Discuss the entrepreneurial ecosystem in Brazil is not an easy task. But professionals with experience on investing and creating companies in that market, have learned enough about the biggest country in LatAm and know exactly which are the factors to weigh in that business environment. Fear of failure, lack of successful stories, and the immaturity of the market were some of the points discussed by investors and entrepreneurs from Advance Medical, Valor Capital Group, Accel Partners, IDXP and T2 Ventures regarding the entrepreneurial ecosystem in Brazil.
Whether Brazil has an innovation ecosystem and if it can be compared to Silicon Valley, this is a question with two answers, according to Fred Aslan. The CEO of Advance Medical pointed out that he decided to start his own company in Brazil, in 2010, because he saw the opportunities in his country. His company is focused on the commercialization of medical technology in Brazil and other countries in Latin America.
“Yes, Brazil has an entrepreneurial ecosystem and no, it is not like the US. Because the US have the advantage of having a very mature ecosystem, where everybody basically speaks the same language, everyone knows who to go to for any information and there are many people who make this ecosystem work, “explained.
With more than 10 years of experience investing on healthcare innovation in the Bay Area with Venrock, Aslan pointed out that an entrepreneurial ecosystem is not built only by the entrepreneur. He believes that many people make it happen, from board members to investors to bankers.
“And I think Brazil has a very entrepreneurial culture place, but it is not as advanced in regards of number of investors in the side lines, or as many experienced people, building and selling companies as we do here,” said Aslan.
Some of the reasons pointed by Fred Aslan for the differences between the entrepreneurial environment in Brazil and SV include the lack of experience of Brazilian entrepreneurs compared to the US, therefore less successful stories.
“But the good stories are beginning to emerge now. And the success attracts talents, and people realize that the career as an entrepreneur exists, which is something new in Brazil.”
It is no surprise that all the panelists agreed that Silicon Valley is an unique place for entrepreneurs from everywhere. While confirming this fact, Antoine Colaco, partner at Valor Capital Group, also said that he sees Brazil as a place that presents big opportunities.
“There are inefficiencies and technology can solve them. Even when we consider the economy, the water shortage and other things that are happening right now in Brazil, I still think that there is a lot of opportunities for companies to solve problems and we have seen some very excited entrepreneurs there”, explained.
To make justice to the young entrepreneurial scenario in Brazil, Colaco stated the fact that Silicon Valley is a much more mature ecosystem and that the system in Brazil still has a lot to learn.
“It is more difficult to hire and fire professionals in Brazil and also set up a company. But if you can find an entrepreneur that can go through all those processes, he can be very successful outside the country too.”
Mariana Donangelo, integrant of the investment team at Accel Partners, said that although companies in Latam are on their portfolio since 2008 and that they have success in their investments in the region, the situation hasn’t gotten to a point where it is worth for Accel having an office in Brazil yet.
“As for now, we are happy with the strategy we have, which is to invest from here, but making sure that we have partners that can help our companies on a local level,” added.
But if Brazil presents lots of business opportunities, one question remains: Why do Brazilian entrepreneurs still come to Silicon Valley?
According to the co-founder of IDXP Analytics, Gustavo Lemos, who also founded a company in Brazil, the experience as an entrepreneur in both places has made him able to evaluate the differences when it comes to the ecosystem. Lemos is a successful Brazilian entrepreneur and its company IDXP provides in-store shopper behavior analytics.
“The environment is what really matters. It is important for the entrepreneur to be surrounded by people who understand what he/she is doing. This goes from company founders who plan to build an entrepreneurial career, to investors knowing what is the right way to incentive an early stage startup and its risks to the funding ecosystem as well”, explained Lemos.
When asked how Brazil can put the pieces together to form a stronger entrepreneurial scenario, the CEO and co-founder at T2 Venture Creation Victor Hwang explained that it is necessary to understand the difference between money and capital. According to Hwang, capital is something that can be used, leveraged, and circulated in a system.
“If you look at the Valley, the fund managers, the people who actually put the money, they just do not try to take a high percentage of the business because they realize they are partners integrated in the process.”
Victor Hwang also highlighted that the birth of the venture capital industry in the Valley was born thanks to people who jumped in without even knowing if they could fund the company.
“So that model, of fund managers taking an entrepreneurial path, is missing in those parts of the world (not just Brazil) because they think it is a money problem. In fact, it is not, it is a capital problem and people who manage that capital have to adopt a certain attitude on the way they work with entrepreneurs”, concluded.