Entering the market in Brazil

Why expand to Brazil?
Brazil is a massive market of 210 million people and the 12th largest economy in the world. It is a country of continental dimensions with rich and diverse natural resources. Despite its huge population size and continental dimensions, Portuguese is the shared language, along with the same general cultural and social values, creating favorable conditions to establish and expand business regionally and nationally. The bottom of the pyramid economic class has emerged and gained access to digital services. Brazilians are very enthusiastic about new technologies and head statistics of time spent on the Internet. Brazilian big and medium cities have become home to multinational and regional tech powerhouses.

Brazil also has the largest startup ecosystem in Latin America, and VC investments as of May 2021 have already amounted to USD 3,2 billion. This number already represents 90% of all investments made in the year 2020 and already outpaced the total VC investments of 2019, which was USD 2.7 billion. The current year is on a good track to beat all former records with a significant lead. The most recent numbers from June 2021, the month with all-time most Series C and Series A rounds support this hypothesis. Only in June 2021, USD 4 billion have been raised over 80 rounds, representing 2/3 of all this year's invested money so far. The hotspot of this money flow is regionally restricted in Brazil, due to high economic gaps between the states. The major innovation hubs are in the South-East (São Paulo, Rio de Janeiro, Belo Horizonte) and the South (Florianopolis, Curitiba) regions.

What is to expect?
Brazilians are enthusiastic about new technologies and proudly fit the early-adopter profile. E-commerce is also booming, as all technology, infrastructure, logistics, security and financial know-how necessary to support it. Brazilians build personal and professional relationships in a very informal way, that’s why personal contact is essential for business and gaining trust may require some time. Brazil is a heterogenic ethnic country and this diversity can provide diversified data and clinical opportunities for life sciences and med tech areas. Brazil also offers wide opportunities for international startups expansion, as there are few born global operating in the local market.

What is the state of innovation?
Brazil is experiencing a moment of growth and maturity in its innovation ecosystem: the number of accelerators, incubators, corporate ventures, investors, innovation hubs, R&D centers, coworking spaces are increasing and corporates’ awareness and startup culture engagement are becoming part of business strategy as they are increasingly approaching startups for implementing open innovation projects.

The AgTech and FinTech sectors are especially developed in Brazil. Benefitting from a connected population and low costs for users, fintechs have been thriving. Nubank, a digital bank and credit card operator, became Brazil’s third unicorn in 2018. In 2021 the digital bank continued to astonish the world. With 40 million customers and a value of USD 30 billion it is the world's third largest fintech company. It also has received USD 500 million from Warren Buffet's investment firm Berkshire Hathaway as its value has already surpassed Brazil's national bank "Banco do Brasil". Together with other major digital banks, such as C6, this makes Brazil, and especially São Paulo, a region to be on the lookout for. The digitization of payments are also on the rise. The Brazilian Central Bank's instant payment system named PIX, launched in November 2020, already accounts for 30% of all payment operations in the country. The PIX works in a similar way as TWINT in Switzerland, where users can transfer money instantly without entering bank account details. The solution won the Fintech & Regtech Global Awards 2021 in the Payment Innovation Category.

Agribusiness, a sector that accounts for a big share of GDP, is also expected to grow further with digitalization of the industry and therefore opening opportunities for Swiss solutions. Agricultural commodities account for a large part of the exports to its main partners China, the US, Argentina, and the European Union. Its local AgTech sector is experiencing a record year in investments, having surpassed USD 160 million.

Thanks to favorable meteorological and geological conditions and the size of the country, opportunities in the energy sector are also growing. The Brazilian energy matrix is predominantly renewable, relying on hydropower as the main source.

Is it easy to find qualified co-workers?
Brazil has experienced an unprecedented expansion of academic education and technical formation opportunities in the last 20 years, due to new legislation, public and private investments. Access to superior education for a significant part of professionals today is a regular career path and this new generation shift has increased workforce quality. Among Postgraduate students in Brazil, 62% are in Academic Masters and 34% are Doctoral Students. Brazilians are also self-motivated to invest in continuous education to improve their own career and the rise of e-learning and specialization courses in both private and public institutions are a solution to increasing demands. Nevertheless, there’s and increasing market demand for high-qualified professionals and proficiency in foreign languages need to be improved.

What is the good thing about Brazil?
Brazilians are very open minded, eager to test new technologies and get the latest product models. They are leaders in time spent on the internet and very active on social medias. That means getting almost instant and valuable feedbacks and contributions to products and services validation. Brazilian social and cultural identity are rooted in the Americas, Europe and Africa making the business setting easier to navigate and with less cultural divide to be challenged by Swiss entrepreneurs.

What opportunities do Rio de Janeiro and São Paulo offer?
Rio de Janeiro and São Paulo are Brazil’s biggest cities and offer a wide range of opportunities. Home to more than 20 million people, they consistently make the top 10 cities lists for digital entrepreneurs. Rio de Janeiro has R&D tech parks affiliated with high level Universities in fields such as Biotech, Engineering, IT, Oil & Gas, Renewable Energy, Creative Economy, among others. São Paulo is the financial heart and industry force of the country, ranked 12th for startup innovation worldwide and home to more than 2,700 active startups. World’s most innovative global corporations have offices in São Paulo enhancing conditions for market innovation, qualified workforce and investment.

…and what are the challenges?
Persistent bureaucracy is one of the main challenges entrepreneurs face in Brazil. That makes business lose time and money, worsened by high local and federal taxes. Despite the impressive variety and amount of data collection, there’s limited capacity to use it due to lack of structured databases. Furthermore, language can be a barrier to access information and data from public institutions, as these are mostly available in Portuguese. These conditions and other aspects of Brazilian business culture already mentioned, creates incentives for having reliable and trustworthy local partners for market entry.

What does Swissnex in Brazil bring to the table?
Swissnex in Brazil offers an array of services for interested Swiss startups, including fact finding, networking opportunities, fairs, and coworking space in Rio de Janeiro and São Paulo.

Fact finding: We can provide information about the local market and connect local players to interested startups. Startups can rely on Swissnex in Brazil to carry out preliminary market and regulatory research, identify potential clients and cooperation partners, prepare and implement market entry strategies.

Networking: Swissnex in Brazil has a broad network of experts in science and technology-based startups available to share knowledge via e-mail, face to face and on-line meetings in Rio de Janeiro and São Paulo.

Fairs and Trade Shows: support the participation of Swiss startups in industry trade shows, fairs and tech showcases.

Coworking space: We offer office infrastructure and coworking space.

Find out all about the Market Entry Camps in Rio and São Paolo:

Ultima modifica 26.08.2021

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