On December 10, nine companies will take the stage in Silicon Valley. It won’t be a typical pitch competition. It will be a nervous day for the entrepreneurs who will bounce from their native Portuguese to English in front of some of the most connected and coveted venture capital firms in business.
All the companies are from Brazil and are closely attached to the Start-Up Brasil program, a joint private-public initiative that is building the hierarchy of the country’s startup ecosystem from the ground up.
It will be the second International Demo Day for Start-Up Brasil (SUB), a public-private organization trying to accelerate the country’s start-up ecosystem’s growth. Their main partners include the public Brazilian Trade and Investment Promotion Agency (Apex-Brasil), managed by the Organization for Promotion of Brazilian Software, or Softex (in case you’re wondering, Brazil is spelled with an “s” in Portuguese, so don’t get all up in our editor’s grill).
The nine companies gracing the stage run the gamut. Econodata identifies B2B leads, Nazar.io monitors and tests apps, GPS-wearable Pinmypet collects analytics about your pets’ behavior, and consumer-reporting platform Tippz correlates customers’ good time with what beverages they’re drinking. There are also flight simulation startup Virtual Avionics, plane ticket marketplace MaxMilhas, online women’s hub Superela, and candidate-profiling company Solides for human resources departments.
The Start-Up Brasil model perhaps reflects more of the top-down, government-led approaches of places like 1990s Israel than it does the private sprawl of places like, well, 2010s Israel. Start-Up Brasil sounds more like a ministry in the government, or at the very least a public agency, than it does a communal effort at enterprise.
Mass times acceleration
Start-Up Brasil has 18 accelerators under its umbrella and has so far worked with 183 companies, including several non-Brazilian entities from 13 other countries. It is more of a super-accelerator — though it doesn’t bill itself as such — serving as a mothership to a number of region-focused and vertical-specializing accelerators. It’s both indicative of the government-led history of Brazil’s economic management, as well as a break from tradition in its emphasis on something which wasn’t so prevalent until recent years. They hold four national demo days a year and one internationally.
“There weren’t a lot of accelerators when we started thinking about Start-Up Brasil back in 2012, maybe about five prior to the program,” Start-Up Brasil COO Vitor Andrade tells Geektime. Now, there are nearly 20, most of them having worked with SUB.
“Brazil had a lot of different grant-giving government programs before Start-Up Brasil, normally offering grants for the entrepreneurs and letting them choose how to use the money. But when we analyzed the programs, we saw that it was important not only to offer funding, but also invest in people and talent. They needed hands-on support to build their businesses and for money to be used in the right way,” he explains.
They’re entering their fourth cycle of companies and the program has two tiers of applications. For one, accelerators themselves are applicants. The program is rigorous for the accelerators as well, which have to reapply every year. Only nine qualified for the first two cycles, but that jumped to 12 for the third and fourth rounds.
Once the accelerators are selected, then the candidate companies lucky enough to be accepted to the program still have to reach an agreement with one of Start-Up Brasil’s accepted acceleration programs. If no agreement is reached within 60 days, the company has to reapply the next year to the entire program. Every company accepted gets Start-Up Brasil perks and its flat grant of R 200,000 (about $50,000) for up to 12 months for things like new hires, though each accelerator has its own benefits which could go on longer and vary wildly program to program.
Papaya Ventures takes 10%-15% and anywhere between R 20,000 and R 40,000; 21212 might take up to 20% and invest an extra R 20,000-50,000; Minas Gerais-focused Acelera MGTI only takes 4% but could grant up to R 150,000; newer Acelera Partners takes up to 10%, but also might give an extra R 200,000. Schedules range between four months for some programs and 18 for others.
Going top-down: from big gov to big corp
Andrade says that Brasilia could do without some of its tax revenues if it incentivized more early-stage funding, “especially for angels.” But the government has made Start-Up Brasil’s grants tax-free, so that’s a start. Money is also pretty easy to grab to support new employees with little questioning of the individual companies’ hiring decisions. In Andrade’s words, HR grants are easy because they “require less administrative time.”
“When the government decided to build SUB, they decided to hire a team with some connections to the startups already,” says Andrade. The national government would be able to help the system further to encourage B2G (business-to-government) business, but Brasilia isn’t at the stage that they are the best client just yet since they haven’t contracted out many startups as government suppliers. Most companies going through the program are B2B, then B2C. Only then do you see upstarts thinking about municipal, provincial, or federal government customers.
That might have to do with the capital’s lack of familiarity with the companies they’re supporting, which is evident in the approach they’ve taken to Start-Up Brasil. When asked if the top-heavy approach to growing the tech scene was weighing it down, he adds that government involvement isn’t too overbearing and is laid out to rely on local experts to lead.
“I think the government chose a private institution, Softex, thinking they would have the job to translate the conversation, helping [startups] connect with the government,” he adds.
Reflecting global trends, corporate venture capital arms are moving into the space. Representing all sorts of new clientele, investors and possible acquirers, it’s a big deal for the local scene. Those trends have Andrade and Start-Up Brasil optimistic they’ll see not only more early-stage ventures, but also exits in the near future.
“A lot of corporations are approaching the ecosystem now, especially this year. It is one of the signs that we are maturing.”
Start-Up Brasil’s Demo Day 2015 will take place on December 10 at Hero City in San Mateo, California. Attendance is free and you can register here.