Analysis of venture capital fund portfolios in Brazil

assessing investments in late-stage companies and their implications on the Brazilian ecosystem

Abstract

In recent decades, the Venture Capital (VC) industry has been gaining more and more prominence on the world stage and has caused profound changes in global capital markets, especially after the rise of Bigtechs, which in just ten years surpassed traditional industries. These capital-intensive companies have figured for decades as the most valuable companies on the globe. This protagonism was undertaken at the expense of generating technological innovation, combined with scalable, replicable models that allow for exponential growth. These companies competed for their markets solving major ordinary problems. All these companies have in common, the fact that they were financed by VC in their infancy, when they were still garage companies. This revolution was not restricted to the US and spread across the globe, led mainly by Europe and China in Asia. In Brazil, with a certain delay in relation to the USA market, the VC industry has been breaking consecutive records in investment volumes, which has increasingly attracted the attention of large global investors. It is undeniable that a large part of this success can be attributed to the acquisition of 99 by Didi in 2019, which created the first Brazilian unicorn, and placed the country definitively on the map of global VC managers. Despite all this development, it is noted that domestic managers are responsible for most investments in the industry, however they have a timid participation in investments in more mature stages. Therefore, the object of this research was to explore, through qualitative research, the main barriers encountered by domestic VCs to advance their participation in more mature ventures. Fortunately, this lack of participation in the more mature stages does not represent a threat to the Brazilian ecosystem, on the contrary, it is part of its evolution.