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Brazil is a country rich in unicorn startups to invest and do business

Posted 2022-05-06

Brazil has already earned its space in the global startup market. The emergence of new unicorn startups companies happens at such an accelerated pace that it even makes it possible to offer BPO Brazil services – financial management outsourcing.

The number of new startups emerging in the country continues to grow. As early as the first few months of 2021, Brazil invested approximately R$33.5 billion in 226 companies. This is due to low interest rates and high market liquidity, which ensure more investment opportunities with high returns.

In addition, we can see that, as players mature, the investing conditions become more beneficial. In fact, this condition favors the development and increase of unicorn companies in the country.

The Neon fintech, for example, was registered as the first unicorn of 2022, after investment contribution from the Spain-based bank BBVA. Including Neon, Brazil has already yielded 25 unicorns.

 

The Brazilian ecosystem

 

Compared to the rest of the world, Brazilian startups account for 66% of all unicorns in Latin America. Mexico is ranked second, accounting for 19% of this total. However, the US ecosystem still leads the pack with 242 unicorns.

The Brazilian ecosystem started in 2018 with the emergence of the first Brazilian unicorn: 99 Táxi. At that time, the number of investors was much smaller, as was the encouragement to invest.

As the Venture Capital – an investment mode – developed, 20 unicorn startups also emerged. Importantly, this number has grown significantly, and Brazil has been showing enormous potential for the production of such companies.

The estimate by The Unicorn Race – Distrito innovation platform, is that 14 Brazilian startups could become unicorns this year. The good news is that fintech’s are favorites, in addition to other industries that also made the list, such as:

Bpo Fintech Brasil, healthtech, edtech, and commerce/retail startups.

 

Drivers for the development of unicorns

 

Entrepreneurship in Brazil has made great progress, and this has made businesses more favorable for investment. The main reason is the increased number of inexperienced players in the market, which provide more resources and conditions for entrepreneurs to scale their businesses.

Furthermore, Brazil is a country with many opportunities to provide solutions in the economic, social, and environmental areas, among others.

By combining technology and innovation with these industries, and by encouraging consumers to purchase new products and services, the prospect of investing in new startups improves.

The major contribution to this scenario is the changes in Brazilian regulatory framework. With the pandemic, the pace of the Brazilian ecosystem accelerated, boosting the economy and new business models, also enabling the development of unicorn startups.

 

Unicorn startup trends

 

In fact, Brazil is a country with many unicorn startups posed for growth. Here are a few trends that contribute to this scenario:

Increase in capital contribution

The Venture Capital market has raised the value of investment for business escalation. As a result, companies have increased their capital with the objective of growth for investment rounds.

 

A more dynamic investment market

The Venture Capital marketplace has become more popular and connected, thus reducing geographic barriers. This way, meetings and negotiations have become more convenient, faster processes.

 

Innovations in industries

After the behavioral changes caused by the pandemic period, certain sectors became more relevant, such as healtech, edtech, fintech, and Bpo Fintech Brasil, opening up more and more room for digital and investments.

After a few funding rounds, the growth of startups in Brazil reaching the unicorn status is remarkable, because the investment market has provided very positive expectations.

The trend is that the result of such changes will continue, and the appreciation of technology-oriented companies turning into unicorns will increase.

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Author's post: Europartner Accounting

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