brazil-startup
Business Management

Building a Startup Ethos in Brazil

The dream of having a Brazilian version of the Silicon Valley has finally reached the country’s political class, prompting the federal government to launch a programme in favour of entrepreneurship in the field of technology. After researching initiatives in Chile, Canada and the US, Brazil’s Science, Technology and Innovation Ministry (MCTI) introduced in November 2012 the Start-UP Brasil programme.

With an annual budget of 23 million Reais (almost US$10m), the programme offers grants of up to 200,000 Reais per year (around US$85,000) to each project selected. Those selected also participate in an acceleration programme with access to services such as legal advice, mentoring and training. Added to the public resources, private accelerators will invest 20,000 Reais (US$8,500) to 1m Reais (US$425,000) in each startup in exchange for a shareholding percentage. And the initiative is not only open to Brazilian citizens: 25% of the approved projects can be foreign.

After one year of existence, Start-UP Brasil seems to be a first good step in the right direction but not enough in a country where opening and running a business is quite difficult. According to the World Bank's 2014 annual global report Doing Business — which evaluates, among other points, the ease of starting a business, getting credit and paying taxes — Brazil ranked 116th out of 183 countries.

“The positive point is that the government is looking at start-ups,” says Gustavo Caetano, president of the Brazilian Start-up Association and founder of a successful Brazilian start-up named Samba Tech, the largest online video platform in Latin America. “But now we need to work more on the business environment. For example, there are a lot of taxes to pay and this is lethal to any start-up.”

Bureaucracy and the complexity of the tax system allied with out-of-date employment laws explain the low survival rate of start-ups in Brazil, according to Caetano. 

“The start-ups compete at a global level. At Samba Tech, for example, we compete with companies based in a more favourable environment, like the US. So there comes a time when you start thinking: why not leave and establish my company over there.

The critics have already reached the executive team responsible for the Start-UP Brasil programme.

“We have mapped where the problems are and now other sectors in the government are getting more and more involved in the discussion,” says Rafael Moreira from Brazil’s science ministry. “There is a greater sensibility in the government to tackle these problems.”

According to Moreira, things won’t change in 2014 because of the presidential elections in October, but they should improve in 2015 when the government is able to promote specific benefits to the start-ups. In his opinion, there will be no general reform in employment laws or taxes rules, but a system of exemption should be created to encourage the development of start-ups in the country.

Although Start-Up Brasil still needs some important adjustments, participating in the program was “a super-positive experience” to Luciana Caletti. She is one of the founders and CEO of Love Mondays, a startup selected in the first round of the programme in 2013.

“The best things were the mentoring process and to have access to investors. The programme opens some doors; offers you opportunities to partnerships, events and things like that,” says Caletti.

Love Mondays is a career community, aimed at empowering jobseekers to make informed career decisions by providing reviews of companies, all of which have been contributed anonymously by employees who work there. The website also provides a platform for companies to promote their brands as good employers.

“Today, Brazil is the second most difficult place to recruit in the world,” Caletti explains. “It is only behind Japan. The unemployment rate is low and the best professionals can really choose where they want to work. In this scenario the companies in Brazil need to differentiate themselves in order to attract the best professionals.”

And, listening to Caletti, it is hard not to wonder if some opportunities seem only to be possible in a country in transformation like Brazil, despite all the difficulties of doing business in the South America giant.

 

Nathalia Fernandes is a London-based Brazilian journalist. She has worked for BBC World Service, Globo TV and Reuters.

PREVIOUS ARTICLE

« Understanding Mobile-Only Internet Usage in APAC

NEXT ARTICLE

InfoShot: Cloudera Joins the Billion-Dollar Babies Creche »