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Sao Paulo is the 2nd best city in Latin America for entrepreneurship, says consultancy

Posted 2021-07-31

The city of São Paulo and Brazil stand out in the ranking of the best places to do business in Latin America. São Paulo appears as the second best Latin American city to start or expand a business, second only to Santiago, in Chile. To complete the podium, Lima, Peru, appears in third position. The conclusion is from an unprecedented study conducted by Orbelo, an e-commerce platform that helps entrepreneurs set up online businesses. The survey points out the metropolises with the best scenario for entrepreneurship, financing and business growth in Latin America and worldwide.

13 indicators were analyzed in 200 cities

To build the ranking of the largest business centers that meet the prosperous conditions for entrepreneurs, 13 factors were analyzed. Two hundred capitals and large business centers were evaluated according to these indicators. The study was divided into four categories: Infrastructure, Technology/Digital, Import/Export, Finance, and Bootstrapping (ability to start a business from limited resources, without the support of investors). The delay to start a company, female entrepreneurship, human capital in technology, and logistics ecosystem were some of the items taken into consideration. 

The survey also listed the global cities with the highest scores in relation to the best conditions to create and develop a business. The top three were: London, New York, and San Francisco. São Paulo ranks 69th on the global list.

Brazil has good logistics infrastructure

Brazil stands out with a more developed logistics infrastructure than most of its neighbors in the region and has a favorable scenario for startups, whose investments have been increasing over the last five years. Although the country has been severely affected by the covid-19 crisis, there are still signs of economic growth in the entrepreneurship sector, and the city of São Paulo is the largest financial center in the region, and is a hub of innovation due to its access to global markets, says the study. One of the sources used in the research was the World Bank’s Doing Business index, which pointed out a challenging scenario for starting a business in Brazil, due to bureaucracy, regulations, and difficulties in accessing international markets. The country has a more developed logistics infrastructure than most Latin Americans. São Paulo and Rio rank 3rd and 4th in this respect, with better shipment tracking and punctuality in deliveries. They are second only to Panama City (1st) and Santiago (2nd)

Strong support for startups

The strong ecosystem created to support and finance startups was one of the foundations that led São Paulo to the second place ranking in Latin America. “Despite the catastrophic losses that the Latin American region suffered during the pandemic, there has been continuous economic growth in the entrepreneurship scenario, specifically in technological and digital activities,” says Ana Llorente Pérez, Marketing Manager for Latin America at Oberlo. The expert attributes the current scenario to the destabilization of traditional business models, as well as financial support packages. 

“This unique set of circumstances proved to be a fertile ground for people with innovative ideas, but who didn’t have the time or financial resources to carry them out. It’s no coincidence that the top cities in our study are all locations where new entrepreneurs were able to take big risks despite the pandemic.”

Debureaucratization and support programs

The numbers ascertained by Sebrae accompany this growth of micro and small companies in Brazil, which occurred even during the worsening of the pandemic. In the first four months of this year, more than 1 million were created. In the whole of last year, there were 4 million new registrations. For Eder Max, Sebrae SP’s business consultant, debureaucratization and support programs were fundamental for this growth in the opening of micro and small companies.

“The computerization process for the opening of companies has speeded up the life of the entrepreneur, who previously needed to schedule a visit to the offices. The MEI is now exempt from having to obtain a business license. This all encouraged the person who had an idea to open a snack bar, a home-cooker market, who took advantage of the moment and did it. With the pandemic, the federal, state and municipal governments developed their own programs to help the unemployed and micro and small entrepreneurs, such as financing lines with affordable interest rates, especially Pronampe.

Also according to Sebrae’s consultant, the pandemic facilitated the emergence of technology startups, especially financial solutions, which emerged more structured, gaining the trust of investors and contributing to the decrease of venture capital. But despite many positive points, Eder Max lists some points that still deserve attention for the growth of these business models. “We can say that 99% of the companies in Brazil are small companies, and this fostering of innovation has contributed to the growth of Brazil’s GDP . That’s why attention to some items is important, mainly related to human capital, technological environments, politicians and financing laws.”

You’re thinking of launching a new business, or creating a branch in Brazil ? Our team of experts helps you in all the administrative and legal aspects of your establishment process. Feel free to contact us for further information, or any question.

Author's post: Europartner Accounting

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