Brazil Real Estate Start-Up Draws U.S. Investment

RIO DE JANEIRO â€" Amid continuing concerns about Brazil’s sputtering economy, the Dragoneer Investment Group of San Francisco has made its first investment in an Internet company here, leading a $12.75 million round in VivaReal, an online real estate classifieds start-up, the companies said on Tuesday.

The financing, which was negotiated this month, is Dragoneer’s first investment in Brazil, Latin America’s largest economy, said Marc Stad, the firm’s founder. The growing fears about disappointing growth and even a possible recession here seem to only have emboldened Mr. Stad.

“I’d rather invest in companies and countries at a time when they are out of favor with investors,” he said.

Earlier VivaReal investors including Kaszek Ventures, Monashees Capital and Valiant Capital, the investment firm started by Chris Hansen, also participated in the round, which included $8.75 million in cash and a call option for $4 million, according to Brian Requarth, the chief executive and co-founder of VivaReal.

Mr. Requarth, who is an American and graduate of San Diego State University, said his company had raised more than $28 million so far.

The start-up, which was started in 2010 in Sao Paulo, is looking to cash in on the lucrative online real estate advertising market, estimated at 4.1 billion reais, or $1.7 billion, in 2013, according to the Brazilian research firm Ibope.

Competitors include Zap, backed by Brazilian media giant Globo and Immovelweb, owned by Navent, whose investors include New York investment firms Tiger Global Management and Riverwood Capital.

For Dragoneer, which oversees more than $200 million in holdings, the VivaReal investment represents a continuation of its search for global Internet companies. The firm invested in Facebook when it was still private as well India’s Flipkart, and China’s Alibaba.

Even as many United States venture capital and investment firms became enamored by Internet start-ups in South America, Dragoneer has been inactive here in recent years. Mr. Stad said that was in part because his firm was focused on other geographies and also because the Brazilian companies he saw lacked strong financial models.

Yet he now expects to make additional investments here. Despite almost daily concerns here about the economy, he said that over the long term, “Brazil is one of the most attractive markets in which to invest.”