HispanicBusiness

For Arenas, Marco Polo's interest led it to its place among investors in the first round of growth financing that yielded $12.5 million two years ago. At the time, the company was billing $6 million in marketing campaigns; today, the total comes to $20 million. The first round of funding "was a promise of what we could do," Mr. Pozo says. "Today we have proved it."

Aside from building the company's core advertising business, first-round money also financed early experiments in distribution and production. In December 2002, Arenas released Empire, a crime drama starring John Leguizamo. According to the company, Empire's purchase price was $1.75 million, but it returned $17.5 million at the box office and $22 million in video sales. Arenas also co-produced Imagining Argentina, a political drama with Antonio Banderas and Emma Thompson that is scheduled to open in theaters this April.

But to become a mini-studio, Arenas still needed more capital. Late last year, the company began the second round of mezzanine financing for $12 million. This time, Marco Polo also is interested and plans to tap private investors with an interest in global Hispanic media. "We are always open to new investment opportunities to create synergies with Arenas," says Mr. Galera. "We are truly committed to the Arenas opportunity right now."

Although the fund is not actively hunting for further investments in the United States, Marco Polo remains open to strategic opportunities, according to Mr. Galera. Like many venture capitalists, he is looking for established companies with strong management teams and detailed business plans in a growing niche. The fund seeks a minority equity stake in firms for a minimum investment of $6 million.

But while Arenas, for now, is the centerpiece of Marco Polo's U.S. strategy, the fund's involvement reflects a growing trend of global investment in the U.S. Hispanic media market. Plural Entertainment, a subsidiary of Grupo Prisa, has invested in Miami-based Estefan Enterprises. Prisa also has teamed with Universal Music Group to form Muxxic Latina, a "multinational record label" based in Miami, according to Variety. Venezuela-based Cisneros Group has invested in Claxson International, a broadcast and Internet provider that owns the portal El Sitio. And Hispania Capital, a U.S.-based venture capital fund, has announced its first investment in Chicago's daily newspaper LaRaza.

That trend of investor interest – and Mr. Pozo's willingness to look to unconventional sources of capital – highlight potential opportunities available to enterprising and determined entrepreneurs. "It was a good decision to tap into an alternative capital source," says Patrick Russo, principal in the Salter Group, a media industry consulting firm. "[Mr. Pozo] had a relationship there, coming from Spain himself. His background and track record gave them a comfort level, and they [Marco Polo] are strong supporters of his company."
And, says Russo: "First and foremost, [Arenas] identified a unique niche. Large corporations or conglomerates in media, retailing, or consumer goods typically don't have that sensitivity to the Hispanic marketplace. They simply don't."

Arenas also made strategic use of outside advisors during its financing search. In the first round of funding, Arenas went out with its business plan and one consultant - in Spain, the country that eventually yielded an investment. For round two, the company had help from the Salter Group and Hollywood powerhouse Creative Artists Agency. Mr. Pozo says the second round was "much easier," but he warns against over-reliance on experts. "In the end, the one who has to raise the money, the one who has to sell, the one the investors must trust or not trust, is you," he says.