The year of the Brazilian unicorns

Brazil has ten unicorn companies. Thanks to Softbank investments, five of them reached this status in 2019.

According to the Brazilian Startup Association (ABS), Brazil has more than 12 k technology-based companies. Of this total, only ten companies have reached the level of a unicorn, a term used for companies valued at more than one billion dollars. Of these ten, five reached this status in 2019: Loggi, Gympass, QuintoAndar, Ebanx, and Wildlife, making the year a turning point for the Brazilian ecosystem.

Part of this is due to the interest of venture capital funds in startups founded in Brazil and Latin America. The appetite of the Japanese group Softbank for the region played a crucial role. In 2019, the Japanese corporate announced a $ 5 billion fund for Latin American companies.

According to the balance published by the company, Softbank invested this year, from R $ 6 billion to R $ 10 billion in new companies in Latin America, an equivalent of 2.4 million dollars. According to André Maciel, partner of SoftBank Group International and leader of Brazilian investment operations, the group starred in “the largest private equity fund investment campaign in Brazil.”

In Brazil, the Japanese bank had already invested in 99 and Nubank. In 2019, the corporative made contributions in the startups Loggi, QuintoAndar, Gympass, MadeiraMadeira, Olist, Buser, Creditas, and VTEX.

The surprise of seeing so many unicorns

For Renata Zanuto, co-director of Cubo Itaú, 2019 was a year of consolidation for the ecosystem. “I think it is essential to see more unicorns because it ignites a single flame in entrepreneurs. Prove that yes, Brazilian startups are also companies with scale potential. And it also serves to attract foreign investors to Brazil. “

Cyntia Calixto, a professor at the FGV Entrepreneurship and New Business Center, also welcomes the year. “Not only because of the exponential growth of unicorns, which turns out to be a milestone for innovation, but also maturity.” More than the arrival of funds such as Softbank, the teacher sees accelerators and incubators maturing.

Camilla Junqueira, managing director of Endeavor, says she is impressed by the “overwhelming” evolution of the market. “In 2012, it was unthinkable to imagine that we would reach this level of maturity as soon as 2019.”

Pedro Waengertner, the co-founder of ACE, follows the same tone. “2019 was an incredible year. The best in the history of the Brazilian ecosystem and 2020 will be even better.” In the field of Angel investment, Maria Rita Spina also highlights 2019 as an outstanding year. For her, the new investors and the growth of the average ticket of the contributions were the main highlights. “Brazil has a vibrant ecosystem.”

Amure Pinho, president of ABStartups (ABS), attributes the momentum to a combination of factors: the presence of venture capital, strengthening of the entrepreneurial ecosystem, and growth of customer-oriented B2C solutions. Regarding the entry of international funds, the drop in interest rates stands out as the main justification. “We had an economic break, which made room for venture capital,” he says.

What will happen to the Brazilian unicorns in 2020?

By 2020, the president of ABS expects Brasilentra in what he calls the “second cycle.” Until now, the majority of Brazilian unicorns have had the main feature of offering software solutions for sectors more open to technology. In this new phase, you are betting that the more traditional segments, which usually take more time to perform the digital transformation, decide to focus on it. These are sectors such as agribusiness, health and industry. “I think the time has come.”

In the opinion of Michael Nicklas, partner of the Valor Capital Group, the progress in the startup ecosystem goes beyond capital inflows. For the investor, the maturation of the Brazilian market is the result of a series of factors, such as the globalization of business culture, greater access to broadband Internet, and the penetration of smartphones in Brazilian society. “Powered by technology and cloud computing, these companies have been able to generate value and productivity for bankrupt industries,” says Nickla. “2019 was a year in which Brazil was shown to have the capacity to generate large and competitive companies worldwide. These are companies that, from now on, are born with dual citizenship: Brazilian and global”.