Brazil's Smart Capital Got Smarter By Going 'Back To School' At Stanford University Conference
Stanford students threw first "Brazil at Silicon Valley" event with 700+ attendees that included many Brazilian investment icons. Insiders bet that one third of Brazil’s GDP was in the room.
Carlos Brito, CEO of Anheuser-Busch InBev (left), and Vinod Khosla, co-founder of Sun Microsystems and founder of Khosla Ventures, onstage at the “Brazil at Silicon Valley” event.
If the inaugural edition of the “Brazil at Silicon Valley” conference that took place in early April is anywhere close to a fair barometer, the smart capital of Brazil has now “woke” to the tech potential there in a material fashion. I’ve been a venture capitalist in Brazil since 2003, and it has been a privilege to closely witness the evolution of its entrepreneurial ecosystem. There’s been a beautiful blossoming in the last three years, including a first pack of unicorns running free last year. It should be no surprise to me that investors are paying attention. Still, when I walked into the event held at the Computer History Museum in Menlo Park, I was stunned.
Held over two days on April 8-9 in Mountain View, California, the event was organized by students and volunteers, under the impeccable leadership of Rodrigo Xavier, former CEO of both UBS Pactual and of Bank of America Merrill Lynch in Brazil. The event had an incredible lineup, covering the latest and hottest people and companies in tech investing and entrepreneurship.
Among the well-heeled and highly influential speakers were unicorn jockeys like David Vélez from Nubank and StoneCo Ltd. Chairman André Street. Other notable speakers included Jorge Paulo Lemann, co-founder of 3G, Carlos Brito, CEO of Anheuser-Busch InBev, Fernando Madeira, president of ipsy, Frederico Trajano, CEO of Magazine Luiza - one of Brazil’s largest retailers, and Mike Krieger, a Brazilian co-founder of Instagram, to name just a few.
But what impressed me, and most people there, was the caliber of people sitting in the audience. These were people you’d typically see on stage and then have them vanish from the venue after finishing their gigs. Not this time. Instead, they sat through sessions, took notes, and engaged eagerly in the Q&A sessions. This made the networking breaks as interesting as the content itself. Jokes about the vast wealth represented there were not rare: "We surely have one third of Brazil's GDP in that room.” Rich people were impressed that richer ones were there.
Building a Bridge from Silicon Valley to Brazil
In his opening speech, Hugo Barra, who’s now in charge of VR at Facebook, emphasized the importance of building a bridge between two of the world’s most important entrepreneurial epicenters: Silicon Valley and São Paulo, Brazil’s vibrant financial and tech-innovation center. In 2018, Barra left Xiaomi for Facebook and he previously led Android efforts at Google.
That goal of making key connections between Brazil and Silicon Valley has long been part of our mandate as investors, as well as the mission of BayBrazil, a Silicon Valley-based nonprofit founded in 2010 that serves as a source of information and a catalyst to connect the two regions. The lessons from Silicon Valley have been invaluable in accelerating the growth of Brazil’s tech ecosystem.
For example, the creation of Cubo, now the world’s second largest entrepreneurial hub in São Paulo, was inspired by trying to duplicate the likelihood of serendipitous encounters based on the sheer volume of entrepreneurs located in one place. Without a major hub like Silicon Valley’s Menlo Park, Cubo’s co-founders realized the pace of innovation would be stuck in low gear.
Certainly, the most successful entrepreneurs participating in the first “Brazil at Silicon Valley” are prime examples of promising startups who’ve bridged the two regions and networked with the Brazilian-American tech community.
A prime example is David Vélez, who was one of the featured speakers at the event. Prior to taking the helm of Nubank, which is Brazil’s third unicorn and currently valued at more than $4 billion after Tencent’s $180 million investment, Vélez worked at some of the most prominent investment firms and banks in the U.S. and graduated from Stanford University with an MBA.
Another presenter was Pipefy, a SaaS workflow platform founded by Alessio Alionco that is now used in more than 150 countries by enterprises such Accenture, GE, Visa and Volvo. Founded in Brazil, it now has its global headquarters in San Francisco and a tech development team in Curitiba, Brazil— something we are sure to see more and more of as Brazil-born startups continue to grow and expand internationally.
Mike Krieger, Brazilian co-founder of Instagram, compares the current scenario with Brazil 2010, when the app was released. He believes that, today, it could have been developed in the country.
What a Difference Five Years Makes
About five years ago, I recall a lively debate among VCs actively investing in Brazil at a similar, but much smaller event in Silicon Valley. At the time, the group was wagering whether the tech investing in Brazil had reached a total of a half-billion or a billion U.S. dollars.
Fast forward from five years ago to last fall, and in one of Latin America’s largest deals, Movile raised $400 million for its iFood delivery business. And, then, earlier this year Softbank announced a new U.S.$5 billion Softbank Innovation Fund for Latin American tech companies that it described as “the largest-ever technology fund focused exclusively on the fast-growing Latin American market,” per Crunchbase.
There was a funny moment during “Brazil at Silicon Valley” when Softbank CEO Marcelo Claure was asked how on Earth he could possibly deploy $5 billion in Latin America with the new fund. Claure answered with a chuckle that: “We believe $5 billion is a good start.”
Based on the first edition of McKinsey & Company’s new Brazil Digital Report, published and made available during the “Brazil at Silicon Valley” event, there’s good reason for bullishness.
According to the new report, the Brazilian economy has reached a “tipping point,” consumer and industry confidence are high and inflation and interest rates are at all-decade lows. Brazil’s capital markets are developing and diversifying funding for companies. IPOs have been on the rise. IT investment continues to grow faster than GDP, albeit a slow, steady pace. Pay TV and digital are the fastest-growing channels for media investments. E-commerce is growing. And, Brazil now accounts for 70 percent of the VC, private equity and private investment in LatAm.
One McKinsey & Company chart that really grabbed the audience’s attention, is that seven of the top-10 biggest market cap companies in the U.S. are big tech players including Alphabet, Amazon, Apple and Facebook. That’s simply not the case in Brazil today, but the opportunity is looming, large and compelling. One of the speakers forecast that in five years, at least half of Brazil’s largest companies will be tech companies.
I believe that this inaugural conference was the biggest gathering of Brazilians traveling to Silicon Valley that I have ever witnessed. The runner-up was a big group of about 250 Brazilian entrepreneurs attending TechCrunch Disrupt back in 2012 at the peak of Brazilian euphoria. But, at the “Brazil at Silicon Valley” event, there were all sorts of ecosystem players in the room. The very cream of the crop of top entrepreneurs, investors and corporations were all there.
During Disrupt 2012, we took the opportunity to launch our firm, throwing a party on the rooftop of the Transamerica Pyramid building were one of our Silicon Valley partners, e.ventures, is located. That party included a few Samba dancers. After Stanford conference, Mathias Schilling, co-founder of e.ventures, came to the important conclusion that next time around we’ll need a couple of floors, and a full Samba school formation during our party at BayBrazil’s annual “Brazil Week” that will take place in San Francisco in August this year.
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Anderson Thees is managing partner of Redpoint eventures, the Brazilian-focused arm of the Silicon Valley venture firms Redpoint Ventures and e.ventures.
Disclosure: Redpoint eventures is an early investor in Pipefy and a co-founder of CUBO. Anderson Thees is currently a board member of BayBrazil