The growth in digitalization is driven both by internet penetration in the population and by investments in technology companies. One of the countries with the most internet users in the world and an innovation ecosystem that has been maturing over time, Brazil is attracting investment and business opportunities for startups and scaleups.
Brazil has the fifth largest online population
According to the Digital 2021 Report organized by We Are Social and Hootsuite, there are 4.13 billion internet users around the world. Brazil ranks fifth in a top of countries with most internet users. Around seven out of 10 Brazilians are online, while nine out of 10 internet users access the web on a daily basis.
Source: Digital 2021. We are Social & Hootsuite
The number of internet users in Brazil increased by 9.6 million (+6.4%) between 2020 and 2021. As of January 2021, Brazil had approximately 160 million internet users. That is more than Mexico and Argentina combined, the two ranking second and third respectively in Latin America.
Source: Digital 2021 Report. We are Social & Hootsuite
The pandemic of the new coronavirus has boosted the digitalization in Brazil, opening more opportunities for tech and innovative companies.
Investment in startups in Brazil triples and breaks a record
Brazilian startups received an amount of BRL 33,5 billion in investment in the first nine months of 2021. This amount is more than three times higher than that recorded in the same period of 2020. The data are part of a study set by the Brazilian Private Equity and Venture Capital Association (ABVCAP) and by the consulting firm KPMG.
Looking at Venture Capital’s Investments per Segment, there is a concentration of investments in the fintech sector and software companies. This means that there is also a market for startups with solutions in energy, logistics and transportation and mobility.
Source: Industry Data Consolidation, Third Quarter 2021. ABVCAP & KPMG
What factors explain this historical record?
The pandemic accelerated the creation of new businesses. "Despite political noises, legal insecurity and economic uncertainties, Brazil is experiencing the largest wave of entrepreneurship in its history," said Piero Minardi, president of ABVCAP. According to Marcio Barea, ABVCAP Studies and Research Executive Manager, another factor that impacts the market is the devaluation of the real against the dollar. Consequently, it is cheaper for foreign funds, which are operating heavily in Brazil, to invest locally.
Even with this growth, there are still many opportunities to explore digital transformation in the country for both local and international startups.