How to make Brazilian Unicorns a less rare species
While in the United States venture capital investment represents 0.4% of GDP, in Brazil it is 0.04% of GDP.
This means that because the US economy is ten times bigger than the Brazilian economy, with the other conditions being equal, every 100 startups, 99 will appear there and only one here.
This is one of the insights we shared in the first edition of the Brazil at Silicon Valley conference, an incredible initiative by Stanford Brazilian students and alumni to discuss digitization and innovation in Brazil.
McKinsey presented an unpublished dossier on Brazil's digital economy, in which we point out challenges and opportunities for the country to grow back from technology, innovation and entrepreneurship.
We find that there are several other difficulties besides the lack of venture capital.
Our productivity has increased little in the last decades, and we have hardly been able to innovate.
We also need to be a more attractive country for digital business. We currently occupy the 109th position in the global ranking for ease of doing digital business.
Here, it takes 79 days to start a business, compared to half a day in the UK.
To make it even harder, the high cost of starting and closing businesses, and the long time it takes, is even more costly in a digital ecosystem where testing and failure are required to succeed.
Among the biggest obstacles pointed out by startups is the lack of people with digital skills. Only 17% of college students study engineering and computer science.
Brazil is not an attractive country for foreigners who want to work here either. In the US, at least half of startups valued at more than $ 1 billion have an immigrant founder.
Finally, in the field of innovation, we are always behind schedule. Issuing a patent can take up to 14 years in Brazil. What value will a new digital product have in a decade? In Japan, 65 times more patents are issued per year compared to Brazil.
But not everything is lost.
Brazilian GDP has finally returned to growth. Consumer and industry confidence are high, interest rates and inflation have fallen.
In recent years, we have seen the first eight unicorns (companies valued at over US $1 billion) Brazilians are born, and there is great potential for others to emerge. There are already 8 thousand startups in Brazil, which generate more than 30 thousand jobs. Last year, they totaled investments of over $ 1 billion.
Moving from subsistence entrepreneurship to disruption entrepreneurship is something we need to celebrate.
In addition, Brazilians are avid for digital (the population spends an average of nine hours a day connected) and an entrepreneurial people (40% of people engage in some kind of autonomous activity).
There are huge opportunities ahead in the various sectors.
Ecommerce penetration accounts for only 6% of industry sales, compared with 20% in China. A gap that can be filled by national retailers.
We have 25% of the debarred population, a huge asset for fintechs; 45% of paper medical records already targeted by health startups; and nearly 40% of the non-high school population reached by distance learning startups.
It is high time we solved structural problems and offered a more business-friendly environment, especially digital ones. We hope that the Brazilian digital revolution will be a true turning point for a new era of growth and social prosperity.
Source - Brazil Journal. Posted by Nicola Calicchio and Jordan Lombardi, 4/17/2019.