Entrepreneurship Is Growing Up in Brazil and So Are Investment Opportunities

Entrepreneurial activity is on the rise in Brazil and spreading into new industries.

Just a few years ago entrepreneurial activity was largely focused on software. Now companies are popping up in health care, manufacturing and digital signage. Innovation in several investment sectors, such as financial services, holds the promise of becoming world class.

This assessment comes from David Thomas, a managing director for Intel Capital in Latin America. Last year, Intel’s investment arm doubled its investment staff in Brazil to four.

Thomas isn’t sure whether the increase in staff will translate into more Brazilian investments by Intel Capital, which made five last year. But he says the deal flow is better than he has seen it in the past. “We’re seeing a very strong pipeline of investment opportunities,” he told peHUB.

It is not hard to understand why. Many of Brazil’s rising middle class are buying cars and computers for the first time. It is a trend “that doesn’t show any signs of slowing down,” says Thomas. The country is now the world’s third largest PC market and people are spending more time online.

Thomas says the venture ecosystem is becoming more mature along with its entrepreneurs. Company formation and diversity is increasing. “There is more entrepreneurship,” he says. “There is more risk taking.”

As in the United States, some of the excitement revolves around consumer Internet and e-commerce startups. Companies are taking proven business models and applying them to Brazil.

There are other sectors where local entrepreneurs have a special expertise, Thomas says. One is financial services. Others are oil exploration, where off-shore drilling is taking place, and agriculture, where sophisticated farming techniques are evolving.

Intel Capital isn’t the only U.S.-based investor showing interest in Brazil. Earlier this month H.I.G. Capital opened an office in Rio de Janeiro. Last month San Francisco-based life sciences investor Burrill & Co. announced that it had raised $125 million in a first close for its Burrill Brazil Fund I, which has a target of $200 million. The fund will invest in Brazilian life sciences companies, including “early to late-stage investments in therapeutics, diagnostics, medical devices, healthcare services, biofuels and digital health,” Burrill said in a statement.

Facebook backer Accel Partners is also targeting Brazil. In December, the firm invested in Kekanto, a Brazilian review site. That was at least its fourth investment in the market in the past 12 months, according to Thomson Reuters (publisher of pehUB). Accel’s other Brazilian bets are on Shoes4you, an online shoe seller; Elo7, which operates an online marketplace; and ITCapital Servicos de Tecnologia Ltda, which provides IT services.

“Brazil has rapidly become one of the most important markets for virtually all of our Internet companies,” Accel Partner Kevin Efrusy told TechCrunch last September.

Additional reporting by Lawrence Aragon, peHUB

Image credit: Brazil investment image courtesy of Shutterstock

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