Friday, December 2, 2016

Start-Up Brasil: Belo Horizonte Is Emerging As A Leading Center For Entrepenurs

Special Report: 

Start-up Brazil

Belo Horizonte is emerging as a leading centre for entrepreneurs
Beside an artificial lake in south-east Brazil stands a blue-tiled modernist church, one of Oscar Niemeyer’s early masterpieces for which Pampulha is famous. This year the architect’s 1940s blueprint for Brasília became a Unesco World Heritage Site. But this suburb of Belo Horizonte (“Beautiful Horizon”), the state capital of Minas Gerais, is also a burgeoning hub of the technology revolution sweeping this mountainous mining state of red roofs and red earth.
Just south of Pampulha’s landscaped lagoon is BH.Tec, a five-storey science park, whose cafeteria juts into tropical woodland. The 19 tenant companies include global leaders in biotech, and the oldest, Ecovec, is expanding. Cecilia Marques-Toledo, a molecular biologist, shows me around labs where the Zika virus can be diagnosed in mosquitoes. The brainchild of professor Álvaro Eiras, the patented technology uses MosquiTraps and GPS surveillance to prevent dengue and Zika outbreaks.
The tech park, inaugurated in 2012 on the campus of the Federal University of Minas Gerais, is part of a drive to bring world-class Brazilian innovators, state government and business together. Just up the road is the Mineirão stadium, rebuilt for the 2014 World Cup but known around the country for a notorious match that ended in a rout. “We don’t want to be the place where Brazil lost 7-1 to Germany,” Leonardo Dias, Minas Gerais’s dynamic undersecretary for technology and innovation, tells me with a persuasive smile. Dias, 47, an electrical engineering graduate and events entrepreneur, meets me in the centre of town in the elegant café of Espaço CentoeQuatro, a textile factory turned cultural centre with a new co-working space that opened this year. “We want to be known as the capital of innovation in Brazil,” he says.
Leonardo Dias, Minas Gerais state’s under-secretary for technology and innovation © Leo Drummond
With 5,000 tech companies, second only to São Paulo, Minas Gerais has fast emerged as one of the best start-up centres in Latin America. Its growth is bucking Brazil’s worst recession in two decades. During the Rio Olympics, in British-backed international Startup Games, a non-profit competition, Minas Gerais start-ups won gold, silver and bronze. Those clustered in the capital (pronounced Bellow Rizonchi) were dubbed “San Pedro Valley” after the affluent São Pedro district where many were born. More than 300 are now spread around the city. Its developers are one reason, in a state with four of Brazil’s top 10 universities. Google opened its first R&D centre in Latin America in Belo 10 years ago, after buying Akwan, a mining software company with a brilliant search algorithm. A “garden city” of fountained squares, Belo also has a lower cost of living than São Paulo or Rio, less traffic and a relaxed street life as Brazil’s “bar capital”. An hour’s drive away are the botanical pleasure gardens and 23 contemporary art pavilions of Instituto Inhotim, founded 10 years ago by the mining tycoon Bernardo Paz.
Government has followed entrepreneurs’ lead. “We have the third-largest GDP of any Brazilian state, but if you take out mining and coffee, it’s 22nd,” Dias says. “The dependency is very high, so our strategy is to invest to change that.” Other goals are to stem a brain drain and attract foreign companies and investors. Start-ups and Entrepreneurial Ecosystem Development (Seed), “the only public accelerator programme in Brazil”, began in 2013 to give equity-free funds and mentoring to Brazilian and foreign start-ups selected in open competition. It has restarted after a hiatus that followed a change of governor in January 2015.
For Dias, “the economic crisis is the best moment to change the culture. We’re connecting the problems of industry with start-ups that can solve them.” Among Seed’s new intake of 40 is Residuall, which, by tracking waste smartly, is green and saves fines. Cora, one of myriad learning platforms plugging gaps in education, was co-founded by a former school principal, Cecília Passagli, 32. Her innovative ideas were rebuffed by a textbook publisher, “so I decided to do it myself”.
Growth can be spectacular. Lucas Borges, 29, co-founder of Risü, a platform to donate to social causes while shopping online, says revenue has grown almost 1,350 per cent this year.
Priscila Gama, founder of Malalai © Leo Drummond
“Brazilians don’t trust the government or the police because of corruption, especially if you’re not rich,” Priscila Gama, 33, says. “So we think, can society do it?” The daughter of a car mechanic and a nurse, Gama was a practising architect until recession halted construction. Hearing of a rape by a taxi driver, she co-founded Malalai, to “use technology to make women feel safe in the streets”. Named after Malala Yousafzai, the Pakistani Nobel peace laureate, Malalai deploys camouflaged wearables and virtual companions: “We believe women can do great things if they feel safe to go wherever they want.”
There are also nascent efforts to connect the ecosystem to some of Belo’s 215 favelas, like those sprawled on the ring road, where “internet access is still a problem”, João Souza, 36, says. He and Tatiana Silva, 30, are co-founders of Fa.Vela, a group of educated volunteers (some, like them, from favela backgrounds) who mentor microbusinesses. The group won Seed backing this year.
We’re connecting the problems of industry start-ups
Leonardo Dias
The Zika crisis is a factor behind Ecovec’s steep growth. Its M.I.Dengue system has been in use for more than 10 years in 80 Brazilian cities and abroad. “We’re the unique company in the world doing large-scale mosquito surveillance,” says co-founder Eiras, 55. He did a PhD at Southampton in England in mosquito behaviour “to know the enemy”. But it was his son Tiago’s dengue haemorrhagic fever in 2000 that drove him to find a solution, and a business partner. “I have just one son and I almost lost him,” Eiras says. Ecovec uses traps positioned by GPS to predict outbreaks so health authorities can target vector control. One 2013 study in Minas Gerais estimated that 27,000 cases of dengue had been prevented, at a cost of $1 per inhabitant per year.
When Eiras invented his first trap there were restrictions on profiting from publicly funded research. But new federal innovation laws since 2004 have spurred researchers to “take technology from university into society. Now everyone’s launching a company,” he says. Of his 13 patents, eight are licensed. He now wants investment for Ecovec to develop internationally beyond 16 employees. The difficulty in diagnosing Zika in humans makes prevention paramount: “We’re wasting time.”
Innovators have been spurred to take technology from university into society
A new contract with Espírito Santo state will extend surveillance to 65 more cities than the 12 monitored at present. Yet why is this life-saving technology not more widespread in Brazil’s more than 5,000 municipalities? “Our contracts are with government health departments,” he says carefully. “When a politician comes in, they might change things for political reasons. They have other priorities than public health.”
“We don’t bother with patents,” says Pedro Filizzola, 28, marketing head of SambaTech, an early start-up beacon. “We just keep innovating.” With 120 employees, and offices in Bogotá in Colombia and Seattle in the US, SambaTech recently moved from BH.Tec to plush headquarters in a hillside suburb.
With a wall of awards from the Massachusetts Institute of Technology in the US and Microsoft, the pale-yellow bean-bags and matching pool table nod to Silicon Valley. At his sales office in São Paulo, the founding chief executive, Gustavo Caetano, 35, tells me he was video-games columnist for a local newspaper at the age of 12. He started his first company in his early 20s in frustration that he could download only 10 video games on his Nokia mobile. Spotting a gap, he found a British aggregator with 2,000 games he could supply to Brazilian telecom companies. Later, he moved to online video streaming for Latin American TV corporations and digital platforms for advertising and education.
Gustavo Caetano, CEO and founder of SambaTech © Leo Drummond
“We try to solve very specific problems for one industry and to be first in every market we enter.” Last summer, SambaTech launched KAST in the US, “the first corporate Snapchat”, a secure internal communications app for the instant video age.
Caetano, who in 2011 founded the Brazilian Startups Association, believes “federal government is not helping at all. Labour laws are from the industrial era. Entrepreneurs sell and don’t want to start another company; they buy farms instead.”
Luiz Tângari, 41, an electrical engineering graduate, had farmers’ rising costs in mind when he co-founded Strider in 2013, which expanded this year into a tower block in Savassi, next to São Pedro. Toy tractors beside the coffee bar signal the business. “I wanted a product you could sell in Brazil, the US and elsewhere, with real innovation from the south.”
For an annual fee, Strider’s robust green tablet converts data on pests into colour-coded “heat maps” that can indicate where and when to spray or harvest. “Farmers can start using data not gut feeling,” he says. Clients claim to save 10-15 per cent on pesticides, he says, while using greener, less toxic brands.
Roberta Vasconcellos, CEO of BeerOrCoffee © Leo Drummond
When Roberta Vasconcellos, 28, left SambaTech to start a company with her brother Pedro, her ex-boss was a mentor. Their business networking app, BeerOrCoffee, won gold in the Rio Startup Games. It has partner cafés and bars across Brazil and is expanding internationally. The aim is to connect people to others nearby with useful skills. “We engineer serendipity,” says Vasconcellos, for whom San Pedro Valley’s support network is key to the strides its entrepreneurs have made.
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