Rio 2013 Blog: In Brazil, Government Boosts Funds for Innovation and Entrepreneurship

Despite the fact that it continues to attract foreign investment from large companies, Brazil lags behind countries like Chile and Panama in terms of overall competitiveness. It ranks as one of the most difficult places in the world to start a business; in Brazil, it takes an average of 119 days to set up a company. In a bid to make the South American country a destination for high-tech businesses and to improve productivity in traditional industries, the government aims to channel more investments to innovation and technology. Two recent initiatives seek to make strides in this area.

• Startup Brasil: In November, the Ministry of Science, Technology, and Innovation kicked off this program targeting technology companies. The public-private partnership will fund tech startup companies with an estimated $18 million in investments. While the program bears a resemblance to Startup Chile, the government also mirrored similar efforts in Israel, South Korea, and the United States. During the first year of the program, Startup Brasil will work with nine accelerators—companies that provide seed money and mentorship for startup entrepreneurs. These accelerators largely focus on digital and software companies. For example, accelerator 21212 works with a company that developed a taxi-locator cell phone app, as well as a site that allows users to crowdfund concerts. Of these accelerators, six have offices in Rio de Janeiro. The program also aims to set up an international hub in California’s Silicon Valley.
• Plano Inova Empresa (Business Innovation Plan): Launched by President Dilma Rousseff on March 14, this $16.3 billion program will provide credit and investments for strategic industries to boost innovation and competitiveness. Information technology forms a significant part of the plan, but areas such as agribusiness, oil and gas, and environmental sustainability will also benefit in order to develop new technologies. On the tech side, information technology programs will receive over $1 billion, with investments in projects such as technology parks, startup incubators, and research and development. Criatec, a venture capital fund run by Brazil’s development bank, will receive $109 million. This fund has invested in a variety of innovative companies, ranging from pesticide producers to firms developing cancer-fighting drugs. The Brazilian Corporation for Research and Industrial Innovation, a government organization that coordinates R&D efforts between the public and private sectors, will receive half a billion dollars. In addition, small and medium-sized enterprises will be eligible for a $2.5 billion line of credit for R&D and product development.