Brazil: A look into Latin Americas largest startup ecosystem

Brazil: A look into Latin Americas largest startup ecosystem

click photo for more information
Brazil: A look into Latin Americas largest startup ecosystem
Conrad Egusa is the CEO of Publicize. More posts by this contributor: A Look into Chile’s innovative startup government Austria: The up-and-coming early-stage investment capital of Europe How to join the network David Carter is a senior account manager at Publicize. How to join the network In September 2012, Forbes published a lengthy feature heralding Brazils arrival […]

In September 2012, Forbes published a lengthy feature heralding Brazils arrival as one of the most entrepreneurial countries in the world. At the time, the South American giant had been powering through a global recession, with growth rates that drew the envy even of its surging companions in the emerging-market bloc.

Roughly 25 percent of Brazils workforce was self-employed in some capacity, and small businesses were accounting for two-thirds of private sector job creation in a rapidly diversifying economy that had already produced record reductions in poverty and unemployment.

This was a cause of tremendous enthusiasm, and Forbes was far from the only one to take notice.

The details of Brazils decline from that high-water mark have been recounted many times in the last four years. Political corruption, fiscal mismanagement, falling commodity prices and stagnation in China converged to bring about a dramatic reversal. Overnight, Brazil went from historic boom to the countrys worst economic crisis in decades. With so much negative attention on Brazils many and serious problems, its easy to overlook a counterintuitive truth about the countrys burgeoning startup scene: The overall outlook has not changed.

With more than 200 million people, Brazil is still the most populous country in South America, as well as its largest market. Internet penetration and use are still high Brazil trails only the United States in total Facebook, Twitter and YouTube users and the country still has more mobile devices than human inhabitants. The only Portuguese-speaking country in Latin America, Brazil is still uniquely positioned to capitalize on regional markets and is artificially devoid of international competition.

But big impediments remain. Economic downturn has done nothing to diminish the notorious labyrinths of red tape Brazils indecipherable bureaucracy erects around even the most straightforward certifications, transactions and licensing processes. At 14.25 percent, interest rates are high for the returns your average Silicon Valley VC fund could expect to see on a given portfolio, rendering entrepreneurship needlessly risky for many investors who might otherwise be interested in backing promising businesses. Antiquated labor laws and tax codes, crumbling or non-existent roads and an overburdened university system are just some of the longstanding barriers entrepreneurs continue to face in the country.

Yet Brazilians are famous for innovating around inefficiencies, and their own attitudes tell a different story than the dire headlines of the business press. Fundacity a network for startups and investors has found that education and healthcare, two of Brazils most chronically troubled sectors, are precisely the areas investors are most keen on. With the national mood plunging toward despair in the first semester of 2015, Brazilian accelerators, VC funds and angel networks nevertheless backed at least 195 startups between them.

Those combined investments accounted for just under 7 percent of the total capital taken in by startups that semester, which suggests something else about Brazilian entrepreneurialism foreign observers would do well to make note of: the potential remains enormous.

Much needs to happen before that potential can be realized, but as Juliana Vasconcelos, from Brazils government investment agency Apex, put it at the Venture Capital in Brazil Forum in Menlo Park this past September, crisis creates opportunity. Theres as much, if not more, reason to take stock of the Brazilian startup economy now as there was in 2012, when the country was at its most ascendant.

Origin story

The story of Brazils startup scene starts long before those of most of its South American counterparts.

TOTVSwas founded in 1983 and has been aconstant presence in the national ecosystem ever since. Today it supplies business software to around 60 percent of Brazils small and medium-sized businesses, making it by far the most successful Brazilian tech company, and the countrys 22nd most valuable brand overall. The largest software company in South America the company now boasts 26,000 active users and 10,000 employees TOTVS also claims to be the only one with a proprietary software development platform.

1983 was also the year that the Brazilian government, still operating under military rule at the time, created the Associao Brasileira de Private Equity & Venture Capital (ABVCAP). Other government initiatives to foment entrepreneurship have fizzled out, but ABVCAP is still active, organizing networking and promotional events like the annual Brazil Breakfast, set to take place in New York in late September, and Brazilian Venture Capital Conference, set to take place in So Paolo in late October.

It took many years for the private sector to start developing a significant venture capital presence of its own. But in 2000, Inseed Investments, Inventta consultancy, Tropos Lab and a biotech firm called Ecovec came together to form the Instituto Inovao Group, the foremost business generator in Brazilian innovation.

By 2002, the local scene had developed to the point that the outside world was looking to get involved. Google picked So Paulo for the site of its first Latin America office, a decision vindicated in the steady stream of talent that continues to flow through its doors from across the region. Three years later, TOTVS went public on the New Market of the Stock Exchange of So Paolo, becoming the first Latin American IT company to IPO.

Brazils first major acquisition followed soon after, in 2006, when a South African conglomerate purchased a 91 percent stake in Buscap, a compare-and-shop e-commerce site. At $374 million, the exit, still one of the countrys largest, helped encourage further investment in the market. In 2009, Cassio Spina, an entrepreneur, founded Anjos do Brasil, a nonprofit angel network dedicated to keeping the trend going. In 2011, Redpoint Ventures, a California-based VC fund, and e.ventures raised $130 million to invest in early-stage Brazilian companies.

Brazilians have long since identified the issues that need to be addressed in order for the country to make the next step as a driver of innovation.

The 2012 Forbes article came out as the Brazilian startup scene seemed poised to make a major leap. In 2014, the transport app Easy Taxi raised $40 million in Series D funding from Phenomen Venture and Tengelmann Ventures, among others for an expansion into Latin America and Asia. Based on the innovative model from Start-Up Chile, Start-Up Brasil launched later that year, with a mandate to attract foreign entrepreneurs to the local consumer market and foment domestic entrepreneurial culture. Backed by $78 million from the government, it was meant to be the culmination all the momentum Brazil had been building.

Within two years, of course, that momentum would be largely gone, and Start-Up Brasil along with it. But measured against the collapsing expectations, the Brazilian startup scene performed impressively. In the past year, Googles Brazilian campus Google So Paulo announced its first batch of resident startups. YouTube Gaming and Instagram for Business have both planted flags in the country. An array of national businesses have completed impressive fundraisers, from the pet-sitting marketplace DogHero ($3.1 million) to the B2B sales software firm Exact Sales ($1.2 million).

So Paolo: The financial capital

Depending on who you ask, So Paulo is either what would happen if New York threw up on Los Angeles, or what would happen if Los Angeles threw up on New York. Either way, its big.

How big? If it were its own country, So Paulo would be the eighth largest in South America. From above, the city seems to sprawl out and up at once.

The other part of that analogy is money. So Paulo is not just the financial capital of Brazil, its also its primary center of commerce, fashion, food, music, industry and sport. As goods and services replace factories as the core of its economy, So Paulo is expected to leap from the tenth to sixth largest urban GDP in the world. Foreign businesses go there when they want to open shop in Brazil. Brazilian businesses go there when they want to project themselves on the national scale or abroad.

It should come as no surprise that So Paulo is by far the most mature startup scene in Brazil. Even entrepreneurs from rival cities will tell you that the majority of Brazils startups are concentrated in the city.

Transitive talent is one of the main advantages So Paulo has in that respect. Established tech companies like Google, Uber and Airbnb, to say nothing of established corporations in general, have their Brazilian headquarters in the city, and when employees get bored or inspiration strikes, they often leave to start companies of their own. By the same token, entrepreneurs looking to recruit experienced teams have no shortage of options from which to choose. The largest startups in the country, such as real estate startup VivaReal, which has raised approximately $75 million to date, are based in the city.

So Paulo is by far the most mature startup scene in Brazil.

The companies themselves get involved, too, whether through patronizing events or providing a steady demand for B2B innovation. The largest and second largest private banks in the country have both set up entire divisions to interact with So Paulos thriving fintech subsector. Visa and IBM are major sponsors of Startup Farm, a leading accelerator with more than $100 million invested in upwards of 200 startups. Brands as varied as Embraco, a refrigeration technology and production company, and Natura, a cosmetics label, have created similar programs to invest in startups operating in their respective spaces. Impact-accelerators such as Artemisia and the nonprofit Endeavor play important roles in the ecosystem.

But the So Paolo startup culture also gets by just fine on its own. Together, co-working spaces like CUBO, plug.coand Impact Hub; accelerators like ACE, which has modeled itself as a growth-oriented version of Y Combinator; investment firms like Monashees, Kaszek Ventures, DGF, Redpoint eVentures, SP Ventures, Antera, 500 Startups, BBI Financial, and Bonanza Investments; and government-led initiatives like Innovatech, which provides online mentorship to around 300 startups, and SEBRAE, which focuses on small business more generally, form a well-rounded, autonomous ecosystem that maintains a surprising level of cohesion, in spite of the sheer size of the city. Organizers launched the inaugural CASE conferenceat a time when most of the national economy was in belt-tightening mode. This fall, they expect 8,000 entrepreneurs from 2,000 startups to attend.

Leaders in the So Paolos ecosystem include David Velez of NuBank, Brian Requarth of Viva Real, Fabricio Bloisi of Movile, Paulo Veras of 99 Taxis, Jorge Pacheco of Plug, Guilherme Junqueira of Gama Academy, Flavio Pripas of CUBO, Romero Rodriguez of Redpoint, Ana Fontes of RME, angel investor Silvia Valadares, Tony Celestino of UpGlobal, Andr Barrence of Google Campus, Joo Kepler of Bossa Nova Investments, Felipe Matos of Startup Farm, Carolina Morandini of Wayra and Michel Porcino from the So Paolo Mayors Office.

San Pedro Valley

Its rare that you can trace the origins of a given startup scene with such precision, but the chosen moniker for Belo Horizonte gives it all away. Aside from the usual play on the northern California tech-mecca, San Pedro Valley draws its name from the So Pedro, the neighborhood that birthed many of Belo Horizontes first and most successful startups.

What set this core, pioneering group of entrepreneurs apart was not just their businesses but their commitment to giving back, in ways both concrete and abstract, to build a real ecosystem.

Principal among these efforts has been the Brazilian Startup Association, a unique entity started by Gustavo Caetano the CEO of Samba Tech, the online video platform that recently added to its regional holdings with a new satellite location in Seattle, its second in the United States and three other local leaders. Conceived as a facilitator of intra-entrepreneurial exchange and a lobby group advocating on behalf of forward-thinking startup policy in Brazil, the association has grown to include more than 4,000 member startups and 38,000 entrepreneurs throughout the country.

Other important community spaces include Hora Extra BH, a regular meetup, Coolwork, a coworking office and Aceleradora, an accelerator. Google has its national R&D office in the city, and in 2012, the city government inaugurated BH-tec, a digital park that caters to entrepreneurs in particular. Another government program, Minas Digital, an offshoot of the state Ministry of Technology, aims to have supported 100,000 local entrepreneurs by 2025. Toward that goal, it sponsored Belo Horizontes first StartupWeek last year, which featured more than 70 events across the city. Additional leaders in the city include Rodrigo Cartacho of Sympla, Joo Resende of Hotmart, Mateus Lana of SmarttBot and Roberta Vasconcellos of BeerOrCoffee.

Integral to the citys startup culture is its large student population. With four top universities, including Minas Gerais Federal University, one of Brazils most dependable sources of IT talent, Belo Horizonte has the feel and energy of a college town, but the size and ceiling of a major urban hub. Lots of ambitious young people still leave for So Paulo, lured either by job or fundraising prospects. But in the near future, its easy to envision a reverse on the brain drain. Belo Horizonte is cheaper, friendlier and less inundated with traffic. Basically, its in many respects a nicer place to live, and plenty of businesses are finding it a prosperous place to put down roots, as well.

Rio de Janeiro and Florianpolis

As far as living conditions go, you wont find a better place in Brazil, or anywhere else for that matter, than Rio de Janeiro. The stark, granite cliffs, lush jungle canopy and picturesque beaches get plenty of attention as is, but theres still something to be said for having the option to brainstorm at a caf overlooking the ocean or team-build during a hike into the mountains.

Regular events like FuckUp Nights, Geeks on Beer, Circuito Startup and Rio Info have learned to take advantage of the citys stunning landscape and vibrant cultural offerings. A fairly comprehensive list of activities can be found on Startup Digest.

For better or for worse, the citys transformation in recent years has been specifically directed toward creating a more attractive environment for a young, cosmopolitan professional class. Government programs to improve security, 4G connectivity and transportation have in turn encouraged major private investments in the tech sector. Cisco, in conjunction with local authorities, is devoting $500 million to a project that includes a venture capital fund and co-development facilities. Located in the heart of downtown revitalization, NEX has become the largest co-working space in all of Latin America.

Rio isnt the only beachside tourist hotspot at the forefront of the Brazilian startup scene.

In light of the city governments emphasis on attracting foreign investment and tourism, its encouraging to see entrepreneurs use tech innovation the area for which Rios startup scene is best known to address lingering social issues. Founded in 2011 by Leonardo Eloi and others, Meu Rio (My Rio) is a digital civic engagement platform that sends alerts and facilitates a wide-ranging political discourse between diverse sectors of society. In a city where police violence has long led to distrust among the general population, the Igarape Institute has worked to develop smart policing mobile technologies to improve transparency. And, like a localized, family oriented Groupon, Clubinho de Ofertas offers mothers affordable shopping and activity options.

Cariocas, Rios largest startup group that counts several hundred members, hosts regular events and today is led by a group of entrepreneurs, including Danilo Neves de Martins and Ricardo Motta of Hostintown. Investors in the city include Acrux Capital, ArpexCapital and Valor Capital, which play an important role alongside organizations such as Startup Rio and FAPERJ. Additional leaders in Rio include Gabriel Gaspar of Nibo, Gustavo Mota of We Do Logos, Ricardo Barros of The Pareto Group, Bernard De Luna of 3Days and Rodrigo Salvador of Passei Direto.

But Rio isnt the only beachside tourist hotspot at the forefront of the Brazilian startup scene. Florianpolis has made a big play to assert itself in the tech economy, and, in recent years, its payed off. According to the state government, 600 companies now contribute to a robust startup sector that has grown an average of 15 percent year-over-year to represent $350 million in annual GDP for the city.

Local leaders such as Eduardo Mattos of SmartMob Coworking and Eric Santos of Resultados Digitais play an important role in this growth. Earlier this year, 100 Open Startups named 10 companies from Florianpolis in its top-100 list, running the gamut from a solar energy startup (Soluz Energia) to a visual recognition software company (Meerkat) to an information platform for surfers (Opifex). Some people already put Florianpolis ahead of Rio in terms of ecosystem maturity. But if its not there already, then ongoing investments intended to consolidate a tech infrastructure that already includes two cyber parks Alfa and Sapiens Parque and the skeleton of an innovation route along one of the citys major thoroughfares may soon push Florianpolis over the threshold.

Conclusion

The good news is that Brazilians have long since identified the issues that need to be addressed in order for the country to make the next step as a driver of innovation. According to the World Bank Group, it takes 83.6 days and 4.3 percent of income per capita simply to start a new business. Closing an old one can often be even harder. Labor laws dont allow for the types of remuneration structures many startups like to rely on, and companies trying to maintain a lean workforce waste precious time and resources navigating the countrys antiquated tax code. None of this would strike anyone who has done even minimal business in Brazil as novel information.

The bad news is that theres a reason the problems havent been fixed, despite universal recognition that they should be. In recent years especially, political infighting and communication breakdown has paralyzed the country, as documented by journalist Anna Heim. Whatever the arguments about the way that conflict was resolved, resolution at least holds the promise of action. President Michel Temer, controversial though he may be, has promised business-friendly reforms that could help unleash the immense latent potential of Brazils startup sector.

In the meantime, there are things Brazils entrepreneurs can be doing themselves. As in most Latin American countries, Brazilian startups are often little more than mirror copies of models proven elsewhere. Thats fine for doing business on the national level, but if Brazilian startup culture is to project itself beyond its own borders, it needs to follow the example set by the many local entrepreneurs who have contributed genuinely new ideas to the marketplace. The number of business doing just that has ratcheted up with each passing year, and as the country as a whole starts to turn the corner on an economic slump, its only a matter of time before Forbes and company are once again writing features on the booming Brazilian startup scene.

Read more: https://techcrunch.com/2017/01/19/brazil-a-look-into-latin-americas-largest-startup-ecosystem/

No need to wait for “Black Friday” when you can shop on Thursday

click photo for more information
No need to wait for “Black Friday” when you can shop on Thursday
Read more: https://imgflip.com/i/1zitgl

French police conduct security operation in Paris church

click photo for more information
French police conduct security operation in Paris church
French police conducted a security operation on Saturday in a busy shopping district in central Paris and said it had ended with no sign of danger. During the operation, the official French govern Read more: http://www.thehindu.com/news/international/french-police-conduct-security-operation-in-paris-church/article9119136.ece?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication

Why UPS Drivers Dont Turn Left And You Probably Shouldnt Either

click photo for more information
Why UPS Drivers Dont Turn Left And You Probably Shouldnt Either
It might seem strange, but UPS delivery vans dont always take the shortest route between stops. The company gives each driver a specific route to follow and that includes a policy that drivers should never turn through oncoming traffic (thats left in countries where they drive on the right and vice versa) unless absolutely necessary. […]

Clever Pup Picks Out His Own Treats At The Supermarket

click photo for more information
Clever Pup Picks Out His Own Treats At The Supermarket
Read more: http://cheezburger.com/415239/clever-pup-picks-out-his-own-treats-at-the-supermarket

Oblivious Mom Leaves Glowing Review For a Sex Toy She Mistook as Toy For Her Kids

click photo for more information
Oblivious Mom Leaves Glowing Review For a Sex Toy She Mistook as Toy For Her Kids
Seriously, she still gives it the 4-star review? Wow.  1 Via:

Jakarta explosions: multiple blasts and gunshots reported rolling report

click photo for more information
Jakarta explosions: multiple blasts and gunshots reported  rolling report
Reports of explosions and gunshots in the Indonesian capital near to Sarinah shopping mall and United Nations offices Read more: http://www.theguardian.com/world/live/2016/jan/14/multiple-explosions-gunshots-reported-in-jakarta-rolling-report

America’s biggest mall won’t be open on Thanksgiving

click photo for more information
America’s biggest mall won’t be open on Thanksgiving
Shoppers pile into a Macys department store in NYC on Black Friday last year. The Mall of America won’t be opening on Thanksgiving this year. Every year, Black Friday shopping hours seem to creep closer and closer to the time Thanksgiving dinner is still hot on the table. But, this year, the Mall of America […]

They Thought This Dog Had A Strange Rash, But Her Real Condition Was Horrific

click photo for more information
They Thought This Dog Had A Strange Rash, But Her Real Condition Was Horrific
We’ve seen dogs in all sorts of desperate situations, but nothing quite like this pup named Belle who was found wandering the streets of Johannesburg, South Africa. In September, rescuers from Community Led Animal Welfare, otherwise known as CLAW, found a lab and hound mix covered in so many blood-sucking ticks, she was practically unrecognizable. […]

Lubrication For Your Tool

click photo for more information
Lubrication For Your Tool
Lubrication For Your Tool This man shopping at a local chain store unexpectedly found the wrong type of lube for his “tool.” via Jamie Lee Bracey Read more: http://dailypicksandflicks.com/2015/10/19/lube-for-your-tool-video/

The joys of online shopping!

click photo for more information
The joys of online shopping!
Read more: http://imgur.com/gallery/SuMxM

This is why I hate shopping for clothes lately

click photo for more information
This is why I hate shopping for clothes lately
Read more: http://imgur.com/gallery/zqaT5jY

Lions, Tigers, Bears…Oh Really! This Sanctuary Rescues Them All From Abuse

click photo for more information
Lions, Tigers, Bears…Oh Really! This Sanctuary Rescues Them All From Abuse
With so many house pets entering animal rescues every year, it’s easy to forget about their wilder cousins. It’s not just cruel hunting practices that endanger our wildlife, though. People illegally take them in as pets, abuse them in circus acts, and trade them in the exotic animal market. In fact, this very live underground […]

Paleontologists Believe They Have Discovered The First Fossil Bed From The Dinosaur Extinction Event Itself

click photo for more information
Paleontologists Believe They Have Discovered The First Fossil Bed From The Dinosaur Extinction Event Itself
When an asteroid hit the Earth around 66 million years ago, it wiped out almost 75 percent of the plants and animals on the planet. All dinosaurs, except those that would eventually give rise to modern birds, were killed following the impact. Yet despite such a vast die-off, no bone bed containing a concentration of […]

Calls to ban Coca-Cola Christmas truck

click photo for more information
Calls to ban Coca-Cola Christmas truck
His concerns come four months after a study by Public Health Liverpool naming and shaming what it said were the most sugary breakfast cereals. Related Topics Coca-Cola Obesity Read more: http://www.bbc.co.uk/news/uk-england-merseyside-41810436

Worlds First Skyscraper Designed To Hang Suspended From An Asteroid

click photo for more information
Worlds First Skyscraper Designed To Hang Suspended From An Asteroid
So far, weve had sky gardens in China and floating cities in the Pacific, but experimental architectural design has just gone a step further into the future. New York-based architects have revealed their plans for a skyscraper to hang suspended from an asteroid 50,000 kilometers (31,000 miles) in the air. Clouds Architecture Office, the people […]
load more posts