Everything you need to know about Brazil’s startup scene

Community-driven Brazil Startup Guide

Source: LonelyPlanet

The Argentina startup scene was fun and now Josh and I are in Brazil! So, in this community-driven post, you will find everything you need to know about Brazil’s startup scene.

If something is missing, leave a reply and I’ll update the post periodically.

📚 Check out our other community-driven startup guides: 🇲🇽 Mexico, 🇨🇱 Chile, and 🇦🇷 Argentina.

What everyone needs to know about Brazil’s startup scene

On the deal count front, Crunchbase recorded a total of 242 Series A and B rounds in 2021, up from 136 in 2020. That’s a ~78% year-over-year increase. Brazil was the top destination for funded companies, followed by Mexico, Colombia, Chile, and Argentina.

Venture-capital funding in Brazil in 2021, through October 12, reached a record $6.4 billion, 300% of the amount raised in all of pre-pandemic 2019, according to data firm PitchBook. That exceeded South Korea and Indonesia while surpassing the combined startup investments for Russia, South Africa, Turkey, and Nigeria.

By the end of 2021, startups in Brazil attracted record-breaking levels of funding, with over $9.4 billion raised in the innovation market — almost 2.6 times more than the $3.5 billion notched in 2020, according to The Rio Times.

Growth. Between 2012 and 2020, the number of startups grew by 427%. Statista estimates there are over 13K startups.

Brazilian startups are leading in massive markets such as financial services (4 unicorns: Stone, NuBank, PagSeguro, EBANX) and real estate (2 unicorns: Loft, QuintoAndar) and are primed to disrupt enormous industries further.

Source: Antler. Note: Nuvemshop, CloudWalk, Frete.com, Daki, Olist, Facily, Neon and Dock are missing.

Number of VCs. By November 2021, Brazil had 316 VC firms with 55% residing in São Paulo. The second and third largest VC home are Rio de Janeiro and Santa Catarina. At the time, 80% of them were focused on early-stage.

Funding & deals. Brazil has raised $4.1B and represents 58% of all deals closed in Latin America. And according to LAVCA, 30% of Brazil’s VC dollars have gone to e-commerce and proptech.

50% of the top deals done in Latin America and the Caribbean came from Brazil. They included Neon, Creditas, Flash, Solides, and Gupy.

Source: CBInsights

💰 Interested in learning more about the startup-VC opportunity that lies in LATAM? Read this post.

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🗓 Want to meet up with the Brazil startup community for coffee in São Paulo? RSVP here.

Why Brazil will attract investors and founders alike

Brazil is #1 in LATAM’s VC-Startup scene because of the size of the market, tech adoption, regulation changes, the pandemic, and momentum.

Size of the market. Brazil is the 6th most populated country in the world, has more than 210 million people, and is the world’s 12th largest economy. And its current GDP is larger than other areas with more active VC markets, such as Southeast Asia. That said, Brazil’s land size is nearly two times that of Southeast Asia.

Regulation changes. Albeit historically, Brazil hasn’t made it easy to do business, according to WSJ, in recent years, new regulations in Brazil have promoted competition in industries long dominated by a few giants. Entrepreneurs have greater access to financing from a growing group of venture-capital investors.

Recently a Startup Civil Mark, created by Abstartups and Dinamo, was legislated and will accordingly register tech companies as startups, legally, with other benefits for the sector. This is believed to be a starting stepping-stone to easy things for entrepreneurs.

Tech adoption. Brazil is one of the most connected and engaged digital markets in the world. According to Statista, more than 160 million Brazilians are online. Its population has a 75% internet user penetration, making Brazil the country with the second-largest growth in e-commerce sales, as reported by eMarketer. Interestingly enough, Brazil represents the country with the second most Facebook/WhatsApp users in the world. And according to Americas Market Intelligence, in a report that Mastercard commissioned, more than 100 million people in a region of 650 million have shifted from a dependence on cash to new online bank accounts during the pandemic.

Source: Statista

Amid pandemic, many Brazilians went to Nubank for banking, a Brazil-based online challenger bank that raised $750M in pre-IPO financing before going public in December. Nubank now amassed 40 million customers, making it one of the largest digital banks in the world.

Momentum. According to Statista, 6 out of the 10 most valuable Latin American unicorn companies are based in Brazil.

Source: Statista

Lower cost of living. The cost of living per person in Brazil is 3Xs lower than it is in the US.

Source: Living Cost

Alright from here on, I share interesting data for you to fall in love with, move to, and invest in Brazil. Enjoy!

Brazil founders and startups to watch

I’d definitely keep an eye on the founders of the 7 (out of 10) most valuable unicorns and decacorn in Latin America in Brazil: Nubank, QuintoAndar, Wildlife Studios, Loft, C6, Mercado Bitcoin, and Creditas. Beyond.

  1. Nubank ($30 billion): an online bank with its headquarters in Sao Paulo
  2. QuintoAndar ($4 billion): Established in 2014, QuintoAndar is a startup in Brazil focused on real estate rentals and sales.
  3. Wildlife Studios ($3 billion): Mobile games developer Wildlife Studios was established in 2011 and has grown exponentially since then.
  4. Loft ($2.9 billion): Another real estate-focused company, Sao Paulo-based Loft was established in 2018 and facilitates property rentals and sales, as well as providing financing to prospective buyers.
  5. C6 ($2.1 billion): C6 is another online bank, which was founded in 2018, providing current accounts, credit cards, and facilitating investments.
  6. Mercado Bitcoin ($2.1 billion): Brazil’s largest cryptocurrency exchange.
  7. Creditas ($1.7 billion): Formed in 2012, Creditas is a fintech company that facilitates secured credit, and has grown to become one of the most significant startups in Brazil
  8. NG Cash: Rio de Janeiro-based fintech focused on the GenZ market. NG Cash offers banking solutions to kids, teenagers, and young adults. They are one of the fastest-growing fintechs in Brazil.
  9. Medway: Sao Paulo-based edtech. Medway offers an educational platform for medical students and graduates who wish to enter a residency program. Medway has recently closed their USD 15m Series A round, led by Softbank.
  10. Bipa: Sao Paulo-based fintech. Bipa offers a very fast and easy-to-use Bitcoin wallet that transacts within the Lightning Network.
  11. Mara: Sao Paulo-based grocery startup focused on serving the underserved in Latin America. Mara’s co-founder is Ariel Lambrecht, who co-founded 99, the first Brazilian unicorn. Mara has recently raised $6 million in a round co-led by Canary and Caffeinated Capital.
  12. Memed: Sao Paulo-based health tech. Memed offers an electronic prescription tool for doctors. Memed raised a USD 20m Series C in November 2021.
  13. Galena: Sao Paulo-based edtech. Galena helps young underprivileged individuals to enter the job market. Galena raised a USD 16m Series A, led by Altos Ventures, in February 2022.
  14. Nomad: Sao Paulo-based fintech that enables Brazilians to open a US-based bank account and access US investment products. Nomad has recently closed a USD 32m Series B.
  15. Vittude: women founded mental health startup that helps connect patients with psychologists. Vittude has recently raised a USD 7m Series A led by Crescera Capital.
  16. Pantys: a women-founded and Sao Paulo-based femtech that created a line of apparel solutions for menstruation, leak protection, and maternity.
  17. Conta Black: Sao Paulo-based fintech. Conta Black is a community-focused digital bank that offers banking services to black individuals.

Brazil startups with exits

In Q1’2022, Brazil took the #2 spot on the list of largest M&A deals globally when Coinbase brought 2TM for $2.2B.

Source: CBInsights

As LAVCA captured, 8 out of the 10 2021 exits were Brazilian and included: Nubank, GetNinjas, VTEX, Infracommerce, Zenvia, WDC Networks, CI&T, and Allied.

Source: LAVCA

Brazil startups that could IPO in 2022, according to PitchBook:

  1. QuintoAndar, the real estate company based in Sao Paulo, Brazil is worth $5.1 billion.
  2. Wildlife is a gaming startup that is part of the list. It originated in Sao Paulo, Brazil and is worth US$3 billion.

Brazil investors

Brazilian VCs made up 40% of CBInsight’s Q1’22 most active and top Latin American and Caribbean VCs list. VC funds included: Canary with 10 deals, Domo Invest with 8 deals, Monashees+ with 7 deals, and Maya Capital with 6 deals.

Source: CBInsights

Brazil-based VCs

International VC

New VCs on the LATAM block include Anthemis, Picus Capital, Flash Ventures, Kayak Ventures, and MGV Capital.

Brazil accelerators

Brazilian Startups Association

Danilo Picucci, Director of Community at Associação Brasileira de Startups, shared with us the following: The Brazilian startup ecosystem is one of the few around the world that is represented by an NGO, the Brazilian Startups Association (Abstartups). The NGO was founded in 2011 and its main focus is to represent, promote and connect startups all around the continental country. It has more than 7K startups associated which have access to a lot of perks (AWS, Pipedrive, Pipefy, Miro, etc) and services. It is also the producer of the biggest LATAM startup event, the Annual Startups and Entrepreneurship Conference (CASE), which is held in November, annually.”

Brazil co-working spaces

São Paulo

Florianópolis

Salvador

Fortaleza

Goiânia

Teresina

Porto Alegre

Belo Horizonte

Juiz de Fora

Manaus

São Luis

Uberlândia

Vitória

Rio de Janeiro list

Brazil Afro-Latinos

Largest population of Afro-Latinos

Did you know that Brazil has the largest population of Afro-Latinos? It does. In Brazil, about 50% of people are of African descent.

Salvador’s startup-scene

There largest population of Afro-Latinos is in Salvador, Brazil and I’m super curious to explore the startup scene there because as Paulo Rogério Nunes co-founder of Vale do Dendê, told the Rest of the World:

São Paulo — the financial capital — and Rio, the tourist capital. But Salvador, the capital of Bahia, was the country’s first capital. It’s the cultural capital of Brazil and it’s at the heart of Afro-Brazilian culture. What’s different here is the creative economy. Salvador is the birthplace of Brazilian culture — samba and capoeira started here. This strong culture is a foundation for a very creative society. If you combine the creativity, innovation, and problem-solving skills we have here with technology, it makes something very special.

Additional reading

About author and collaborators

Lolita Taub is a GP at Ganas Ventures where she invests in pre-seed and seed community-driven companies in the US and Latin America. With 15 years working within the Silicon Valley ecosystem, she has accomplished $70M+ in sales and made 90+ investments as an angel investor, Scout at Lightspeed Venture Partners, and VC at Backstage Capital and The Community Fund. Lolita is also a Co-Founder of proprietary matching tools Startup-Investor Matching Tool, the GP-LP Matching Tool, and the LaaS community which brings along a community of over 4K+ founders, funders, and ecosystem friends. Forbes and Inc Magazine have featured her as a woman promoting investment in underestimated founders and funders. She has a BA from the University of Southern California and an MBA from the IE Business School. Lolita is currently in LATAM, hunting for unicorns, and most importantly, she is a dog mom to the cutest Dachshund mix, Choco.

Thank you to all contributors: Josh Taub, Alex González Ormerod, Jake Storm, Lucas Lameiras, Pâmela Pinheiro, Pedro Muller, Danilo Picucci, Fer Díaz, Funke, Alied Monica, Caetano Mantovani, and more.

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About investing in community-driven cos + supporting our underestimated founder/investor fam. @lolitataub

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Lolita Taub

About investing in community-driven cos + supporting our underestimated founder/investor fam. @lolitataub