🇧🇷 Beyond Carnaval #02: Investment paradigm change in emerging markets
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I might not be an economist, but I wouldn’t be naive to think that all the paradigm changes and complexity we are facing globally wouldn’t affect investment opportunities. Would you?
Historically speaking, the US, China and UK have been leading venture capital investments worldwide. So it wasn’t a surprise when the Q1 2024 of global venture capital investment hit $82.1 billion, and had these 3 countries on the top of the ranking.
But, here is when things become interesting, there's a rising trend toward exploring less conventional investment destinations on the horizon.
When considering the next generation of tech ecosystem growth, many less obvious names rise to the top, offering promising opportunities for growth and innovation, beyond traditional hubs.
Considering the top 10 rising star ecosystems, 4 of them are based in Asia, 3 in LatAm - 2 of them in Brazil -, 2 in Europe and in 1 MENA (Middle East and North Africa).
The development of these cities as potential new tech ecosystems is a result of the increased globalization that contributes to a decentralized venture capital model and the presence of local early-stage VCs.
Analyzing the past 20 years of Foreign Direct Investment (FDI) reveals the growth of several key emerging markets worldwide like China, Brazil, India, Poland, Turkiye, Corea, Mexico, Indonesia and Saudi Arabia.
In a surprising twist of economic fate, China, once the titan of foreign investment, experienced a dramatic downturn in 2023, marking its lowest FDI intake in three decades at a mere USD 33 billion. For the same period, however, even with a downturn of 18%, Brazil emerged as a beacon for international capital, boasting a USD 61 billion influx.
Look how Brazil is doing
Zooming into the Brazilian market, here are a few facts: every minute an average of 12 new companies are created. There are more than 13 thousand startups in business, of which, 24 are unicorns, representing 62,9% of the LATAM tech ecosystem.
Besides, being the country leader in biofuels and hydropower technologies, in a global run for decarbonization, Brazil plays a significant role for a cleaner Energy Transition. But let's save this topic for another edition of "Beyond Carnaval".
Sure, there are some challenges to opening and running a business in Brazilian lands, but even with some difficulties, that doesn’t seem to stop the growing Brazilian ecosystem.
With a population of over 200 million people and a growing economy, Brazil is a market that should not be ignored, especially for investors looking to tap into the startup and innovation scene.
Don’t call us to express your FOMO later, #peace.
There is a new Brazilian 🦄 between us! The QI Tech reached a valuation of over US$1 billion after securing an extension of its Series B round with General Atlantic.
CPQD and Inventta Consultoria will create an Innovation Hub in Campinas, boosting local innovation with R$13.6 million of non-reimbursable resources from FNDCT (National Fund for Scientific and Technological Development). The hub will focus on Web 3.0 and digital skills development for the area.
Embrapa, Brazil's agricultural research company, signed six strategic cooperation agreements. Between them, one with The World Bank to develop projects for a greener, more resilient, and inclusive agri-food sector. And with Japan, focusing on precision and digital agriculture to strengthen innovation ecosystems and sustainability.
The J&F Group announced a R$25 billion investment to build a new production line for its Eldorado Brasil, a pulp and paper company in Três Lagoas, Mato Grosso do Sul, creating 10,000 new jobs during construction and 2,000 permanent positions.
After 50 years, and inspired by the tax system of New Zealand for instance, the current Brazilian government is discussing tax reform. This could change the game for the Brazilian economy.
Are Brazilians VC's behind when it comes to AI? In an interview to Folha de São Paulo (paywall), founder of AI-based fintech Traive, Aline Pezente calls out having trouble raising capital from local VCs due to their "limited and outdated frameworks" to analyze companies to invest.
🇧🇷 Brazil
May, 3rd
IPC-Fipe inflation (monthly): Previous: 0.26%
Industrial production (monthly): Previous: -0.3% // Consensus: 1%
🇺🇸 The U.S.
May, 2nd
Jobless claims: Previous: 207K // Consensus: 212K
Total vehicle sales: Previous: 15.5M
May 3rd:
Non-farm payrolls: Previous: 303K // Consensus: 243K
Unemployment rare: Previous: 3.8% // Consensus 3.8%
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Every Thursday 06:09 am (BR time), the Beyond Carnaval newsletter offers concise reflections, digests, and highlights of the week's significant news within Brazil's investment and innovation landscape.
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