Rodrigo Menezes, partner at law firm Derraik & Menezes Advogados, hosted a panel on Brazil’s ecosystem featuring Rosario Cannata, investment manager at EDP Ventures, the corporate venturing arm of energy utility EDP, and Flavio Pripas, corporate venture officer at venture capital Redpoint eVentures.
Mendezes kicked off proceedings by asking: “Why are we only now on the global radar and why should we remain there?”
Pripas explained that the market was very new and Redpoint had only started investing about 15 years ago. Things started to move quickly after that, he said, and several startups had now started expanding internationally after successfully scaling in the domestic market.
A challenge that had been solved, Pripas continued, was that of follow-on capital, of which there essentially was none even five years ago. Today, he continued, some startups were growing as much as 100% year-on-year.
Cannata similarly noticed recent changes, noting that over the past two years he had had weekly meetings with corporates aiming to set up local investment units. Corporates were keen to access innovation and they were coming around to the idea that venture capital was the most efficient way of achieving this goal.
Pripas pointed out that Brazil had celebrated five unicorns before many other large economies, such as Germany, and revealed that his fund counted both domestic and multinational corporates as limited partners.
Multinationals, he explained, were particularly interested in entering Brazil, which was a big market but not an easy one to penetrate due to challenges such as logistics. Local startups were well placed to help corporates solve such issues, he declared.
Cannata agreed that Brazil was an important market for his Portgual-based parent company, but the motivation to set up local offices was also influenced by a wider trend that’s meant Brazil-based startups raised three times more capital in 2019 then even in 2016.
Both Pripas and Cannata denied that unicorns or the increased availability of capital had led to inflated valuations. Cannata explained: “There aren’t many investors in Brazil, so while they are getting more competitive it is nothing like Silicon Valley and the valuations are still reasonable.”
When asked by Mendezes which changes they foresaw in the 2020s, Cannata had a brief and perhaps unsurprising answer: there would be many more corporate venture capital units.
