Beyond Carnaval: or should we call it “Beyond Havaianas”?
Concise reflections, digests, and highlights of the week's significant news within Brazil's investment and innovation landscape.
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IN TODAY'S BEYOND CARNAVAL:
The Journey of Brazilian Startups Internationalization
Brazilian’s internationalization scenario
Gympass successful case
It's funny to think how a simple idea that pops into your head on a random day can become a business and reach at first unthinking markets and people.
I’ve been working with corporate innovation for quite a while now and one day, while working at a global innovation consultancy, I was in charge of conducting a workshop on how to adapt a product or service for a foreign market, in this case, the Portuguese. I shared case studies from McDonald's as they are quite successful in keeping the key elements of their brand but above all incorporate cultural references in which country they operate to create a local connection. Besides that, it was also my role to warn the entrepreneurs about cultural gaps and word misunderstandings (even though we theoretically speak the same language, we don't in some cases).
This was a rich experience, not only for me but for sure to that audience made mostly of founders of Brazilian startups preparing to internationalize their businesses.
Ironically, the manager of this project was my current partner and founder of I'm No Economist, Leo Torres. Yes, life is crazy. Back then, we were only colleagues who admired each other’s work.
Even though I could write an edition about how intelligent, competent, curious, and great an entrepreneur and friend my partner is, the focus of this edition is on the process of internationalizing Brazilian businesses. Maybe next time, Leo!
But coming back to the internationalization process, this is happening more and more every year in the Brazilian market. Not only from our local startups, but also for foreign ones coming to expand their operations to this land.
So on this edition of Beyond Carnaval, we will explore the big numbers of internationalization considering mostly Brazil and a case of a Brazilian Unicorn that inspires worldwide entrepreneurs to bet on this strategy.
If you would like to explore more this internationalization topic, I recommend: Beyond Carnaval: The Pursuit of Foreign Investments
Brazil's Map of Internationalization
AI helped me with the research
As much the pessimists might think, not only Brazil, but the world itself has never been a peaceful place. And it certainly will get more and more complex. A pandemia. A war. An economic crisis. A turbulent election. Something will always be happening somewhere with potential effects worldwide. If instability is a constant, to internationalize, sometimes, is about mitigating the risks as you don't keep “all your eggs in the same basket”.
Internationalization may seem straightforward, but it requires strategic preparation. Several companies now assist those looking to enter new markets. This is where soft landing programs and companies come in. These specialized programs and companies offer comprehensive support for startups and foreign technology firms aiming to establish a presence in new markets, providing a range of services to navigate the complexities of setting up new operations.
In this context of expansion, unified data on internationalization efforts from Brazilian companies is lacking - perhaps a sign that we should create it... However, we have gathered the following information:
The Sebrae Like a Boss program has engaged with approximately 4,000 Brazilian startups seeking to internationalize over the past four years.
A study by the Fundação Dom Cabral, conducted with 140 Brazilian companies, revealed that in 2023, 51% of them plan to launch new operations abroad within the next two years, indicating a growing trend towards internationalization.
Popular destinations for expansion include:
United States: Cities like Miami are prime targets for Brazilian startups due to their vast market size, investment opportunities, and well-developed innovation ecosystems.
Canada: Toronto is a relevant destination, offering a conducive environment for business growth.
Portugal: Lisbon has become popular due to cultural affinity, a common language, and government incentives for foreign businesses.
Germany: Berlin stands out as a significant destination in Europe.
France: France continues to attract international businesses specially for its strong startup ecosystem.
Argentina and Paraguay: Are common choices for initial internationalization efforts due to their geographical and cultural proximity to Brazil.
More Than Just Havaianas
Yes, we have more than just Havaianas representing us worldwide and at the Olympic Games 2024 in Paris. It's time to showcase the Gympass internationalization case, as they have undergone a remarkable international expansion since their inception.
Gympass, one of the selected rolls of unicorns in Brazil, with a valuation of $2.4 billion was founded by Cesar Carvalho in 2012. The company focuses on offering corporate fitness solutions and access to a wide network of gyms, studios, and wellness services.
Initially operating as a B2C model in Brazil, Gympass pivoted to a B2B2C model, gaining traction with its first major client, PwC. The company began its international journey by expanding to Mexico, followed by Spain, which served as a springboard for further European expansion.
In late 2017, Gympass made a significant entry into the United States market, capitalizing on the robust fitness industry there. The company continued to grow across Latin America, leveraging its success in Brazil and Mexico.
To support this rapid international growth, Gympass invested heavily in technology and talent, planning to more than double its technology staff by the end of 2019. A key component of its strategy was expanding its network of accredited gyms, which numbered over 47,000 worldwide by 2019. Strategic partnerships with multinational corporations like PwC, Banco Santander, Unilever, Accenture, KPMG, and McDonald's further fueled Gympass's expansion by providing access to a global employee base.
Supported by significant investment rounds totaling $520 million as of June 2021, Gympass continued to grow, with future plans to consolidate its presence in the United States and explore opportunities in Asia.
As I said before, isn’t it funny to think how a simple idea that pops into your head on a random day can become a business and reach at first unthinking markets and people?! This notion resonates deeply with the journey of internationalizing businesses, especially within the dynamic Brazilian market.
With well defined strategic planning, businesses like Gympass have successfully navigated the complexities of expanding globally, demonstrating the vast potential and opportunities within this landscape.
As instability remains a constant in our world, the pursuit of internationalization stands as a strategic move to diversify and mitigate risks, proving that even the simplest ideas can transform into global success stories.
Andrade Gutierrez's solar startup, AG4 Energy, and Trinity Capital have announced a joint venture to develop and operate solar power plants in Brazil. The partnership aims to accelerate the growth of renewable energy projects in the country. (Source: startups.com.br)
Brazil's unemployment rate has fallen to 6.9%, the lowest second-quarter level since 2014. The number of employed people reached 100.9 million, while the unemployed population decreased to 7.4 million. This improvement reflects a strengthening job market in the country. (Source: Agência Brasil)
The Central Bank of Brazil's Monetary Policy Committee (Copom) unanimously decided to maintain the Selic rate at 10.5% per annum. This decision aims to consolidate the disinflation process and anchor inflation expectations, considering adverse external conditions and robust domestic economic activity. (Source: Agência Brasil)
The 5th National Conference on Science, Technology, and Innovation opened on July 30 in Brasília. The event aims to discuss and propose a new National Strategy for Science, Technology, and Innovation, including the launch of the National Artificial Intelligence Plan. (Source: EBC)
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Deciphering Brazilian potential. Generating expert intelligence and strategic insights for the Brazilian investment market.
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.
Delivered on the first Saturday of the month at 06:09 am (BR time), the Open Zeitgeist newsletter provides a space for both Brazilian and "gringo" guests to share their perspectives on Brazilian investment opportunities.
Investors are closely looking for opportunities in our country. It is our job to decipher Brazilian potential.
Funny. I completely forgot to mention in Open Zeitgeist that we worked together on that internationalization workshop for Brazilian startups.