

What the Brazilian Startup Ecosystem Needs to Succeed - rl12345
http://www.rudi.co/what-the-brazilian-startup-ecosystem-needs-to-succeed/

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meira
All of this about Brazilian entrepreneurship and ecosystem is only a
reflection of the real problem. Brazil's problem is corruption and extremely
concentration of wealth, granted by a corrupt government, the same since
always. We still have regions that are ruled by families that received lands
in the 1600s. Everybody that has money in Brazil have tons of ways to get
richer without risk, because the brazilian government prioritizes and secures
this kind of development, hiring their companies to do infrastructure
projects, for example. And that is why our tax system is complex, or bank
system "secure" and we have full employment (with low skill jobs) for a long
time. It's enough to keep people occupied and the system running.

The irony is that only startups could save Brazil from this doomed scenario.
And that is the reason why, until now, the ecosystem hadn't developed. But
someday, this will be hacked.

Disclosure: I'm Brazilian and had my startup broken by Brazilian corrupcy.

~~~
seanflyon
Could you tell us more about how corruption broke your start-up? What would
need to change for start-ups like yours to have a better chance?

~~~
meira
> Could you tell us more about how corruption broke your start-up?

Our request for a national program to fund startups was accepted, we had
R$200,000 granted for 1 year of investment. But after that, they stoped answer
our emails, and 6 months later, they announced that we and a dozen more
startups were removed from the program, without explain why. The program is
ruled by laws and we should have the money, but sue the government in Brazil
is totally worthless. 5 years to win, 10 years to receive. As I said before,
we have a very well planned system for the things to stay wrong.

> What would need to change for start-ups like yours to have a better chance?

Have more and more connected hackers to work around the issues. And the
investors start to see on them the way out, not in the copycats.

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evli
I am a firm believer Brazilian start ups should focus internally, but be able
to be scalable abroad. By being tied to the US market I think we fail to reach
the potential our country has.

Instead of simply copying US businesses Brazilians should innovate in markets
that make sense for Brazil. Focus on local customers in services that can be
expanded worldwide.

To me, simply trying to tie with U.S. businesses will cause Brazil to never
develop a strong startup ecosystem as it is seem in countries like India and
China.

~~~
rcamera
I agree with you that startups in Brazil should focus on the internal market
first. But Rudi also has a point that for many of the startups here, very few
look past Brazil's borders, loosing relevance and being exposed to external
competitors once they consolidated their markets outside.

Brazil is rather expensive and an extremely bureaucratic place to start a
company in, so there is less competition when starting up. That is the only
advantage of starting a business here, so doing one but focusing on the
outside market before you validate a business model isn't optimal, you would
be better off starting in the US instead.

~~~
swah
And if the objective is to make money, and your business is purely virtual
(say Github), it makes sense to target the US market instead of Brazil...

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mamcx
All the comments here could apply to the situation in Colombia, and probably
other countries in the region (and maybe Spain, for what I hear from devs from
there).

A lot of the money committed to help startups is lost in the incubators. I
"win" a competition where the 90% of the money was labeled as "consulting &
support" and the cash left was to buy things they say I could buy.

I participate in others programs, where I move to the very last stages and
drop because the situation is not that better. In this point, I consider a
waste of time trying for any incubator here (for example: You need to sign a
contract that say you MUST give 50% of all your time doing "incubator
activities" as helpful as hear somebody explaining about internet marketing.
Even for the king of support that could be nice, reduce the startup capacity
to work by half is not great. And for 6 months or more?).

I try several routes, programs and contest. A lot of "yeah your idea is
amazing! (not that much, but..)" but honestly look like without having US
100.000/Sales at the start none of the terms are a advantage for a starting
startup.

Here are the challenges, similar to the ones other say in this thread and
other:

\- Not great tech education. However, good talent here but: \- The talent
available is spread in shitty jobs or is almost invisible. Like I say in
[https://news.ycombinator.com/item?id=7875627](https://news.ycombinator.com/item?id=7875627)
some people are paid very badly, even for companies that could do better, and
some people are insulated from the tech scene \- The community was huge around
MS, when it was strong here. Now, is very disjoint, or that is my impression
\- Not enough money liquity to hang around 3-8 months hacking. For example, I
have my own apps but I need to stop working on them, do jobs for pay rent, and
resume when I can. Because I'm independent at least I could try. People in
full time jobs are out of luck if wanna build side projects

This is far harder that people in USA and other countries have, not impossible
but this lead to:

\- Get a cofounder is damm hard. I have a friend that I wish to have at my
side, but he never get the nerve to drop from job (not that bad of a job).
Others can't survive for more than 3 months. I have be independent this years
mainly because my close family and myself is very relaxed & patient about
money, and could live with less with not problem. But not everyone have the
circumstances.

Probably some will say: Why not setup a nice side-project with monthly
payments?

I have for more than 2 years looking how solve the problem of get money.
Fastspring.com is the only that barely work for me, and Apple. In colombia, we
are hit hard for all the drug traffic stuff (and some early crash about a
pyramid scheme), so anything that could fly in seconds in USA is a wall here.
For example, doing bitcoin here is like trying to buy radioactivity material.
Is like banks hate anything that could help a startup..

Not even paypal work! You can't get money to the bank, you don't have stripe-
like processors, the ones here are bizantine (and don't answer your mails or
don't care for you). So the option is create a company in USA. And this is
just one of several problems to overcome.

About investors:

Anyone that give you money, small or big, is your Boss. For live.

About get a loan:

We have [https://www.datacredito.com.co](https://www.datacredito.com.co), the
"you have not pay bills, wall of shame". Who are there? Almost everyone!. For
how long? How cares! So if a person is wealthy probably is ok, but the rest of
us are toxic for get a loan (and must consider carefully wich one to get, so
for example, with the intention of get a house is not good idea to default
because your are dreaming of build a game!).

However at the bright side, I think the momentum is building. The situation is
screaming of somebody smart enough to take advantage of the hunger of people
in latin-america for build great things. I hope not miss this!

------
goshx
Brazil needs a change in culture in order for the startup ecosystem to
succeed.

Most of the people don't have the "I want to be an entrepreneur" mentality.
They are looking for well paid careers when choosing the field they want to
graduate in. Creating a startup does not even cross their minds because they
are not aware that it is a possibility.

They want stability... like working for the government. For the ones that want
to be entrepreneurs, the mentality is either the mom and pop shop, where they
will spend their lives on and never really make real money or the ones that
happen to create big companies but stay in there forever as well.

VC's, Angels, investment, exit... a very low % of college students know what
these are about.

I dare to say that Brazilians are not used to take risks... even the ones that
are creating these copycats. Why do you think they are doing it this way? Less
risk.

Disclosure: I am Brazilian and during my college days starting a company was
not even talked about.

~~~
tmcz26
Mom and pop shops are a huge source of job creation everywhere, and there is
nothing wrong with opening up a bakery or a gadget shop. I'm always impressed
by the number of nail salons and 'padarias' opening up. Brazil has a lot of
entrepreneurs. The franchise market grows at double digits.

We you (and Rudi) are talking about is, specifically, tech companies. There
you have a point.. college graduates are not familiar with the VC world and
few talk about starting their own _software_ company.

Taking risk in the US is different than in Brazil. The US has the LLC and
bankruptcy laws, which shields the founders if it goes under. Brazil makes the
people responsible for every financial commitment, and the bankruptcy laws are
impossible to understand. If your company tanks, you personally go under too.

Disclosure: I'm also Brazilian and currently a co-founder at a São Paulo-based
tech startup.

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3327
We (www.lalina.com.br) are a Brazil only startup and have had some success
with a different model. Our head office is in NYC (better access to talent)
and we just opened our office in SP. We are beauty only and a traditional
business model. We discovered early on many of the points this article
highlights and confirm confirm most of them. Talent is a huge problem in
brazil and the startup culture is only in some small circles. Not to mention
vc's are very unsophisticated and do not offer much value except for cash and
what they read off investment blogs, granted there are a few exceptions.

~~~
caio1982
That's interesting, thanks. Why do you think the talent pool is a huge
problem? Is it about cost? Lacking of skills (if so, which ones are these, for
instance)? The best people are already taken or...?

~~~
3327
Cost is fairly cheap is more about security and vision. No one is really
interested in equity just a pay check. Skill is also a problem we are actively
trying to hire developers for the SP office but besides .net and php we have
had no success finding python / django or some of the modern framework guys.

Its like the us in the 90's

~~~
dcarmo
Question is: are you guys willing to pay decent salary? I've seen this "can't
find local work force" talk a lot, but most of them want local work force
paying minimum wage (when comparing to other places in the world).

About equity: I don't see anything wrong in wanting a pay check. IMO equity is
a plus a company can offer employees as a way to help hold talent - not salary
substitute.

~~~
3327
We are paying very decent. I would say 50% more than what you would typically
get. Benefits, vacation, hardware etc...

~~~
rglullis
Can you please put a number on it? The "benefits, vacation, hardware" part
does not mean much, because they are required by Brazilian labor law.

My profile: Sr. Developer/Architect with 8+ years experience in Django. I have
received (and turned down) offers in São Paulo for R$12.000/month (CLT), to
what some people in my network said it would be "good, but not extraordinary".
I've heard people saying they were making less, some saying were making more.
One of them mentioned he was making R$20k/month CLT, but admittedly he was way
out of the curve.

In the end, I moved to Berlin, a city that is less expensive than São Paulo
and where you can get a €6000/month salary without much trouble, and freelance
contracts in the €75-80/hour range.

But in short, tell me you are actually paying R$18.000/month and I will send
you my CV.

~~~
elros
Wow, that's exactly my situation. Brazilian, 8+ years experience in diverse
technologies, got frustrated with the lack of professionalism in Brazilian
companies and moved to Berlin where I'm making around 5 times what I made in
Rio de Janeiro, with the difference that Berlin is much cheaper to live in.

As parent said: But in short, tell me you are actually paying R$18.000/month
and I will send you my CV.

~~~
rglullis
Are you still in Berlin? It would be good to connect with a like-minded
fellow. You can find my email on my about page.

~~~
elros
I am still in Berlin, but couldn't find your e-mail address.

Entra em contato comigo, meu endereço é adelgado1313arrobagmailpontocom.

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ffreitasalves
In Brazil we have a lot of ways to make money without risk, so this is one of
the problems we are facing to get funding and when we pass through this
obstacle we have to give a lot of equity for the investors.

This kind of relationship between founders and investors is very harmful and
it is contributing to failure of brazilian startup scene.

Another point your post made very clear is the lack of entrepreneurs that
already had success in tech startups. We have a lot of people pretending to be
mentors, but none of them have any skills to do that. They never grown a
business, or got to millions of users from zero. They just are assuming that
they are mentors and are supported by the specialized media. Just impostors
gaining money from lectures and classes.

And, unfortunately, I believe another problem we are facing is the culture.
People are not open to use something new. Just few people are early adopter
and it is a real problem for companies that need to achieve a critical mass to
start running.

