Illustration by Felipe Mayerle
Technology

Number of players in all funding stages grows in Brazil, but only some of them lead the largest rounds

Do you want to know who these funds and investment managers are? See the chart made by the innovation platform Jupter and the investor group Angels & VC

Charting Brazil’s investment stars in 2020, the Brazilian innovation platform Jupter managed to offer an updated view of the country’s startup ecosystem and the changes that it went through last year. The main one is that the number of players in all funding stages grew in the country over the last few years, but only some lead the largest rounds. The work was overseen by the Angels & VCs group, which brings together several Brazilian leaders and investors. (Read the study, in Portuguese, here)

Investors map in Brazil by Jupter. Read the whole study here.

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Most of the country’s venture capital investors are on the board, according to the stage in which they normally operate and their investment range. According to Bruno Dequech Ceschin, leader of the research and co-founder of Jupter, the biggest surprises in the 2020’s report were the greater diversity in styles, investment strategies, and the large number of players that, today, fill all financing stages of Brazilian startups. 

Brazil has numerous capital types for multiple types of entrepreneurs and startups. This has shown us that there are multiple paths in entrepreneurs’ and investors’ journey to go further in the development cycle of startups

Bruno Dequech Ceschin, leader of the research and co-founder of Jupter.

However, the map still shows the inequality of infusions, where unicorns concentrate the largest rounds and most startups receive little. According to the report, there is quite a divergence between the players and their preferences, even when operating within the same maturity stage.

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Bruno Dequech Ceschin, leader of the research and co-founder of Jupter. Photo: Courtesy

For Ceschin, there is a severe asymmetry in access to capital to be resolved in the early stages, making room for the funding of about 10,000 Brazilian startups that have never received any round. “The largest ones will always be able to accumulate more financial and non-financial resources [better mentors, talents, reputation, and more efficient acquisition and distribution channels] due to the concentration effect that these big platforms promote, and from which they leverage to consolidate markets that tend to have few winners,” he says.

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He says that Jupter is working to improve access to capital for those just starting, helping them to minimally build their initial hypotheses until they are really drawn. “By better leveling the starting point, we can bring more equity in the race for the huge sums of resources that exist in the rounds of series C onwards, where unicorns normally begin and are more commonly financed by foreign capital [although a lot of new Brazilian capital has arrived at these stages also known as Private Equity in 2020],” he says. 

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According to Ceschin, even though most investors prefer to operate at the Seed stage, it is still necessary to significantly increase the financial volume and the number of startups interested in receiving them. Furthermore, in his view, the rounds should be ten times more mixed with angel investors, accelerators, pre-Seed, and Seed funds than what they are now, so that the ecosystem works more efficiently, promoting a healthier creation of “all the Brazilian technological fauna and flora,” he adds.  To encourage this, Jupter’s accelerator created a community called Investor Trek, a community that offers mentoring, events, and investors’ meetings. With it, Jupter wants to foster investors’ experiences and multiply the number of startup investors. 

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According to him, the diversity aspect among Brazilian startups worsened in 2020 compared to the previous year. “It is terrible information. It points to a reduction in what was already low in 2019. There is an increasing number of initiatives for women entrepreneurs. Still, to change this reality more drastically, we need more women investors, which is where I see the worst metrics – only 7% of angel investors are women. To change this reality, we created an investor club within Investor Trek with an aggressive discount incentive for women who would like to learn how to invest in startups. We hope to have women investors and entrepreneurs accounting for half of the community soon.”