At the southern tip of Brazil, the state of Rio Grande do Sul is investing in the evolution of its tech scene and positioning itself as the first point of access for foreign investors interested in South American generation companies.
With a population of just over 11 million and key industries such as agriculture and manufacturing, the state has evolved its generation sector in its capital, Porto Alegre, as well as elsewhere in its territory, over the past two decades. and the personal and academic sectors seek to increase the number of local startups and expand the industry as a whole, with the aim of becoming one of the main generation poles in Brazil.
Unlike its neighbor, Santa Catarina, where the tech industry is thriving, Rio Grande do Sul has faced structural barriers to creating a developing tech innovation industry, adding to traditionally high unemployment and crime rates. These disorders have led giant corporations to distance themselves from the state. And many professionals have sought opportunities elsewhere.
The startup landscape in Rio Grande do Sul is still in its infancy, with nearly 300 companies listed, according to the RS Tech report, conducted through the government in collaboration with the Caldeira Institute. Of these, 78% were created in the last five years and basically in areas such as health, agriculture, biotechnology and education.
According to the governor of the state, Eduardo Leite, the focus has been on selling changes, first by investing in spaces such as greater surveillance and reduction of public debt, and then adopting a strategic positioning for investments in generation and innovation, strengthening public policies. innovation, adding greater investment via subsidies.
“We’re converting the state’s belief so that it can be sold to the world,” Leite said in an interview with Forbes.
The government of Rio Grande do Sul is “fully aware” that selling off the generation sector is the only way to stimulate sustainable economic growth, Leite said. “Even within classic sectors, if corporations don’t incorporate a strong component of innovation and generation, they couldn’t possibly compete globally. “
“In the same way, if we fail to orient our other peoples towards the technological economy, we will not be able to expand as a state. That’s why this program puts pressure on us,” the governor added.
However, Leite noted that the state isn’t starting from scratch when it comes to creating a tech scene and that the local ecosystem has a lot to offer. Most tech ecosystems in Brazil aim for visibility abroad, and the governor says Rio Grande does. Sul can be a platform for those who need to do business beyond Brazil.
“We have professional [technology] at a lower price than other giant urban centers like São Paulo. From a regional point of view, we are culturally and geographically closer to Argentina, Uruguay and Chile, thus providing investors and corporations with the opportunity to interact between the Portuguese-speaking and Spanish-speaking economies,” Leite said.
One in Mindset
The innovation and generation environment of Rio Grande do Sul, especially in Porto Alegre, has evolved in the last 20 years with the emergence of science and generation parks linked to universities, such as Tecnopuc, Tecnosinos, Valetec and others. The innovation ecosystem then goes beyond the boundaries of those parks.
Around 2017-2018, movements such as Pacto Alegre emerged, which united primary universities and generation parks to foster joint progression movements in the territory of Porto Alegre and the surrounding region. This has led to the creation of organizations such as the Caldeira Institute, introduced in 2022. , and the progression of avant-garde territories, with entrepreneurship and innovation centers installed in the favelas of the state capital.
The state government then requested a similar commission in Pacto Alegre for the entire state, which led to the creation of Inova RS. Through partnerships with civil society, companies, academia and government, the commission targeted the innovation ecosystem in 8 regions of the state. .
Companies outside the capital have also begun to participate in the pro-innovation wave, within the same industrial sector: “We started sharing data on virtual transformation and what startups can bring to the table, and learning how to orchestrate those elements. “” said Daniel Randon, executive leader of the transportation apparatus and systems company RandonCorp, based in Caxias do Sul, 128 kilometers from the state capital.
“Leaders began to realize that it was unimaginable to evolve in a vacuum and that a change in mindset was necessary,” he said.
As one of the largest generation parks in Rio Grande do Sul, Tecnopuc is a new strategic stage in the new wave of ecosystem development, according to the organization’s Superintendent of Innovation and Development, Jorge Audy.
“In the past, the goal has been to attract significant foreign investment in R
Tecnopuc, which is home to 600 startups, aims to create another 1,000 new tech corporations over the next decade. However, challenging situations remain, especially in the fitness and biotech sectors: “There is a need for more risky investments, faster public approval processes and a strong legal framework,” Audy said.
Despite those obstacles, Audy pointed to a bright long-term future in spaces such as green hydrogen, gene treatments, and semiconductors. The latter domain is strategic for the technological progress of Rio Grande do Sul, since the state is home to CEITEC, the state-owned company. semiconductor company. This company, which was once considered non-strategic by former President Jair Bolsonaro and slated for sale, is now resuming its activities and strategic plan under the current federal administration.
Creating Success Stories
The Center for Entrepreneurship and Innovation of the Caldeira Institute emerged as a representative of the new phase of technological progression of Rio Grande do Sul in the midst of the Covid-19 pandemic, from a site that once housed Renner, then a textile company and lately a retail company. The institute, named after the original boilers imported from Scotland, aims to “inject new energy into the state through generation and innovation,” according to chief executive Pedro Valério.
“Caldera has grown quite fast in the last two years since its launch, and we firmly accept it as a true collaboration between companies, adding those in the same sector, to foster innovation and network expansion in Porto Alegre and the state as a whole,” said Valério.
The institute has grown rapidly, occupying its 22,000 square meters in less than three years, and plans to expand further by obtaining an additional 33,000 square meters of former retail area through new commitments from local family offices. “Our goal is to create a festival environment and serve as a permanent venue for the festival, fostering innovation through serendipitous connections,” Valério said.
Located in Porto Alegre’s Fourth District neighborhood, the institute began to have an impact on the local economy, Valério said, with the opening of new restaurants and bars nearby and significant relief from petty crime in the area. It also facilitated partnerships between classical schools and the generational community, offering public school students generation and entrepreneurship skills, and connecting them to employment opportunities within the institute’s business network.
Despite the recent wave of progress that Porto Alegre and the State as a whole have experienced, Valério recognizes demanding situations such as the exclusion of the main economic poles and the incessant efforts to promote the institute and the region nationally and externally. “We look forward to sharing more good luck stories about reshaped lives and the appeal of startups and classic businesses in our region in the future,” he said.
On the other hand, the intensification of the organizational painting undertaken in recent years is bearing fruit, on the investment side. According to Valério, the links with organizations in the Brazilian innovation scene, such as Cubo, the oldest entrepreneurship hub in the country, have yielded significant results.
“When Cubo put us in touch with other people like Oxygea [a venture capital fund and business accelerator focused on sustainability], and all of a sudden we had the opportunity to have our startups pitch their paintings to them, you can tell there’s a thing happening. “”Not so long ago, this kind of interaction seemed unimaginable, if not unattainable,” said the Caldera director.
For the CEO of Oxygea, Artur Faria, the aim is to attract more investors to the region and create an environment capable of supporting the expansion of startups. “But it’s not easy to do. Our goal is to scale and be close to each and every innovation ecosystem in Brazil, but as a general rule, investors rarely leave São Paulo to see what else is going on,” he said.
“Build it and they will come”
Organizing an event as an opportunity to network and collaborate, bringing together decision-makers and influencers, is considered a missing piece of the puzzle to create a sufficiently attractive technological environment for local and foreign investors and entrepreneurs.
Porto Alegre then became the setting for the South Summit, a convention that originated in Madrid and was organized in Brazil thanks to a collaborative effort of local actors led by Eduardo Lorea, CEO of the consulting firm Numerik. Previously, the organization had tried to tie in on occasions such as the Web Summit, which finally chose Rio de Janeiro for its convention scheduled for April.
Then, South Summit was run through José Renato Hopf, a Rio Grande do Sul entrepreneur who became a local good luck story after promoting his GetNet payments business in Santander for R$ 1. 1 billion in 2014.
“The occasion has a global character and its function is to showcase the innovation ecosystem in Brazil and the Latin American region,” Hopf said of the meeting, which saw more than 23,000 people come to Porto Alegre for a three-day occasion. The convention will be held on the site of the city’s former harbor, which will be revitalized into an entertainment and events area through a public-private partnership.
In total, some 3,000 startups, 900 investors and 140 investment budgets (the equivalent of $213 billion of budget under management) participated in the event. However, Faria, from Oxygea, under pressure that it was mandatory to qualify the occasion by focusing on the quality of the participants rather than their size.
“The occasion has already attracted players from Brazil and Latin America, but there is still a desire to attract more investors from other countries,” he said. “Also, I’ve noticed that there are a lot of Series A investors, but none of them. There are a lot of growth-stage budget controls that are desired in an ecosystem to drive traction. But it’s a process: build it and they’ll come,” he said. Argued.
Despite the complexities the environment faces in order to stand out on the national innovation map and beyond, the overall mood among local decision-makers is positive. “Like other businesses in the state, I am positive about the long-term and prospects for technological advancements. to drive expansion and create new opportunities,” Randon said.
“People here know the importance of staying ahead of the curve and adopting new technologies to compete in the marketplace, and this awareness will manifest itself in the advancements we will see in the coming years,” he concluded.