For a country with a relatively nascent entrepreneurial and corporate venturing ecosystem given its size and economic importance, Franklin Luzes has done much to support both startups and investors.
Luzes joined US-listed software developer Microsoft in October 2002 as part of its developer platform and evangelism organisation then spent seven years working with independent software vendors in Brazil and Latin America.
In 2010, he then took on the role of InnovAction lead in Brazil, “where I was responsible for promoting the spirit of innovation for the entire Brazilian subsidiary, resulting in the generation of ideas and actions that added value to Microsoft, its employees, partners, customers, and consumers”.
Then, since 2013, Luzes took the post of chief operating officer at Microsoft Participações, a wholly-owned investment subsidiary of Microsoft Brasil, which was set up to bridge the gap between innovative entrepreneurs and professional investors by developing a so-called micro-VC fund, BR Startups.
This fund, therefore, provides pre-seed and seed capital investment opportunities to the Brazilian startup ecosystem and Luzes said it was “the first multi-corporate venture capital initiative established in Brazil”.
Last year, US corporations Qualcomm and Monsanto joined Microsoft as investors in BR Startups, as well as Brazilian institutions, such as Algar, Votorantim Bank and Rio de Janeiro Development Agency.
Luzes, who is married with three children, said: “The BR Startup Fund is meant to provide one of the most robust contributions to nurture an innovation and entrepreneurship ecosystem in Brazil.
“The competitiveness of a company and the health of the communities around it are closely intertwined. A business needs a successful community, not only to create demand for its products but also to provide critical public assets and a supportive environment. On the other hand, a community needs successful businesses to provide jobs and wealth creation opportunities for its citizens.
“Therefore, the Brazilian Micro-VC Fund (BR Startups) places this principle at the forefront of its operating model by establishing strategic partnerships, both in private and public sectors in order to implement a ‘shared risk and shared return’ model to further enable local cluster development. It will benefit entrepreneurs, investors, corporations and government thus generating positive impact in the economy and advancing the startup ecosystem development in Brazil.”
The BR Startup Fund, through its Acelera Partners investment holding company, has invested in ACE, formerly known as Aceleratech, which was elected the Best Latin American Startup Accelerator for three years in a row – 2014, 2015 and 2016.
ACE’s exits include Axado acquiring Shipfy, Gust buying Fundacity and Glassdoor buying LoveMondays.
A successful entrepreneur himself, Luzes has taken a similar approach to “convincing and getting the formal approval of Microsoft in 2013 to create this innovative project.
“We had to divide the fund-raising of the BR Startup Fund into two phases, initially a minimum viable product (MVP) of the concept then a growth investment to scale up the BR Startups Fund. At this moment, this is exactly the stage that we are now here in Brazil.
“Finally, we had to face the reality that Brazil does not have a mature local startup ecosystem. Thus, we had to deal with inherent conditions such as:
• Lack of experience of the entrepreneurs and only a few are serial entrepreneurs.
• Highly mortality rate of startup companies in Brazil.
• Brazil does not have a solid track record of successful startups with global scale.
• Brazil has no unicorn startup – one valued at more than $1bn.
• Brazil has no local Nasdaq and no Brazilian startup is listed on Nasdaq.
“In a nutshell, it is an uphill battle to be an entrepreneur in Brazil.”
Prior to Microsoft, Luzes was the co-founder and CEO of an online learning company in Rio de Janeiro, MHW, for seven years, going through two rounds of venture capital its sale to Xerox.