Brazilian humor is oftentimes a window with the clearest view into the Brazilian psyche. A good joke told at a buteco or pé sujo, the neighborhood corner bars where Brazilians mingle for a late afternoon chopp, is good way for foreigners to pick up what Brazilians really think about issues big and small. One of the more astute albeit biting quips that I remember hearing from time to time during the years I lived in Rio and São Paulo was that “Brazil is the country of the future! And it will always be so!” (“O Brasil é o país do futuro! E sempre será!”) In one tightly worded phrase, this nugget of self-deprecating humor conveys Brazilians’ pride in the enormous potential of their country while simultaneously dousing those same national aspirations with a bucket of cold water.
The problem, of course, is that Brazilians have every reason to be skeptical of their own ability to emerge as a formidable player on the world stage. Brazil has been one of the more volatile of the emerging markets over the last thirty years, with interconnecting periods of unbridled growth followed by deep recessions. In some respects, just by the sheer size of the country and its nearly $2 trillion annual economic output, Brazil is already a heavyweight, albeit one that is still underperforming vis-à-vis its truly staggering potential. And although much of the headlines tend to center around Brazil’s role as one of the major forces in global agricultural production, or the promise of its growing oil and petrochemicals industry, I believe the area that the global business community should be keeping an eye on is the country’s emerging technology sector. Its an opportunity so big that it could lift up the entire Brazilian economy.
From 30,000 feet, Brazil’s current tech ecosystem possesses all the ingredients necessary for lift-off: a robust pool of young and highly educated talent, access to local and global venture
capital, and a huge internal marketplace swelling with over 200 million people. The country is fostering a community of high-quality, seasoned entrepreneurs that are equally – if not more –sophisticated as anyone that might be found in New York, London, or even Silicon Valley. And perhaps the best sign of all: many successful Brazilian entrepreneurs, after exiting their companies, are looking to reinvest their windfalls back into the local Brazilian ecosystem. This redeployment of capital back into the Brazilian market highlights a dramatic difference from previous boon cycles in the Brazilian economy in which businesses couldn’t wait to get their profits into dollars and secured off-shore, locking in gains before the next economic downturn took hold. These changes speak to a newfound maturity in the institutional investment climate which is setting the stage for a sustained techdriven boom in the Brazilian economy.
Like their counterparts in Europe and the North America, the onset of Covid-19 accelerated middle-class Brazilians’ cultural shift into a full-scale adoption of a digital, online lifestyle. And although the same impediments that have defined “Brazil Risk” for decades – corruption, bureaucratic red tape, and complicated legal and tax codes – still present real challenges for tech start-ups, there is some reason to be cautiously optimistic.
This optimism is the reason natio-nal and international investors are looking at Brazil as a next best bet in tech and innovation. Case in point: Japan’s Softbank, the major shareholder in Uber, is investing $5 billion in Latin American start-ups with the lion’s share targeting Brazilian start-ups. Magazine Luiza – considered to be the country’s most innovative of the large retail chains – is building an ecommerce, payments, and fulfilment platform to empower small and medium sized retailers who have been dragging their feet in digitizing their businesses. The Magazine Luiza platform by itself is sure to usher in a new wave of traditional retailers. This will bring their businesses online much like how Shopify and Squarepace did so in the US. Agribusiness, fintech and digital health are other high potential areas of growth within the Brazilian tech sector.
That Brazil lags behind other major economies when it comes to hightech, coupled with a liquidity market now ready to support successful exits suggests that this time, just maybe, it might just be that Brazil’s moniker as the country of the future is finally colliding with the present.
Columnist for CNN, television producer & political advisor