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Updates of the Week: The current scenario of startups in Brazil

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Bruno Drummond comments on the Startups boom

Check out the full audio of the interview in our Podcast:

In the third episode of the “Updates of the Week” segment, we talked with Bruno Drummond, partner and founder of Drummond Advisors, about the boom of startups in Brazil.

According to Drummond, there are currently two favorable environments for the movement of startups that allowed this market to heat up: “First, doing business in Brazil, by nature, takes time. In this context, those who think laterally and create solutions to make processes faster, in all segments, get more opportunities. Second: there are few players in the business environment. For example, few banks dominate the market, there are few financial groups, few cement groups, few investment brokers. In short, few big players have been doing that for a long time. And startups aim to break the paradigm of how things are done and try to see it in a different way, always having the customer as a reference to grow”.

For the executive, within a slow business environment, there is a search for an improvement in transactions, so that they are faster and, consequently, improve the economy as a whole. “At the BrazilianVenture Capitalwe have a financial environment where people are putting a lot of money and getting positive responses with more and more startups that manage to scale. At the same time, we see new kids who say “Wow, doing this process could be easier, starting a company could be easier…Why don’t people do it that way instead of this?”.These young people question thestatus quo, the way things are done. And this question is paramount, because allied to the other factors I mentioned earlier, it creates this very good moment we see in Brazil, where new startups are growing and taking off, achievingtmarket tractopm, both financially and in terms of customers. Consumers are hungry for new services and new products”, he says.

Drummond explains that the world is in need of new ideas. The investor wants new investments, the consumer is looking for new products and services, the market itself needs to be more efficient to make transactions. And young people are full of ideas. This situation reflects what can be seen in Brazil today. “And from the moment these new startups reach a point where they already have a Minimum Viable Product (MVP) and this product can be marketed, investors will only need to invest money to bring more people to expand, provide service, attract new custimers and new muscles to grow”, he comments.

Internationalization for startups

In this context, internationalization helps in all aspects, according to the businessperson. For the executive, a startup that is born to serve only Brazil is signing its own death letter, as today’s competitiveness is great and at a global level. “Startups from other parts of the world are coming to Brazil and confronting Brazilian companies, fighting for space. Investors looking for Brazilian startups to invest already assume that companies are thinking globally and not just nationally. If a startup is a regional player, therefore, its market value will also be limited by the geographic area in question with transactions only in reais. And this hinders the chances of capitalization for the sale of this product abroad, for example”.

Investors are looking for global operations that provide a higher return on capital. It is necessary for the entrepreneur to be prepared to compete globally, since the customer can be from anywhere in the world. The same app that a person uses in New York can be used in Brazil, for example. The entrepreneur must observe who the customer is. If the customer of a particular service fits this globalized profile, the best thing to do is follow them, go where the customer goes.

For those who are just beginning their adventure through this vast universe of startups, Bruno Drummond gives a golden tip: follow the startup market in Israel. “For those just starting out, I would say that there are a lot of companies that you can look up to, but I think it would be interesting for you to try to study the Israeli environment. It’s a small business environment, in terms of borders, so the companies that emerge there are born with global thinking. Israeli startups analyze what services and solutions they can deliver globally,” he explains.

“It’s important to see where there is a need, validate that need before the market, validate your product, and think simple. Gather one, two, three, four, five inputs at most to find the answer you need about your product. The moment you achieve that, it will be enough. And that goes for doing business anywhere in the world”, concludes Drummond.

Written by Aline Ribeiro, Content Consultant at Drummond Advisors