This article was originally published in TechCrunch. Manoel Lemos is a managing partner of Redpoint eventures, the Brazilian-focused arm of the Silicon Valley venture firm Redpoint.
According to Lemos, “while economic uncertainty is still a factor, Brazil is still one of the most intriguing emerging markets for investors, and macroeconomic conditions seem to be improving”.
“Silicon Valley is a state of mind,” said Ambassador Pedro Borio, Consulate General of Brazil in San Francisco, during a recent address at the annual BayBrazil Conference at the Googleplex in Mountain View.
A career diplomat since 1976, Borio spoke about the significant growth in ties and similarities between Silicon Valley and Brazil during the last decade, a stormy tide of a national political scandal beginning to ease and his prediction that Brazil would rise again. “When you look at the historical data, every time Brazil emerges from a major crisis, it grows the most,” said Borio.
Corporate venture arms of multinational giants such as Chinese firm Baidu see a big opportunity in Brazil. In September, Baidu launched a new tech startup program to provide support and mentoring as a way to seek and identify scalable ventures in the country. Applications for the program are open between now and December 31 [applications closed at time of posting], and applicants are being assessed by the Latin American Angels Society (LAAS). In exchange for the support and mentoring, Baidu will take a 10 percent stake in the capital of the companies selected for the program.
VC investments in Latin America are increasing again, and top Silicon Valley firms are returning to the region or making their first LatAm investments, based on new data analysis released by LAVCA in early October. VC transactions are up 46 percent year over year, with $218 million deployed across 104 transactions during the first half of 2016. This follows a banner year in 2015, with 182 deals worth more than $594 million. Leading corporate ventures in the region include Monsanto, Qualcomm and Microsoft. Giants like Monsanto are investing indirectly as limited partners to established funds.
Brazil’s investment opportunity is enticing, especially for the tech sector, because Brazilians ravenously devour digital content, and are very socially engaged. They spend 68 percent more time on blogs than the U.S. Indeed, current Brazilian internet users are online more than five hours a day. They check their smartphones more than 80 times per day. With only about half the country of Brazil online today, growth could be fast and furious. Baidu is banking on more than 43 million Brazilians coming online during the next three years, which is why the country is one of its top-priority investment markets.
