Entrepreneurship in a country where many wild monkeys

If you are interested in technology business, you probably have a basic understanding of the culture of entrepreneurship in the USA, Europe and your own country. This is true in most cases, and it turns out that only the inhabitants of this region and the few investors and startup expats know about the markets, for example, in Latin America.

On the other hand, for general development, it is sometimes useful to read about emerging markets on the other side of the planet, which I propose to do. This year's IDCEE will hold a two-hour panel discussion on entrepreneurship in Brazil - the largest state in South America with a population of about 200 million people (like Russia, Ukraine and Belarus combined), and this is an excellent opportunity to learn a little more about the culture of startups and investments in the country of the tropical jungle, carnivals and "Slaves of Izaura".

To create the right mood while reading, you can turn on the clip by Filo Machado (he, by the way, will perform on the second day of IDCEE):


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On a distant Amazon

Before I started looking for information about the Brazilian market and its entrepreneurial ecosystem, I only remembered that it was there that the social network Orkut, one of the “social attempts” of Google, was very popular. This network, which few people remember in the Russian-language Internet, is still used by many Brazilians, but last year Facebook was the most popular one.

Brazilians are surprisingly social at all: according to the latest data, the country holds the third place in the number of Facebook users (after the USA and India) and second in the number of Twitter users. To complement the portrait of the average Brazilian on the Internet, I will say that he uses Google to search - his share stably keeps above 80% .

Overall, only 46%, or 88 million Brazilians, use the Internet, but spend about $ 13 billion a year online, which makes this market attractive for Internet business. IT accounts for 4.4% of the country's GDP, and the government launched a special Start-Up Brasil business support program this year. It would seem that startups can only live and rejoice.

Underwater rocks

But not everything is so simple; I suspect, if you look at the emerging ecosystem of start-ups in Ukraine or Russia, you might also think that their existence should be cloudless, and statesmen do not sleep at night, thinking what else to do to develop the industry. However - a surprise! - there are enough problems both in Ukraine, and in Russia, and in Brazil.

Listing the obstacles awaiting an entrepreneur in Brazil, knowledgeable people call primarily the state bureaucracy, high taxes and a complicated system of calculating and paying them. According to the World Bank , registration of a company in the country takes four months, and already registered business gives the state 69% of the profits in taxes.

However, all this did not prevent a noticeable increase in the popularity of Brazil among international (mainly American) venture funds in the past few years. In 2012, more than 50 investors made about 80 investment transactions in the country; in the same year, according to the Brazil Startup Dealbook , two funds were formed with a focus on Brazilian projects that manage $ 250 million in capital.

Copy acceleration

Now, after describing the general situation, you can go to the most interesting - in fact, Brazilian startups. As it is easy to guess from the subtitle, the main trend of the market development lately consists in the “tropicalization” of already tested business models, or more simply, in stamping copies of Western services.

A very capacious startup ecosystem in Brazil was described by the co-founder of one of the most well-known local accelerators “21212” Marcelo Sales in last year's interview with FastCompany :

“To create breakthrough startups, the media needs to be written about innovations, and big innovative companies with which you can compete. It can be said that in Brazil there is no "venture capital", there is only "capital". So we do not say that we have the South American Silicon Valley here, nothing of the kind. It’s just a huge market in which proven business models will work; we just need to put together teams. ”

Obsession with proven business models, however, will not last forever: we can already say that the main niches for copycats are already taken, and new start-ups have to (!) Look for original ideas for building a business.

In the process of finding and implementing ideas, start-ups are helped by accelerators, whose number in Brazil is already measured in dozens. At the beginning of this year, nine applications from accelerators received 23 applications to take part in the same Start-Up Brasil state program. The overwhelming majority of them are located in the capital city of São Paulo or in Rio de Janeiro, so beloved by the great combinator Ostap Bender .

Anyway, Brazilian start-up combinators have quite good prospects, despite all the difficulties. If you believe the same Brazil Startup Dealbook, only last month, investors invested about $ 20 million in local companies (of which $ 11 million - in the service of comparing insurance offers Compara). In my opinion, a good indicator for the emerging market; so, development continues and is still ahead.

Photo: tomasfer / Flickr , The Economist