Startup tackles Latin tech market

Carpio of Cary raises $10 million

Born and reared in Brazil, Marco Fregenal knows his country's potential.

He's betting that his Cary software startup can score big on booming demand for business technology in Latin America.

Fregenal is no stranger to starting, running and selling fast-growth international companies. He co-founded Web-reference guide HowStuffWorks.com, ran Cary-based software company Ultimus and headed mobile communications company Pagenet Brazil, which raised $125 million in 1998.

Fregenal's latest venture, Carpio, is a Cary-based software-services provider with offices in Brazil, Panama and Mexico.

It has more than $10 million from investors to expand globally.

"In software, you have to be a global company to succeed," said Fregenal, who emigrated from Brazil to New Jersey when he was 14. "Customers are everywhere now, and they need local support all over the world."

To ramp up operations, Fregenal and fellow executives teamed with several big-name investors to plot two acquisitions in Brazil this month and more in the United States later this year.

That's important for the Triangle, Carpio says. "We're able to attract the kind of investment that brings attention here," he said.

Carpio gets most of its revenue integrating business software products from Microsoft, SAP and others for small and medium businesses, a process that requires significant IT and operations consulting. The company also markets its own financial-planning application, GesFin, a Web-based software that Carpio is acquiring from a Brazilian company. Carpio plans to market GesFin throughout the Americas.

Looking ahead, Fregenal expects the company to break even this year on about $10 million in revenue, which he says is a minute glimmer of its potential.

He recalled leading Pagenet Brazil to $70 million in revenue and 850 employees in 1999.

"Latin America is exploding right now," Fregenal said. He was referring principally to the booming economy of Brazil, a major champion of open-source software, and to the development of small-business software and offshore consulting markets in Latin America.

Fregenal and right-hand executive Scott Loftin pursued several prominent investors that tapping these markets, as well as U.S. small and medium businesses, could be lucrative.

Former Red Hat COO Tim Buckley and Richard Holcomb, chairman and co-founder of Web software company StrikeIron, have put in their own money and joined Carpio's board.

"They've got so many of the current hot buttons checked," said Holcomb, who is also a partner with venture firm Aurora Funds in Durham.

"Marco is a sharp, friendly, everybody-likes-him guy, and he's targeting a region of the world that's doing incredibly well. Brazil is doing now what we were doing in the '80s, '90s, spending a lot of money on IT."

Palladium invests

That Latin America focus also caught the attention of New York investment firm Palladium Equity Partners, which invested more than $10 million in Carpio in December. Neither Carpio nor Palladium would say exactly how much.

The money is aimed at several acquisitions this year, as well as hiring in the United States and Latin America. Buckley said Carpio has an opportunity to swiftly expand its proprietary financial management software in the U.S., where small businesses are underserved in that regard.

Carpio's five-person management team is based in Cary, but most of the company's 100 employees are in Brazil. Fregenal said he expects to add as many as 20 sales and software professionals in the area this year, and he is looking for a larger office.

"If we execute well, we'll bring a lot of jobs to this area," he said. "When I bring people here from New York and California, they love it."