Fifteen

MercadoCasual.com is an online prediction markets site that offers its users the ability to trade futures contracts on political, economic and entertainment events, such as who will win a political election or what the latest country economic data will be. Revenue is generated not only from commissions charged on each trade, but also by generating and selling information about future events. According to Andres, “It has been empirically proven that prediction markets are more accurate in estimating the probability of occurrence of future events than traditional polling methods. You can analyze the collective wisdom of the market and, unlike polls, put your money where your mouth is.” Ignacio also believes that “The information that can be generated from a market like this is immensely valuable, especially when considering the use of techniques such as data mining, cluster analysis and traditional multivariate analysis.”

The pair began discussing the idea over coffee more than a year ago. Ignacio, commonly passionate about the studies of markets and finance, told Andres how he thought that prediction markets, such as InTrade and the Iowa Electronic Markets, could have a great impact in the near future. Andres quickly became excited about the idea and with his usual energy proposed Ignacio to partner in a business plan that could capitalize on this trend.

While Andres offered experience as a successful past entrepreneur, including having founded a web company when he was 18, Ignacio, currently a Finance TA for Prof. Andrew Lo and formerly a strategy consultant with Booz & Company, brought a structured analytic approach. With a vision for launching the company in Latin America, a continent where the penetration of online markets is still low and where both men have significant local knowledge, the pair entered their business plan into IDEAS.

IDEAS is organized by the premier Venezuelan business school, the Instituto de Estudios Superiores Administrativos (IESA) and is backed by over 40 of the leading institutions including venture capitals, global consulting firms, law firms, educational institutions, media companies, banks, and dozens of leading multi-national and national companies with operations in the country. The competition is said to be Latin America’s equivalent of MIT’s $100k competition.

Not only did the prize winners walk away with a sizeable check, they also gained important access to potential investors and partners in the region, in a time where North American investors are reluctant to invest in new ventures. They are aiming at a nascent Latin American market that in 5 years could grow to $100 million and over 500,000 users. Andres is already expecting to launch this venture directly after graduation. “We will launch the beta test very soon,” he says. But whatever the future holds, this is yet another example of the powerful ideas and relationships that are formed in MIT Sloan entrepreneurship community, and of the international success that Sloanies can enjoy when working together.