Brazil: a land of startups

Country stands out for its boosting environment for technology and innovation companies  

By Sérgio Siscaro e Estela Cangerana

 

Huge territory, multicultural history, openness to new ideas, creativity hub. Some of the attributes that perfectly describe Canada are also true about Brazil. The country, with 200 million inhabitants and low cost due to the devalued currency, has presented an impressive growth in the number of innovation centers. More than that, the increase in the number of entrepreneurs, regional and economic characteristics and the entry of some Brazilian startups in the coveted list of unicorns have placed cities like São Paulo in the list of the most promising places in the world.

According to the Global Startup Ecosystem Report 2019, prepared by Startup Genome, São Paulo is highlighted in the “Next 30” list among cities whose ecosystems are expanding and are expected to consolidate as important innovation hubs worldwide in the coming years. What all cities on that list have in common is at least one unicorn (startup valued at more than US$ 1 billion), strong regional leadership, and leadership in some specific segments.

São Paulo is ranked among the Top 10 major global ecosystems for accessible talent, Top 30 best for fintechs, and offers also a very encouraging environment for healthtechs. According to the report, the local ecosystem is worth US$ 5.1 billion. Among the benefits offered by the government are exemption on several types of taxes such as revenue, import & export and manufactured goods taxes. Access to state-of-the-art teaching and research institutions, such as the University of São Paulo (USP), which is ranked 1st in South America in the global ranking of universities, is yet another differential.

Other cities in Brazil also come up with equally attractive features for startups. Rio de Janeiro (RJ), Belo Horizonte (MG), Porto Alegre (RS) and Fortaleza (CE) are some of them. Florianóplis (SC), for example, is the Brazilian city with the highest number of startups per inhabitant, according to statistics from the Santa Catarina Association of Technology (Acate). It is estimated that in the state of Santa Catarina, which represents 3% of the Brazilian population, there are 20% of the country’s startups, right after São Paulo.

Data from the Brazilian Association of Startups (ABStartups) point out that currently there are around 12,000 startups in Brazil, operating in different segments, from areas such as software as a service (SaaS) and application development, to quite a variety of sectors. One example is fintechs: by using technology to compete with traditional banks, allowing account holders and investors a more advantageous experience, they are gaining an increasingly important place in the market. Today these companies have a great ability to attract new talent in the job market: survey of LinkedIn in 2018 showed that 13 of the 25 most desired startups are in the financial sector.

In a similar way, Brazilian agribusiness sector has also benefited from the solutions brought by the new companies, and finds a strong ally in them to raise productivity. In 2018, the Radar AGTech Mining Report study already showed that there were at least 135 startups geared towards the development of agricultural technologies in the country, agritechs. The range of innovations brought by them applies in areas such as precision agriculture, monitoring and data processing technologies, use of robotic and drone solutions, new methods for planting and breeding animals and pest control, among others. Between 2016 and 2017, the aggregate volume of investments in agritechs rose 94.2% to $ 437 billion.

Links connected

The growth of the sector also stimulated the creation of new forms of connection between the players in the ecosystem. The relationship with international partners can be instrumental in raising the capacity of startups to raise funds or develop technology solutions. This need drove, for example, the creatin of the Connection Bureau platform by the Technology Committee of the Chamber of Commerce Brazil-Canada, a great ally in the startups internationalization process, as it facilitates their connection with international partners and investors.

The initiative allows the exchange of experiences and promotes business between companies from Brazil and Canada, be they startups, investors, incubators, accelerators or service providers. The Connection Bureau helps to unite potential partners by providing conditions and guidelines so that startups can launch into the international market safely and successfully.

Over the past 18 months, the platform has received more than 150 applications from interested companies, and now has 114 members, including 56 startups. Soon, an online mentoring system will be launched for startups (both Brazilian and Canadian), which will allow access to guidance in various areas, such as legal assistance and international sales.