For Marcos Toledo, the notion of a “moonshot” should be interpreted differently in Brazil.
While tech giants and scrappy start-ups in the US and China can afford to reach for the stars with ambitious projects like spaceships and autonomous vehicles, Brazilian groups should focus on helping those closer to home, says the managing partner of Canary, a venture capital group in São Paulo.
“Instead of thinking of the rocket ship, maybe founders should be focused on the huge problems of Brazil, where people are underserved by basic services,” he says. “The great moonshot here is for a founder to resolve the education or healthcare sector.”
Social responsibility has infused Brazil’s booming tech sector. From education to “social commerce”, a new generation of start-ups is attempting to address the needs of Brazil’s long-neglected poorer communities.
Part of this stems from the bleak economic situation in Latin America’s largest nation. Almost 53m Brazilians — about 25 per cent of the population — live in a state of poverty, with little access to education, healthcare and other social services. Of those, 13m live in what is considered “extreme poverty”.
But part of this social focus also stems from an acknowledgment that Brazil’s tech ecosystem is unlikely to be able to compete with Silicon Valley or China. “China today trains 4m developers a year. [To match that] Brazil would have to train something like 600,000, and we currently train 30,000,” says Ronaldo Lemos, director of the Institute for Technology and Society in Rio de Janeiro.
The bright side, Mr Lemos says, has been an “explosion of venture capital going to [Brazilian] companies”.
In 2018, the level of venture funding jumped to $1.3bn, more than 50 per cent more than the previous year and almost 370 per cent more than the $280m raised in 2016, according to the Association for Private Capital Investment in Latin America.
One recipient of such funding is Facily, a São Paulo-based social commerce group, which allows Brazilians to club together to buy their shopping online at sharply discounted rates and then have it delivered to a nearby pick-up spot for collection.
Customers join groups of buyers through an app, which allows Facily to offer fresh fruit and other produce at 40 per cent of the supermarket cost. Establishing collection points drives the delivery cost for customers to zero, says Diego Dzodan, co-founder and chief executive of Facily.
“There is a very large part of the population that is being left outside the development that tech produces. That used to be the case even more severely in Latin America until the cell phone came . . . it brought opportunities to close this gap,” says Mr Dzodan.
The company reported 20 per cent growth in users a week between September and February.
Another company taking advantage of mobile tech is Pravaler, which allows students to apply for funding that might otherwise be off-limits.
“Technology is a fundamental tool to meet the goal of expanding access to education,” says Fabio Castro, head of marketing at Pravaler, in 312th place on the FT Americas ranking of 500 fast-growing companies, with a 2015-18 compound annual growth rate of 39 per cent.
“Online student funding is one of the most just and democratic ways to access education. Fifty-five per cent of students [using Pravaler] are the first member of their family to enter higher education.”
More broadly, however, education remains one of Brazil’s biggest failings.
According to All for Education, a non-profit group, more than 40 per cent of Brazilians do not finish high school. Almost 12m citizens are illiterate.
Alicerce Education, a start-up that offers after-school tutoring to children at lower rates than what parents would pay for childcare, is attempting to remedy this. The São Paulo-based group has been hailed for not only shaking up the education sector, but for tackling antisocial behaviour among students who might otherwise be bored after school.
“They’re tackling a huge problem that the government is not resolving,” says Mr Toledo, whose company has invested in Alicerce. “They are tech enabled, but the main innovation is how to create a curriculum very cheaply. That is the hack.”
It is a notion echoed by Carla Gómez, a professor of management at the Federal University of Pernambuco, who says Brazil’s multitude of political and social needs have made it a “breadbasket” for social and tech start-ups.
“This movement is still very young. The difficulties are the same as any other entrepreneur,” she says. “The margins are smaller and the mortality rate for companies has been high.”
Yet she adds: “Just look at deficiencies in public services and the very large demand. It is all mediated by technology. It is in the palm of our hands.”
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