Brazilian humor is often a window into the clearer vision of the Brazilian psyche. A good joke told in a buteco or pé sujo, the corner bars where Brazilians gather for a beer at the end of the afternoon, is a great way for foreigners to grasp what Brazilians really think about big and small issues. One of the most astute, albeit biting, observations I remember hearing from time to time during the years I lived in Rio and São Paulo was that “Brazil is the country of the future! And it will always be so!” In a concise phrase, this pearl of self-deprecating humor conveys Brazilians’ pride in their country’s enormous potential while simultaneously throwing a bucket of cold water on those same national aspirations.
The problem, of course, is that Brazilians have every reason to be skeptical about their own ability to emerge as a formidable player on the world stage. Brazil has been one of the most volatile emerging markets over the past thirty years, with interconnected periods of rampant growth followed by deep recessions. In some respects, just by virtue of the country’s size and its annual economic output of nearly $2 trillion, Brazil is already a heavyweight, although it is still underperforming relative to its truly impressive potential. And while much of the headlines tend to focus on Brazil’s role as a leading force in global agricultural production, or the promise of its growing oil and petrochemical industry, I believe the area where the global business community should keep an eye is the country’s emerging technology sector. It is such a huge opportunity that it could propel the entire Brazilian economy.
From a 30,000-foot perspective, Brazil’s current technology ecosystem has all the necessary ingredients for takeoff: a robust pool of young, highly educated talent, access to local and global venture capital
, and a massive internal market swelling with over 200 million people. The country is fostering a community of high-quality, experienced entrepreneurs who are equally – if not more – sophisticated than anyone you might find in New York, London, or even Silicon Valley. And perhaps the best sign of all: many successful Brazilian entrepreneurs, after exiting their companies, are looking to reinvest their earnings back into the local Brazilian ecosystem. This reallocation of capital back into the Brazilian market highlights a dramatic shift from previous boom cycles in the Brazilian economy, where companies could hardly wait to convert their profits into dollars and protect them abroad, securing gains before the next economic crisis set in. These changes indicate a newly acquired maturity in the institutional investment climate, which is laying the groundwork for a sustained tech boom in the Brazilian economy.
Just like their peers in Europe and North America, the onset of Covid-19 accelerated the cultural shift of the Brazilian middle class towards widespread adoption of a digital and online lifestyle. And although the same impediments that have defined “Brazil Risk” for decades – corruption, excessive bureaucracy, and complicated legal and tax codes – still present real challenges for tech startups, there are reasons for cautious optimism.
This optimism is why national and international investors are looking at Brazil as the next best bet in technology and innovation. Case in point: Japan’s Softbank, the majority shareholder of Uber, is investing $5 billion in Latin American startups, with most of it directed towards Brazilian startups. Magazine Luiza – considered the most innovative of the country’s major retail chains – is building an e-commerce, payments, and fulfillment platform to empower small and medium retailers who have been dragging their feet on digitizing their businesses. Magazine Luiza’s platform alone will certainly usher in a new wave of traditional retailers. This will bring their businesses online just as Shopify and Squarespace did in the U.S. Agribusiness, fintech, and digital health are other high-potential growth areas within the Brazilian tech sector.
The fact that Brazil lags behind other major economies in terms of high technology, coupled with a liquidity market now ready to support successful exits, suggests that this time, who knows, Brazil’s nickname as the country of the future might finally be colliding with the present.ARICK WIERSONCNN columnist, television producer, and political consultantTwitter: @ArickWierson