Silicon Valley is a state of mind,” said Ambassador Pedro Borio, Consulate General of Brazil in San Francisco, during a recent address at the annual BayBrazil Conference at the Googleplex in Mountain View.
A career diplomat since 1976, Borio spoke about the significant growth in ties and similarities between Silicon Valley and Brazil during the last decade, a stormy tide of a national political scandal beginning to ease and his prediction that Brazil would rise again. “When you look at the historical data, every time Brazil emerges from a major crisis, it grows the most,” said Borio.
Corporate venture arms of multinational giants such as Chinese firm Baidu see a big opportunity in Brazil. In September, Baidu launched a new tech startup program to provide support and mentoring as a way to seek and identify scalable ventures in the country. Applications for the program are open between now and December 31, and applicants are being assessed by the Latin American Angels Society (LAAS). In exchange for the support and mentoring, Baidu will take a 10 percent stake in the capital of the companies selected for the program.
VC investments in Latin America are increasing again, and top Silicon Valley firms are returning to the region or making their first LatAm investments, based on new data analysis released by LAVCA in early October. VC transactions are up 46 percent year over year, with $218 million deployed across 104 transactions during the first half of 2016. This follows a banner year in 2015, with 182 deals worth more than $594 million. Leading corporate ventures in the region include Monsanto, Qualcomm and Microsoft. Giants like Monsanto are investing indirectly as limited partners to established funds.
Brazil’s investment opportunity is enticing, especially for the tech sector, because Brazilians ravenously devour digital content, and are very socially engaged. They spend 68 percent more time on blogs than the U.S. Indeed, current Brazilian internet users are online more than five hours a day. They check their smartphones more than 80 times per day. With only about half the country of Brazil online today, growth could be fast and furious. Baidu is banking on more than 43 million Brazilians coming online during the next three years, which is why the country is one of its top-priority investment markets.
Celebrating São Paulo’s Cubo at the one-year mark
The real magic of Silicon Valley and other successful tech startup ecosystems is the creation of an environment to congregate and mix great minds and talent together. This creates an opportunity for synchronicity. In the most recent Global Startup Ecosystem study from Compass, São Paulo is ranked as the 12th best city for tech startups, and the only Latin American city in the top 20.
Cubo, a new 50,000-square-foot coworking space in São Paulo that launched last fall, celebrated its one-year anniversary with a big gathering of entrepreneurs, academics, venture capitalists and corporate mentors. Cubo’s overall objective is to fast-track São Paulo’s startup scene, foster entrepreneurs and provide them with Silicon Valley-like perks, a close-knit community, more serendipity and vital business connections.
While economic uncertainty is still a factor, Brazil is still one of the most intriguing emerging markets for investors, and macroeconomic conditions seem to be improving.
At the end of its first year, Cubo achieved 100 percent capacity, with more than 58 startups and 250+ professionals working there, and another 250 visiting every day. Its companies now generate more than R$135 million in revenue, and they have collectively raised more than R$100 million. Sixty projects have been initiated between its startup residents and Itau, Cubo’s corporate co-founder and Brazil’s largest bank. Eighty pieces of new business have emerged between Cubo’s startups and outside corporations, and 650 new jobs have been created in the process.