Chile. Second-tier markets would include the US and additional Latin American markets.
If we find a partner for TES America, we would use the financing to strengthen the working capital of the company and also invest it in sales and marketing to expand into non-core telecom industries, including energy, metals/mining and the public sector in Colombia and abroad, particularly in Latin America.
LAVCA: Where do you see your company five years from now?
Rosas: We strive to be a leading technology and engineering services group with integrated operations in Latin America, the USA and Asia.
LAVCA: In your opinion, what remains as one of the biggest challenges for entrepreneurs in Colombia?
Rosas: I would point to four main areas: access to financial capital (especially for service and software providers), access to human capital with knowledge and experience in international markets, a taxing regulatory environment and a lack of government incentives for SMEs.
LAVCA: What advice would you give to aspiring entrepreneurs in Colombia?
Rosas: First of all, develop knowledge in technology-related disciplines. We believe technology is the seed that generates a virtuous cycle of innovation, education, development and economic growth. Leverage these technology skills to focus on sectors specifically focused on communications and networking.
Secondly, while Tes America is neutral on background, we urge entrepreneurs to develop skills through a background that stems from a quality education, international experience, language abilities and leadership potential.