Brazilian city center with bridge and skyscrapers view

Your author spent most of last week on a business trip to Brazil, his first since the pandemic. It was reassuring to see that life was broadly back to normal post-COVID, with the streets busy and restaurants packed. While much of the local talk was about the pending electoral faceoff between Jair Bolsonaro and Luiz Inácio Lula da Silva, there was a buzzing undercurrent of optimism in some quarters. To give one strong example, Brazil’s tech scene seems alive and kicking.

As soon as you land at Guaruhlos Airport in São Paulo, passengers are greeted with billboards from local mobile phone operators advertising their 5G networks. Broadband speeds and WiFi connectivity everywhere we visited were comparable to (if not better than) similar services in London or New York. Meanwhile, contactless payment opportunities – in taxis and restaurants – were as ubiquitous as in any other major capital city. Brazil is a connected country: it is the fifth biggest market in the world for mobile phone and internet users despite being only the planet’s ninth largest economy (per research by Stanford University).

In terms of the start-up environment, reports suggest that there are around 12,000 active businesses in Brazil. The majority focus on offering ‘as a service’ propositions and target the B2B segment of the market. The country has nine unicorns (private businesses with valuations of over US$1bn). These include 99, Quinto Andar and Gympass. The former is a taxi app similar to Uber or Gett. Quinto Andar (‘fifth floor’) is a prop-tech business which aims to simplify the rental market for both landlords and tenants, while Gympass is a company centred around well-being whose app contains access to premium gyms, mental health solutions and more. The latter business has gone global and already offers services in the UK.

Of course, some businesses make it beyond the private market and gain public listings. Perhaps the highest profile of these is Nubank. Founded in 2013, it is not only Brazil’s, but also South America’s largest fintech, now listed in the US and capitalised at over US$20bn. More may follow. When considering the potential challenges start-ups face in Brazil, the list is not dissimilar to in other regions: competition for talent, bureaucracy and the tax regime. Watch this space and also what the next round of the election may bring at the end of this month.   

11 October 2022

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise. ​​​​​​​ 

Alex Gunz, Fund Manager

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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