State gives entrepreneurs a helping hand

Angelica Mari

A government-backed initiative is attracting local and foreign entrepreneurs looking for a chance to make it big in South America’s biggest economy

Traditionally, public-sector jobs have been the most attractive prospect for any young Brazilian looking for a stable and well-paid career. Indeed, civil servants represent a 9.4 million-strong workforce in a country of 194 million and such jobs remain exceptionally stable and well protected. 

A cushy government job could be the best option for those entering the workforce and looking to do as little as possible in return for a large pay packet. But the Brazilian state of Minas Gerais is looking to foster a different kind of attitude amongst young people and is ploughing cash into creating an entrepreneurial mindset. 

Minas Gerais is injecting R$15 million (US$6.2 million) into Start-ups and Entrepreneurial Ecosystem Development (SEED), a start-up acceleration programme designed to retain talent and bring investments to the Brazilian state. According to the programme managers, another key issue that the state wants to address is the mass exodus of skilled people who leave Minas to seek work in larger urban centres such as São Paulo. 

“A major problem that bothers us a lot is the fact that we have talented people with very good educational backgrounds in Minas Gerais, but they end up leaving the state and going elsewhere. And we want to retain this human capital,” says André Barrence, chief executive at the Minas Gerais State Office for Strategic Priorities. Barrence adds that the key objective of the programme is not only to create better opportunities for local talent and get people to come up with great ideas, but also to accelerate the development of an entrepreneurial ecosystem and attract a host of high-impact entrepreneurs from all over the world, as well as investors, mentors, researchers and other actors that support the start-up scene. 

The SEED programme is providing up to R$80,000 ($34,000) in equity-free funding to 40 early stage start-ups led by up to three people. The acceleration and mentoring programme will last six months and, during that time, the participants will be based in Minas Gerais’ capital Belo Horizonte and be part of a tech cluster dubbed ‘San Pedro Valley’. 

The first round of the programme – which will be managed by a consortium including companies like Microsoft, Google and Amazon – commenced in December 2013. Within 22 days from the launch of the application process for the programme, some 1,367 start-ups from 32 countries had come forward. 

Out of the 40 chosen projects, there are four groups of entrepreneurs from Chile, two from Uruguay, one from Italy and one from India. Brazilians have submitted the remaining projects. 

In order to make the relocation process for the foreign entrepreneurs easier, the Minas Gerais government and the National Immigration Council have set up a partnership whereby the project participants will have a two-year visa. According to the manager of the SEED programme, Leandro Campos, the idea is to create an environment that is mutually beneficial for the entrepreneurs and the state. 

“Once an initial set of highly innovative and enterprising people has been attracted, the local business environment is transformed so as to become increasingly attractive to more new talent. This virtuous circle will help us to diversify our economy further and promote the transformation of knowledge into greater business value and technological content,” he says. 

Despite the good faith of the organisers, the project has already generated some controversy in its early stages. Concerns were raised by some participant entrepreneurs over the selection method employed by the organisation accelerator, Startup Farm. Entrepreneurs also voiced concerns about the fact that start-ups that had received previous investment and acceleration had been chosen over less mature projects. 

However, government representatives are keen to stress that the fact that a start-up has been previously accelerated or received investment has not directly benefited nor penalised them in terms of the project evaluation. “Yes, SEED was designed with a focus on potential high-impact entrepreneurs who need support to be able to make ideas a reality – but the doors were not shut to those who are at a more advanced stage, provided they have less than two years of existence,” Campos says. 

“If required, we will reassess the selection criteria and optimise the calibration of the respective weights so that the development stage of the start-ups is not a determining factor in their assessment. 

“We are very open to feedback in that regard,” he adds. 

When it comes to the government’s goals for the creation of an innovation ecosystem, Campos says that the objective is clear – his team wants to transform Minas Gerais into the birthplace of technology-based entrepreneurship in Latin America. 

“Over the coming year, we hope that a significant percentage of the start-ups that were backed by us remain in Minas Gerais and populate the San Pedro Valley map – we also want these companies to be highly sought after by investors and that new venture capital funds and angel investors come and set up shop in our state,” he adds. 

“We will do this by attracting a range of entrepreneurs who have big dreams, innovate and make things happen to interact amongst themselves and share best practice while using the tools we’ll offer to make their ideas a reality.”

About the author:

Angelica Mari is a Brazil-based journalist focusing on business and technology, as well as being the founder of Gift Brazil, a craft collective that promotes Brazilian craft to an international audience


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