Founders Talk: Entrepreneurs in Brazil


We asked our Brazilian entrepreneurs, namely the founders of evino, intelipost, and ESV Digital Brazil, about the challenges and particularities of the Brazilian startup scene

Due to the Olympic Games, there was a lot of buzz about Brazil in the media all over the world lately. Brazil is in the middle of an economic and political crises accompanied by an unfavourable development of raw materials. Despite these facts, the e-commerce sector is booming and a lot of investors are looking into the Brazilian market.

We were courious, how it’s like to be an entrepreneur in Brazil these day. That’s why we asked our Brazilian entrepreneurs, namely the founders of evino, intelipost and ESV Digital Brazil, about the challenges and particularities of the Brazilian startup scene. How do they perceive life as an entrepreneur in Brazil? What kind of challenges do they have to face and which chances can be taken?

“There are still a lot of opportunities to be explored”

1. How’s life as an entrepreneur in Brazil?
It’s pretty much like acting as an entrepreneur in other countries: getting things done, challenging the status quo, innovating, finding creative alternatives to overcome obstacles and adopting the “Fail Fast, Fix Fast, Learn Fast” maxim. But yet, Brazilian entrepreneurs have to face some additional challenges to make things happen:

  • Excess of bureaucracy when doing business
  • Lack of legal and regulatory stability to make long term plans
  • Incredibly high taxes make fiscal engineering and tax optimization a major challenge for many businesses, consuming valuable resources and precious time
  • Lack of skilled and talented professionals in some areas
  • Poor logistics infrastructure

2. How do you perceive the Brazilian market? Are there any specific challenges?
Brazil is facing a political and economic crises that will probably take a couple of years to be completely overcome. This scenario might create some fear and consternation among local and foreign investors. It could, however, also be seen as a big opportunity for creative entrepreneurs developing innovative and disruptive services and products that field gaps and demands that appear under economic crises.

3. How do you see the Brazilian startup ecosystem?
There are a lot of young creative and talented entrepreneurs on the market, but the Brazilian venture capital ecosystem is still young and evolving. Due to the challenges mentioned above, a lot of companies continue to suffer from the Brazilian macro-economic environment. Most Brazilian startups rather struggle with the chronic challenges and adversities than with their competition.

However, there are still a lot of opportunities to be explored by eager entrepreneurs since e-commerce activities are growing at very high rates and there are plenty of business opportunities in the digital domain (due to high internet penetration and people’s engagement).

Even though there is an increasing number of startups in Brazil, the sector still lacks some initiatives to multiply experience and knowledge through events, workshops, forums and the like. It is our job as entrepreneurs to leverage shared knowledge amongst the companies.


“Startups have remained on a strong growth path”

1. How’s life as an entrepreneur in Brazil? 
According to the world bank, Brazil ranks 116 out of 189 in the world to lead a business. The ease of starting a business is even regarded as more challenging. Here Brazil is on the 174th position. So, in a way, it is safe to say that there are quite a few challenges as an entrepreneur. Bureaucracy, complicated taxation and inflexible labor laws are some of them. On the other hand, Brazilians are better prepared to cope with the dynamic startup environment and to react more flexibly to changes. This is extremely positive because the startup world is one of constant change.

2. How do you see the Brazilian startup ecosystem?
 
The Brazilian ecosystem is growing steadily. Despite the recent general economic crisis, startups have remained on a strong growth path. The overall infrastructure is still at its beginnings, however. There are a few accelerators and incubators, but it does not come close to more established markets such as Silicon Valley, Berlin or Israel. On the funding side, there are a few investors, but the overall quantity might not exceed 20–30 active investors in the startup scene.

3. How do you perceive the Brazilian market? Are there any specific challenges?
Besides the challenges of entrepreneurship and the recent economic turmoil, Brazil lags behind on workforce qualification and infrastructure. Certain key positions, which require well-prepared technical employees, are sometimes difficult to fill and salaries are comparable to more developed countries, even with a devalued currency. At the same time, infrastructural problems such as poor internet connection, or poor roads and congested cities affect efficiency and service levels across the board.


“It is very hard to be an entrepreneur in Brazil”

Robson Del Fiol (ESV Digital Brazil)
Robson Del Fiol (ESV Digital Brazil)

1. How’s life as an entrepreneur in Brazil ?
As an entrepreneur here in Brazil you need to be prepared to deal with all kinds of uncertainties. Even if you have done an excellent planning, studied the market, structured and prepared your team, suddenly the government creates a new law that moves the tax system and your business is affected.

Every day I wake up thinking about how to be more efficient and to do more with less just because we cannot count on the help of our government. The tax burden is so high that it is almost impossible to make a profit. Even with the crisis of the labor market the legislation requires you to pay so many benefits that your company cannot benefit from market timing. It is very hard to be an entrepreneur in Brazil.

2. How do you perceive the Brazilian market? Are there any particular challenges?
The Brazilian market itself is vast and dynamic but depending on your type of business it is more or less attractive. I would say that a market regulated by the government is very challenging and exhibits higher risks, but the demand is almost guaranteed, as it is the case for telcos.

In my opinion, the biggest problem in Brazil is legal uncertainty and the political scene. Until we have an institutional stability in the three powers (Legislative, Judicial and Executive) we will not have a favorable business environment. But for investors who like to take risks, I believe it is the ideal setting.

3. How do you see the Brazilian startup ecosystem?
Regarding the startup ecosystem, I’d say we’re doing well, although relatively new and small we have many innovations and some very impressive outputs. What still leaves questions is the size of investments that are made by investors. In general, investors screening investment oportunities in the Brazilian startup ecosystem rather look for “profitable” than “innovative” ideas. I think this is nonsense because all startup cases we have seen in Silicon Valley go in the opposite direction, i.e., innovations just come before profit. Anyway, I believe it is the best place to be today!


Thanks to Gabriel, Stefan, Robson and Ari!