Should Your Next Startup be in Sao Paulo

A decade ago, everyone was waxing lyrically in the received wisdom of the BRIC phenomena. The 4 fast growing economies of Brazil, Russia, India and China. After a while I started to notice that Brazil was sending representatives to IT conferences and other fora to promote Brazil's tech industry.

So why is this important? Well Sao Paolo is known as the manufacturing centre of South America and Brazil with a population of over 200 million is considered the 8th largest economy in the world. Against this ranking, Brazil's IT industry representatives present Brazil as having the 7th Largest IT industry in the world. So it should be important.

This leads me to the question of why don't we hear more about Brazilian Startups and why isn't there a stampeded of people from the UK and Europe trying to invest in or partner with Brazilian startups? So I decided to  enquire further.

It appears that investment in Brazilian startups is healthy. A Financial Times article, places Sao Paolo 11th in the world of any city attracting startup funding rounds greater than $100M. This places it behind London, but ahead of Tokyo, Paris, Seoul, Austin, Seatle, Tel Aviv and Mumbai inter alia. So Brazil's reputation for high costs and bureaucracy is not putting anyone off (a lesson for Brexit remoaners perhaps).

So why don't we hear more of this in the UK. One answer could be that Brazilians are notoriously conservative and don't like to do business with people with whom they do not have a long relationship. Additionally, they like quid pro quo partnerships, so want you to bring something more to the table than just cash. The other may be that traditionally they are quite insular in outlook and compare themselves with the United States only. So startups like Pipefy and Psafe have looked to the US rather than Europe. 

I think it's time that UK entrepreneurs started to explore the opportunities available in Brazil, as there is a huge talent pool there and loads of innovation. Personally, I think it's time to do a duolingo course on portuguese.