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The Brazilian Private Equity and Venture Capital Association is a non-prof-

it organization that promotes the development of Private Equity, Venture


Capital and Seed Capital in Brazil, by improving industry conditions and
understanding and also fomenting best practices that are aligned with
international industry standards.

The Brazilian Trade and Investment Promotion Agency promotes Brazilian


products and services abroad and attracts foreign investments to strate-
gic sectors of the brazilian economy. ApexBrasil coordinates the actions
related to foreign direct investment (FDI) attraction into Brazil, seeking to
allocate resources in sectors of strategic relevance for the development
of the competitiveness of Brazilian companies and of the country itself.

The Private Equity & Venture Capital InBrazil program operates as a joint
initiative between ABVCAP and ApexBrasil with the goal of informing
and connecting international investors with brazilian fund managers
and portfolio companies. The main goal of the program is to inform and
empower the global investor community in respect to the Brazilian PEVC
ecosystem and its many opportunities.

Derraik & Menezes Advogados is one of the pioneers in the Venture


Capital area in Brazil. Members of our team were actively involved in the
first wave of VC investments in Brazil in late 90s and remain fully active
nowadays. We represent private equities, institutional and corporate
venture capitalists, from Brazil and abroad, helping our clients with their
investments. We have handled numerous major transactions including
some of the largest and most sophisticated companies restructurings,
M&As, fund formations and foreign investments in Brazil.

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AN
OVERVIEW
The purpose of this publication is to provide an overview
of the venture capital industry in Brazil through the analysis
of industry data, recent investments made and opinions
and insights of industry stakeholders.

The perspectives are positive. The year has started with the
Real valued and stable and the local stock exchange index,
after a long period of stagnation, has exceeded the thresh-
old of 60,000 points. New sectors begin to appear on the
radar of VC managers. Transactions carried out between
2016 and 2017 highlight the increased interest of VCs for
fintechs, a segment driven by the revolution of the internet
and social media in Brazil that combines financial and tech-
nology services to solve a great demand in the country.

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NUMBERS
The following figures are part of the Data
Consolidation of the Brazilian Industry of
Private Equity and Venture Capital, prepared
by ABVCAP together with KPMG. The material
provides industry data from 110 general
partners of domestic and foreign funds of
various sizes. It is important to note that data
from 2016 has not been included in this
publication because it will only be published
in June 2017 at ABVCAP´s Annual Conference.
We recommend readers to check our site
abvcap.com.br periodically for updates.

In 2015 investments made in private equity


and venture capital in Brazil totaled R$ 18.5
billion, a 39% increase from the previous year.
Of this total only 6% represents the amount
invested in venture capital, however, the seg-
ment accounts for the majority or 60% of the
number of companies invested in 2015.

TOTAL INVESTMENTS (R$ BILLION)


PRIVATE EQUITY AND VENTURE CAPITAL IN BRAZIL

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COMMITED CAPITAL X CAPITAL AVAILABLE BY INVESTMENT TYPE
2015

PRIVATE EQUITY (R$ BILLION) VENTURE CAPITAL (R$ BILLION)

Committed capital Available for investments and expenditures

Furthermore, the amount of venture capital transactions was greater than the number
of deals in private equity. In total, the volume invested in VC in 2015 was R$ 1.1 billion.

INVESTMENTS MADE
2015

NUMBER OF COMPANIES AVERAGE AMOUNT (R$ MILLION)

63 PE 96 VC R$ 277 PE R$ 12 VC
Considering the capital available for investment and expenditures in venture capital
of more than R$ 1.7 billion, and the average ticket of investments of R$ 12 million, it is
expected that at least 149 companies will be invested in the next years.

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Health, pharmacy and education sectors were the highlights of 2015, accounting for about
50% of investments reported in the year in the ABVCAP and KPMG consolidated data.

PERCENTAGE OF THE VALUE OF INVESTMENTS BY SECTOR

AGRIBUSINESS FOOD AND BEVERAGE EDUCATION


2014 3% 2014 1% 2014 1%
2015 0% 2015 2% 2015 12%

ENERGY INFRASTRUCTURE TRANSPORT AND LOGISTICS


2014 4% 2014 0% 2014 21%
2015 11% 2015 0% 2015 4%

OIL AND GAS HEALTH AND PHARMACY INFORMATION TECHNOLOGY


2014 29% 2014 16% 2014 12%
2015 10% 2015 38% 2015 3%

RETAIL INDUSTRIAL PRODUCTS REAL ESTATE AND CIVIL


2014 3% AND SERVICES CONSTRUCTION
2015 11% 2014 2% 2014 0%
2015 2% 2015 2%
OTHERS
2014 8%
2015 5%

REPORTED NUMBER OF INVESTEE COMPANIES

AGRIBUSINESS FOOD AND BEVERAGE EDUCATION


2014 6 2014 3 2014 3
2015 3 2015 7 2015 13

ENERGY LOGISTICS AND TRANSPORT OIL AND GAS


2014 8 2014 4 2014 7
2015 6 2015 7 2015 3

TELECOMMUNICATIONS CLEAN TECH / ENERGY INFORMATION TECHNOLOGY


2014 2 2014 3 2014 13
2015 4 2015 0 2015 41

HEALTH AND PHARMACY MINING FINANCIAL SERVICES


2014 9 2014 2 2014 7
2015 22 2015 3 2015 12

RETAIL INDUSTRIAL PRODUCTS REAL ESTATE AND CIVIL


2014 7 AND SERVICES CONSTRUCTION
2015 5 2014 11 2014 0
2015 6 2015 5
OTHERS
2014 16
2015 22

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LATAM
NUMBERS

We observed that other Latin American countries have increased their fundraising
since 2010 and Brazil still accounts for more than 50% of investments in venture capital
in the region. In addition, the country is the main destination for foreign investment in
Latin America and the eighth destination in the world.

LATAM FUNDRAISING BY GEOGRAPHIC FOCUS

2011 81% 9% 5% 5%

2012 54% 27% 15% 4%

2013 42% 9% 21% 26%

2014 53% 43% 2%2%

2015 43% 39% 13% 5%

VENTURE CAPITAL DEALS IN LATAM BY COUNTRY

51% Brazil

3% Argentina

64% Brazil

13% Chile

7% Argentina

9% Other
4% Chile 15% México
13% Other
3% Colombia

13% México 5% Colombia

Source: LAVCA 2016


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FOREIGN DIRECT INVESTMENT (FDI) FLOWS IN LATIN AMERICA

Mexico
$30.3 bn Top 5 hosts economies
+18.0%

Colombia
$12.1 bn
-25.8%

Brazil
$64.6 bn
-11.5%
2015 inflows
$167.6 bn

2015 in world
9.5%

Chile
$11.7 bn
-5.0%

Flows by range

Above $10 bn
Argentina
$5.0 to $9.9 bn
$11.7 bn
$1 to $4.9 bn +130.1%
$0.1 to $0.9 bn
Below to $0.1 bn

Source: UNCTAD - World Investment Report 2016

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FDI FLOWS IN 2015

Country US$ billion

United States $380 22%

Hong Kong, China $175 10%

China $136 8%

Ireland $101 6%

Netherlands $73 4%

Switzerland $69 4%

Singapore $65 4%

Brazil $65 4%

Canada $49 3%

India $44 3%

Other $607 34%

Total $1,762

DESTINATION FOR

8TH FOREIGN INVESTMENT

IN THE WORLD

Source: UNCTAD Stat, IBGE

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YEAR FUND MANAGER (S) INVESTMENT AMOUNT TARGET COMPANY SECTOR
SAMPLE OF RECENT VENTURE CAPITAL TRANSACTIONS IN BRAZIL 2016 / 2017

2016 Founders Fund, Kaszek R$ 200,000,000 Nubank Fintech


Ventures, Sequoia Capital,
Tiger Global Management

2016 IFC; Kaszek Ventures; Ribbit R$ 60,000,000 GuiaBolso Fintech


Capital; QED Investors

2016 SP Ventures Undisclosed Agrosmart Agrotech

2016 CRP Participações R$ 5,000,000 uMov.me Mobility

2016 Red Point E.ventures Undisclosed Olist E-commerce

2016 Verus Group Undisclosed Omie Business Inteligence

2016 Ribbit Capital R$ 100,000,000 Ideal Invest Fintech

2016 Invest Tech Undisclosed Ahgora Sistemas IT

2016 CRP Participações R$ 4,000,000 Exact Sales Business Inteligence

2016 Bozano Investimentos Undisclosed Grupo NRE Educacional Education

2016 Bozano Investimentos Undisclosed Medcel Education

2016 Monashees Capital R$ 10,000,000 DogHero Services

2016 SP Ventures R$ 2,000,000 Biotechnology Pesquisa e Biotechnology


Inovação

2016 CRP Participações R$ 3,000,000 SumOne Food & Beverage

2016 Arpex Capital; Finvest R$ 3,000,000 Vitta Health

2016 Inseed Investimentos R$ 3,000,000 OXI Ambiental Cleantech

2016 CRP Participações R$ 4,000,000 Hiper Services

2016 E.bricks Early Stage; Kaszek Undisclosed Contabilizei Fintech


Ventures

2016 TPG; Red Point E.ventures; R$ 62,000,000 Resultados Digitais Communication/


DGF Investimentos Media

2017 Riverwood Capital Undisclosed 99 Urban Mobility

2017 Kick Ventures Undisclosed Unimove Education

2017 Monashees R$ 1,000,000 Cambly Education

2017 Tencent; Sequoia Capital; Undisclosed Practo Health


Thrive Capital; Capital G

2017 CRP Participações 2,500,000 Asaas Fintech

2017 Red Point E.ventures Undisclosed Pismo Fintech


Public deals

2017 Algar Ventures Undisclosed NetSupport Services

2017 Kaszek Ventures; Undisclosed Netshoes Retail


Riverwood Capital

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SECTOR SPOTLIGHT:
FINTECH

We have seen technology change our consumption in key


sectors such as transportation, leisure, tourism and food,
among others. It is no different with the financial system,
especially in Brazil where 40% of the population does not
have a bank account and at least 8.5 billion of low income
Brazilians would like to open a business but has no access
to credit. (1)

The global financial crisis in 2008, the revolution of the


internet and social media, the increasing access to smart-
phones, created a very conducive environment for the
development of fintechs in Brazil and online consumption
as a whole.

Previous pioneer companies in online services in Brazil,


such as Netshoes, Buscapé and Hotel Urbano, helped to
open the way for fintech to become an attractive option
by providing lower operating costs, more efficient services
and easy access to credit by small and medium enterprises.

Important regulatory frameworks, such as eliminating


the exclusivity of CIELO and Redecard to operate VISA
and Mastercard brands in 2010 and the resolution of the
Brazilian Central Bank on opening current accounts, have
a direct impact on the significant growth presented by the
sector. According to FintechLaB data, in 2016 244 fintech
companies were mapped, a figure 4.5 times higher than
the previous year, when 54 companies were recorded ope-
rating in this sector. (2)

(1) BACEN 2015, Febraban 2015, Data popular 2015

(2) In 2016, a Central Bank ordinance allowed the opening of current and savings accounts online

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FINTECH COMPANIES BY SEGMENT
BASED ON 244 BRAZILIAN COMPANIES IDENTIFIED IN 2016

2% Financial efficiency
(Bigdata / API / Anti fraud system)

4% Currency and multiservices

5% Cryptocurrencies and DLT

5% Debts negotiation
32% Payments

6% Insurance

7% Funding

8% Investments

13% Lending 18% Financial Management

Source: Report FintechLab 2017

Companies in the payment segment are the most significant: they represent 32% of total
fintechs, an increase of 22% of the segment over the previous year. The loans segment
consolidated and increased opportunities, especially among small and medium-sized
companies with a credit gap. They add up to 33, representing 18% of the fintech market.

80% HAVE PAYING CUSTOMERS;


10% HAVE MORE THAN 50 EMPLOYEES;
7% HAVE MORE THAN 100 EMPLOYEES;
72% HAVE RECEIVED INVESTMENTS, 14% OUT OF THESE ABOVE R$ 20 MILLION.

Venture capitalists have had a very significant presence in the volume of these invest-
ments. In addition to funding the operations of the companies, they have also helped
to professionalize and organize the investee companies, especially because many of
them are very young. The industry is still very fragmented and, therefore, offers many
opportunities for consolidation.

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Currently many local and foreign VCs are
part of this ecosystem, investing in lead-
ing companies. The total investment has
exceeded R$ 1 billion in recent years, ac-
cording to the Report FintechLab 2017.
Highlight for GuiaBolso, which already
received investments from Kaszek Ven-
tures, Ribbit Capital, QED and IFC (finan-
cial arm of the World Bank) and Nubank,
invested by funds as the Founders Fund,
Sequoia Capital and Tiger Global. (3)

(3) Largest VC investment made in 2016 in Brazil according to


the FIPData, a database platform of ABVCAP and ANBIMA

RECENT FINTECH TRANSACTIONS IN BRAZIL


2016 / 2017

YEAR FUND MANAGER (S) INVESTMENT TARGET COMPANY


AMOUNT

2016 Founders Fund, Kaszek Ventures, R$ 200,000,000 Nubank


Sequoia Capital, Tiger Global
Management

2016 IFC; Kaszek Ventures; Ribbit Capital; R$ 60,000,000 GuiaBolso


QED Investors

2016 Ribbit Capital R$ 100,000,000 Ideal Invest

2016 E.bricks Early Stage; Kaszek Ventures Undisclosed Contabilizei

2017 CRP Participações R$ 2,500,000 Asaas

2017 Red Point E.ventures Undisclosed Pismo

Public deals

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REGULATORY UPDATE
VENTURE CAPITAL IN BRAZIL
THE PATH AHEAD BEYOND THE CRISIS

RODRIGO MENEZES / FOUNDER & PARTNER / DERRAIK & MENEZES ADVOGADOS

Against all odds, the economic crisis ções - “FIPs”) and substantially expanded
has encouraged the recent growth of their investment alternatives by (a) lifting
the venture capital industry in Brazil. Key then existing restrictions for venture ca-
factors have been relevant to this pro- pital and private equity investment funds
gress: (i) the increase of more innovative to invest in foreign assets and in different
local startups; (ii) the devaluation of the types of Brazilian investment vehicles,
Brazilian currency has attracted foreign and also (b) giving regulatory benefits
investments into local startups; and (iii) for early stage investors (i.e., it is no
the fact that many executives are leaving longer mandatory for the investor to be
their senior positions in large corpora- seated on portfolio’s board of directors,
tions to explore new opportunities. In early stage companies don’t need to be
addition, three other relatively recent audited, among others).
initiatives (which will be the focus of this
article) have been playing a relevant In addition, angel investment was finally
role in the development of the Brazilian regulated by the Brazilian legislator
venture capital industry: through the Supplementary Law 155, of
October 27, 2016. This is a victory of the
(I) the enactment by the CVM – Comis- Brazilian investment industry, as it was so-
são de Valores Mobiliários (the Bra- mething that had been expected for long
zilian equivalent to the SEC) of CVM time, not only by investors/entrepreneurs,
Regulation 578, dated as of August 30, but also by the local market as a whole.
2016, which has contributed to foster
the venture capital and private equity Hi-tech emerging companies are major
industries; (II) the rise of venture capital attractions for angel and venture capi-
hubs around Brazil; and (III) increased tal investments that bet on the benefits
participation of large corporations in the carried out by these innovations. Those
venture capital industry through corpora- innovations are part of the activities of
te venture initiatives. successful companies nowadays called
"unicorns"– emerging companies with
The CVM Regulation 578, has brought market value equivalent to $ 1 billion
flexibility to the Brazilian based funds prior to an initial public offering (IPO).
(Fundos de Investimentos em Participa- We do not have a Brazilian born unicorn

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(yet), but we have a handful of startups disruptive and competitive advantages
with a clear potential to become one for their business operations. As a result,
soon. Some are very close… many of them are seeking beyond their
four walls through corporate venture
Also, although São Paulo remains as the initiatives, with the aim of optimizing
heart of the hi-tech investment industry their innovation processes, in order to
in Brazil, different tech hubs are growing modernize their production/services
in fast pace, spreading innovation and reduce costs. For reference, there
around Brazil, such as in Rio de Janeiro, are about 1,000 corporate venture arms
Florianópolis, Recife, Belo Horizonte, globally, and Brazilian corporations and
Piracicaba and São José dos Campos. banks, as well as multinational compa-
As new virtuous clusters of innovation nies located in the country, are currently
are under development, Brazilian and fo- exploring such practice in Brazil. Moreo-
reign investments continue to be spread ver, following the Silicon Valley patterns,
out through a number of target compa- local corporations and venture capital
nies, so that today we have approxima- general partners are also establishing
tely $2.0 billion invested or allocated for partnerships, forming new funds with the
investments by the venture capital indus- aim of investing in innovation.
try in Brazil. Within this context, a hungry
industry is emerging, which includes the Hence, although there is still a lot to
growth of local strong investment thesis, develop the Brazilian venture capital
such as impact investment, fintech, edte- ecosystem, it is possible to conclude that
ch, agtech, software and healthcare. the investment industry has a massive
growth potential in Brazil, due to these
Last but not least, large Brazilian and new regulations and the rise of new
foreign corporations are surfing/entering startups, which are appealing attractions
into the venture capital/startup world, for venture capitalists, corporate venture
as venture capital provides a useful tool and angel investments. The Brazilian eco-
for them to stand out in their respective nomic crisis, that is slowly overcoming its
markets, as through partnership with challenges, has surprisingly proved to be
startups, they may identify and gain an important factor for boosting invest-
access to new markets and develop ments in this industry.

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GP
PROFILE

MAURICIO LIMA / CO-FOUNDER & CEO / INVEST TECH

Invest Tech is a venture capital and private equity fund manager that focus on compa-
nies in the IT and telecommunications segments and has an AUM of R$ 240 million.

Tells us about the Capital Tech VC fund. ness is conducted or that need urgent
What types of investment are they seek- changes in the control, organization and
ing and what is the average ticket? performance capacity.

Capital Tech VC is a fund currently in fund- How is the interaction between investee
raising dedicated to early-stage invest- companies? Is there technology sharing
ments. It replicates the strategy of our fund between the investees, even working in
I of investing in companies with revenues different sectors?
of up to R$ 16 million per year, but that
necessarily have customers, revenues, staff Each company develops its own techno-
and general partners with a good ability to logical base. We promote and encourage
retain and develop business. operational synergy between them. When
we set up a portfolio, we seek to identify
We begin investing at about R$ 1.5 potential synergies. Today, in the port-
million per company and can arrive at, folio of fund II, we have companies like
in successive rounds, up to R$ 8 million. Americanet and Aker working together
Our focus is on the technology, media to offer Americanet customers the unique
& telecom sectors, dedicated to B2B or solutions based on Aker technology. And
B2B2C market, preferably through minori- with great success!
ty interests. In it, we evaluate companies
that operate in several segments, and we Most of the companies in the portfolio
are seeing interesting growth rates in the only operate in Brazil. What are the pros-
health, agribusiness, infrastructure, ed- pects for internationalization and what
ucation, finance sectors and some other would be the most interesting markets?
segments. I think these are resilient sec-
tors and showed excellent breakthrough Today some of the companies already do
opportunities in the way business-to-busi- international business. Aker has customers

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in the US, Europe and Middle East. Navi- several challenges. The demands change
ta, in turn, has customers worldwide. We and we try to structure our group in the
encourage the international expansion, pro- same direction, striving to complement
vided it is based on a clear strategy of serv- knowledge, culture and experience. The
ing local customers with global demands entry of new members was the result of a
or through partnerships. We also consider vision we had in 2014: the market needed
strategic acquisitions, but depending on to change and we needed to grow.
the market, it may be very expensive.
In regards to new partners, at the end, we
Are you interested in co-investing with were pleasantly surprised to negotiate
other general partners? with a first rate Spanish group, with a lot
of experience in the industries in which
We love co-investments. We now co-in- we invest and with a group willing to help
vest with Intel Capital, Axxon and Oria in implementing the vision we had. It has
Capital, but we would love to increase this been a great experience and now we can
scope. Our perception is that it generates even attract new members through this
a lot of value in the investee companies same model.
when there is alignment (which is natural,
but sometimes there may be a different In your opinion, what are the main oppor-
timing) and clear allocation of responsibil- tunities for the venture capital industry in
ities between the teams. Brazil in the coming years? 

When was the Invest Tech team formed We have no doubt internally that oppor-
and what do you seek in professionals to tunities to invest in the local market are
form the team? numerous, but we doubt whether the
funding will come from Brazil or other
Invest Tech was set up in 2004 as an countries. Our investors lack long-term
advisory. We did not invest in companies vision.
for which we provide advisory, but our
approach has always been to follow the The winners will be those with focus and
companies, pursue operational improve- financial ability to attract and retain teams.
ments and then a strategic transaction. Unfortunately, the cycles are very long,
Our team was formed and trained to max- and it is very difficult to keep everyone
imize returns to stakeholders and, later, to aligned and dedicated to long-term
investors in the fund. growth. We have to beware of adventur-
ers who end up tarnishing the industry
We seek committed people, who like with short-term strategies and little long-
challenges and are capable of processing term commitment.

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COMPANY
PROFILE

BENJAMIN GLEASON / CO FOUNDER & CEO / GUIABOLSO

GuiaBolso is an application that provides financial organization and control ser-


vices and connects users to the best credit offers. In July 2014, it was released
in Apple Store and then Google Play. Currently it is the most downloaded free
financial application in Brazil. It received investment from funds such as Kaszek
Ventures and Ribbit Capital, and from the investment arm of the World Bank, IFC.

How did the idea of operating in the heard of: see your personal finances in an
financial services sector arise? organized and categorized form, always
up-to-date and with no need for manual
Five years ago, my partner Thiago and I input. Thus, we were able to understand
realized that the financial sector, although that the main user demand was for loans
very profitable, did not offer good services with lower fees, and we began to devel-
to the user. Both of us had previously op this service to connect the user to the
worked at McKinsey & Company as consul- credit supply.
tants for banks and insurers and we knew
the market well. There were no fintechs Industry data show that 80% of fintech
operating in Brazil yet and banks were just companies already have revenue. Why
beginning to develop mobile solutions. did you decide to start offering an entire-
ly free service?
We identified that the main problem fac-
ing users was controlling their personal Social impact is very important. Our goal
finances, just as there was a consumption has been to provide a better service to
boom. At that time, I worked at Grou- the user. As the idea is to help people
pon and followed this growing trend of organize their finances, it did not make
greater access to mobile services by the sense to charge for it. However, this was
population in general. only possible because we had access
to good investors with long-term vision,
We began offering automated financial which share with us the belief that, by
control services, which at the time was un- providing an excellent service to our

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users and partner banks, we will arrive at Some investors are large VC funds. In
a sustainable financial model. addition to financial resources, how does
the participation of these partners adds
Given this strategy, please tell us about value to the company's activities?
the contributions received last year by
the company. How do you plan to use We managed to put together a very com-
these funds? plementary team of investors, each with a
specific focus. Kaszek Ventures is critical
In 2013, we made the first round of seed to help us think about digital marketing
funding and, at the time, we were not well and products in Latin America. Ribbit,
received. We were focused on domestic which has expertise in fintech, brings a
investors, thinking that foreigners would vision of what worked in other markets,
have a hard time understanding the Bra- such as China and the US, for example,
zilian market. We received contributions and we think about how to adapt this to
from Bricks and Valor Capital. the Brazilian market. QED, former leaders
of Capital One, helps us structure the
In the second round of fundraising, in credit product. IFC, in turn, acts in the
2014, we received a contribution from institutional part.
Kaszek Ventures, the largest VC fund op-
erating in Latin America, whose founders Fintech companies have helped to
had been very successful previously with change the structure of the financial
the IPO of Mercado Livre, and thus were system. How is your relationship with
well aligned with the long-term strategy the major retail banks?
we were proposing.
We have had a long and healthy rela-
In the third round, Ribbit Capital, a fund tionship with these players and always
with a very active role in Silicon Valley and leave the door open to partnerships. We
in fintech companies, QED Investors (from are open to anyone interested in offer-
the co-founder of Capital One), Omidvar ing good credit services. We are already
Network (social impact fund belonging to experiencing the first partnerships,
the founder of eBay), and Kaszek Ven- especially with medium-sized banks. We
tures made their investments. Last year see ourselves supporting banks and not
we received another round led by Ribbit exactly competing with them.
Capital with IFC participation, and accom-
panied by other investors. Are you interested in merging with other
industry players or acquiring any of them?
Although currently we count with 3.3 What growth opportunities through M&A
billion users, we still have plenty of room do you see in the Brazilian market?
to grow and that is the focus right now.
However, we are always attentive to fund- Our growth trend is organic. The market
ing opportunities from good investors, has few established startup companies,
but without haste. such as Nubank and Creditas; in addition,

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we believe in providing the best options est rates in the world. There is plenty of
for consumers, and it is generally easier room for companies interested in creating
to develop and provide this with partners, good services. Not every company has
taking advantage of the strengths of each access to funding because there is a gap
one, instead of through acquisitions.. We between the development stage of the
prefer to grow in an organic and indepen- companies and investors’ appetite. There
dent manner right now, and in line with is still room for companies in the mobile
the strategy to generate long-term value. channel. Consumers are not satisfied with
traditional financial services and prod-
The growth of fintech companies in Brazil ucts, and are beginning to look beyond
took place very quickly. How do you as- their bank. There is a major challenge
sess the challenges and opportunities for to provide increasingly better products
the coming years in the industry, consid- and services, so companies that are more
ering such a fast increase and significant responsive to user needs tend to be
number of players? more successful. In addition, this trend
is going to favor the consumer, which in
Naturally, there is much room for growth. turn will have better services, with a better
Brazil is the country with the highest inter- cost-benefit ratio.

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THE VIEW FROM A
GLOBAL CORPORATE
VENTURE

CARLOS KOKRON / VICE PRESIDENT & MANAGING DIRECTOR / QUALCOMM VENTURES

Qualcomm Ventures is the strategic investment and venture capital arm of Qual-
comm. The operation began in 2000 in the US and arrived in Brazil in 2013. Since
the arrival of Qualcomm Ventures in Latin America, they have already invested in
14 companies, 1 accelerator and 1 fund. In Brazil, the highlights are QuintoAndar,
100% online platform for residential real estate rental; 99, the urban mobility pla-
tform; and Strider, pest monitoring technology in farming.

How do you see the business environment ted in Corporate Venturing and see it with
in Brazil for Corporate Venture and how do good eyes. The Corporate Ventures now
you believe the participation of these play- account for 20% of funding globally. The
ers affects the venture capital industry? entry of these players in Brazil will bring
a stronger capital base for our startups.
We are excited about the development In addition, its performance will promote
of the Corporate Venture and venture greater collaboration between startups
capital industry. This ecosystem in Brazil is and large companies and encourage
increasingly mature with a healthy balan- more innovation in companies.
ce of supply of investment opportunities
and capital, as well as a large number of What are the main opportunities and/
service providers (lawyers, accounting or obstacles encountered by Corporate
consultancy offices etc.) who understand Venture players wishing to position
how the market works. We see the "capi- themselves in Brazil?
tal continuum" increasingly developed,
with a greater number of angel investors, Corporate Venturing is a long-term
funds focused on seed capital, Corporate activity that requires total commitment
Ventures focused on A Series opportuni- of senior managers, and understanding
ties. There are still gaps in the first stage of its operation, including the associated
and capital growth (Series C on), but it is challenges. A possible form of action for
being solved in time. We are seeing an those wanting to learn is to approach
increasing number of companies interes- accelerators, and promote and support a

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thematic group related to their company. lationships with device manufacturers,
Companies can also invest in funds ma- network operators, content providers and
naged by professional general partners, we have to help our portfolio companies
so that they can develop a better un- in several ways. It is not uncommon that
derstanding of how to act, from pipeline we help our entrepreneurs with presenta-
development to promoting an exit event. tions to executives of these companies to
If they wish to create their own fund, we help them develop their business. We also
recommend them to find general part- make presentations to our engineers when
ners managers with extensive experience there is opportunity to collaborate with our
in the activity. It is important to note that investee companies. Finally, we promote
corporate investors should avoid sear- exchanges between our global portfolio
ching for special rights, such as ROFR companies if both parties are willing to do
(right of first refusal), as it always scares so. Importantly, we always operate in an
co-investors and makes it very difficult to agnostic way, allowing the companies to
raise new funding for the company and decide whether and how should they en-
an exit for entrepreneurs and investors. gage. We do not force anyone to use our
technology, as we believe that companies
Does being an investment arm of a tech- should build an independent and sustai-
nology/mobility company influence the nable business. Of course, if they see value
creation of investment theses?  in our solutions, we will give them every
possible attention.
Certainly. We focus our time on opportuni-
ties that will bring a positive impact for our How can foreign investors benefit from
industry if they work out (we understand the business environment in Brazil or from
that risk is inherent in our activity and that the exchange with Brazilian companies?
many opportunities will not develop as ex-  
pected). Time is our most scarce resource. Brazil is a large market with a potential
In addition to analyzing new opportunities, 200 million consumers and 15 million
we invest significant time helping compa- companies. Our customers are highly
nies we invest in growth. Thus, we focus engaged and our companies seek tech-
on companies where we can add value in nological solutions to improve efficiency.
addition to capital. There are excellent in- Clearly, one way to benefit is to participa-
vestment opportunities that are not strongly te in opportunities arising from this large
aligned with our strategic objectives and, and representative market. Moreover, as
unfortunately, we cannot support them. we still have a limited number of funds in
Brazil, there is relatively little competition
How is the interaction between investee between startups (e.g., no more than
companies? Is there technology sharing 2 or 3 in the same sector, which is very
between Brazilian and foreign companies? common abroad). Our valuations are rela-
tively cheap compared to other emerging
As a player in the mobile world and all markets, like China and India. Foreign in-
things connected, we have strong re- vestors have the opportunity also to learn

22
from the resilience, resourcefulness and ful components cost cents or a few dollars
creativity of Brazilian entrepreneurs. and this is leveraging new technology
applications, such as drones, autonomous
The portfolio profile of Qualcomm Ven- cars etc. These new technologies are ac-
tures in Brazil is very focused on technol- celerating the digital transformation and
ogy, with a bias in services and consump- helping the rapid development of the
tion. Which segments do you consider Internet of Things. In Brazil, we see smart
promising for the coming years? cities, Industrial Internet and Agtech as
quite fertile fields for startups.
Qualcomm Ventures invests in com-
panies that aim to improve the lives of What are the exit strategies you consid-
people and businesses that make use er more viable in the Brazilian market
of technologies related to mobility and and why?
all things connected. In this context, our
focus includes opportunities in B2C and We believe that, no different from what
B2B, hardware, software and services you see abroad, most of our exits are
leveraged by technology. Our portfo- acquisitions of our investee companies
lio in Brazil includes Marketplaces (99, by larger companies that are seeking
Loggi, Ingresse, QuintoAndar etc.) that ways to grow inorganically in the Brazilian
reduce inefficiencies where they operate market. However, IPOs are a possibility;
empowering users and service providers we are beginning to see a resurgence of
(mobile enabled workforce) from the use IPOs, such as NetShoes and Decolar.com,
of one or more sensors on the smartpho- for example. Fundamentally, we believe
ne, such as GPS, camera, etc. and thus are that companies that have a strong value
redefining industries, software companies proposition to the stakeholders will attract
B2B of IoT Analytics, such as WebRadar. the interest of buyers either for their tech-
We are experiencing a time when power- nology, footprint or both.

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BRAZILIAN VENTURE
CAPITAL FIRMS

• A5 Partners • Gera Venture Capital


• Acelera Partners • GrowPlus Ventures
• Altivia Ventures • Ideiasnet
• Antera Asset Management • IndicatorCapital
• Astella Investimentos • Inseed Investimentos
• Atacama Ventures • Invest Tech
• BBI Financial Gestão de Recursos • KaszeK Ventures
• Bolt Ventures • Kick Ventures
• Bossa Nova Investimentos • Koolen & Partners
• Bozano Investimentos • Mindset Ventures
• BR Opportunities • Monashees Capital
• Cedro Capital • Mov Investimentos
• Confrapar • MSW Capital
• Copacabana House Ventures • Performa Investimentos
• CRP Companhia de Participações • Portbank Private Equity
• CVentures • Redpoint eVentures
• DGF Investimentos • SP Ventures
• DOMO Invest • TOTVS Ventures
• e.Bricks Digital • Triaxis Capital
• FIR Capital • Trindade Investimentos
• Fundo Pitanga • Vox Capital

This includes the majority of local VC firms

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CREDITS

EXECUTIVE EDITOR
Cristiane Nascimento, ABVCAP
 
PRODUCTION EDITOR
Gabriela Sant'Anna, ABVCAP
 
WRITER
Maria Alice Leal
 
EXTERNAL CONTRIBUTOR
Rodrigo Menezes, Derraik & Menezes Advogados
 
GRAPHIC DESIGN
ESTUDIO CRU

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PRESENTED BY

SPONSOR

INSTITUTIONAL PARTNER

ABVCAP SUPPORTING MEMBERS

WWW.ABVCAP.COM.BR/BPE

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