Brazil – Endless Possibilities, High Potential

With a population of 212 million people, Brazil is the most populous country in South America, and fifth in the world. Occupying 48% of the continent, it is vast in land and resources. Brazil’s history of colonialism and immigration, combined with political and social changes, has resulted in a country rich in diversity ranging from its people, culture and its economy. Despite its economic and political turbulences, Brazil is constantly reforming and its people’s entrepreneurial spirit have kept the country on the journey to reaching its full potential of a leading powerhouse both regionally and globally. (download our 2019 White Paper about Brazil)

In preparation for the next Scaleup Bootcamp São Paulo, we’d like to give you some details about the trends in this ecosystem.

Trends

  • Educating Talent

Brazilian talent ranks second out of the major emerging market, with 5.6% of annual talent pool growth.

  • Smart Phone Penetration & Internet Penetration

The country is the largest internet market in Latin America and the fourth largest market in the world. Smart phone penetration has reached above 40% in 2018, and the monthly internet usage averaged 25.7 hours per user, which is much higher than the region’s average of 18.6 hours.

  • Social Media Usage

Social media penetration rate has been increasing tremendously, and will continue to do so for the following years. Facebook is the leading social platform in Brazil, and third largest Facebook market in the world. 

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The Startup Ecosystem

Brazilian startups were born with the goal of providing solutions to underserved audiences in order to fill gaps left by traditional institutions due to restrictive access or prices, or even to demand that has potential that has been overlooked or ignored by traditional players. Innovative solutions by these startups are tackling problems mainly surrounding financial transactions, education and healthcare. The number of startups is above 10,000, with a 20% annual increase. 8 out of 10 unicorns in Latin America emerged from Brazil in 2018, and venture capital investments was approximately USD 860 million over the year.

  • Edtech

Poor infrastructure, limited resources and lack of teacher training are some of the challenges the Brazilian’s education system have been struggling with for quite some time. The Government of Brazil encourages education with a creation of several incentives: Bolsa Familia, a social welfare program, provides financial aid to families to keep children in school. Also, the Program of Connected Educational Innovation plan to improve the pedagogical use of technology in public schools. These conditions allow the growth of EdTech landscape, as opportunity is present along with the government support. With the rapid growth in the technology sector in Brazil, it is important for the population to be equipped with the technological skills to develop home-grown talent.

Top Segments: Basic Education – Elementary and middle school (47%), Free courses (19%), Corporate upskilling (8%), Higher Education (6%), Language Teaching (4%)

  • Fintech 

Brazil is the most active country in fintech in Latin America, and is the largest fintech ecosystem in the region. USD 257 million was invested in fintech just in the first half of 2018. 

41% of entrepreneurs fail to have access to financing through traditional banks. Only 59% of Brazilian companies have access to loans at banks, but this number is a far below the 95% in the developed countries. For small and medium-sized businesses, getting loans is even more difficult. 84% of them do not have access to financing, and combined with high interest rates and bureaucracy, it is almost impossible for smaller players to have a chance for a loan. Realizing this gap, fintech companies saw an opportunity. Therefore, the startups are targeting small to medium enterprises by offering disruptive tech solutions to enable wider and easier access to financial services and loans.

Top Segments: Payments and Remittances, Enterprise and Financial Management, Lending, Personal Finances, Crowdfunding and Wealth Management

  • HealthTech

HealthTech was the second-fastest growing tech sector in Latin America in 2018. Brazil spends 9.1% of its annual GDP on healthcare, and it is the largest healthcare market in the continent. However, out of 56 countries, Brazil was ranked 51 in Bloomberg’s health-efficiency index. The country’s healthcare costs have doubled in the past years and over USD 18 billion was wasted annually due to these inefficiencies. These reasons gave rise to health startups as alternative care providers with a higher quality of healthcare.

Top Segments: Telehealth services (23.8%), Clinical Administration (20%), Digitalization of medical records and Prescription, Predictive and Preventive Healthcare (8%)

Despite having still recovering from the 2014’s economic recession and political reforms, Brazil’s entrepreneurial spirit and their creative and innovative solutions have made themselves a strong contender in the tech industry. 

About LatAm Startups

LatAm Startups is a non profit corporation based in Toronto supported by the City of Toronto, members of NACO and designated company for the Startup Visa program. We support international startups with bootcamps and softlanding programs to grow global from Canada.

Sources:

http://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2018-Full-Report.pdf

https://www.forbes.com/sites/angelicamarideoliveira/2019/03/29/sao-paulo-the-brazilian-innovation-ecosystem-is-ready-for-business/#16c90dba10f9

https://www.pwc.com.br/pt/setores-de atividade/financeiro/2018/fintech_deep_dive_ingles_18.pdf

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