Step outside Silicon Valley and the stories are always the same. ”We have talent, we have ideas, but there’s no infrastructure to support entrepreneurship. Sao Paolo, the commerce center of Brazil, is no exception.The last generation of Brazilians grew up being taught that their country was the country of the future because of its natural resources, young population, and climate. However, in the 80s and 90s runaway inflation robbed them of business opportunities, and many of them left home or went to work for global corporations.
Today, with inflation under control at a modest 6.5%, many young people have decided either to stay in Brazil and start companies or to come home bringing their American experience with them.
in 1991, when Marco Garib started his information technology company, EverSystems,the cost of a business loan was prohibitive. As a result, even though Marco became a successful Brazilian entrepreneur– he even won Ernst & Young’s Entrepreneur of the Year Award– he’s not as financially well off as his counterparts in Silicon Valley or even in India.
His new venture, EverMobile, provides point of sale systems to micro enterprises, and even now its market strategy shows a reluctance to swing for the fences by taking on the established financial systems providers of his country. Instead, he will target only those currently unserved: doctors, deliveries, microstores,services and taxis. He targets the bottom of the pyramid.
The next generation of entrepreneurs, raised on the Internet, shows much less deference to the existing business power elites, and they are showing up to shake things up. Steve Vachani, of Serendipity Ventures moves easily from New York to Sao Paolo and Rio de Janeiro, trying to identify good teams to come to Brazil and start global companies there to disrupt worldwide markets. His teams spend six months in Rio with enough funding to get a new company off the ground. Very often, the idea comes before the team is assembled and Vachani scours the world to find the right team to execute.
Because Serendipity funds all the costs for the first year in phases ( test, seed, and angel), he has a good chance to develop the team, and if the idea doesn’t get traction, he can move it to another idea.
When we ask “Why Rio?” he answers ” Why not?
The greatest natural entrepreneurs are in undeveloped countries. Like athletes and musicians, they just have to be discovered, and he believes he’s creating “American Idol” for entrepreneurs. Serendipity has twelve companies in development, one of which has $1.5m revenue after only two months.
Another is headed by a 19-year-old from Tennessee who just dropped put of school to move to Brazil. He and Serendipity own the mobile rights to five top games. Vachani says entrepreneurs are even coming from New York to create companies in Brazil.
Vachani himself is a serial entrepreneur, formerly CEO of Power.com, an open platform for the web built entirely by a team from Salvador and rural Brazil, and good enough to attract investment from Silicon Valley’s Draper, Fisher, Jervetson; it was DFJ’s first Brazilian investment.
Part of the buzz about Brazil is the willingness of its young entrepreneurs to go global, but a bigger piece is the opportunity of a country Brazil’s size as a market itself. Because of it’s rapidly growing economy, Brazil now has a middle class, and with it, a consumer market.