Brazil's Best Counsel 2021 - Chapter Opening: Startups & Innovation

Posted Tuesday, November 24th 2020
Brazil's Best Counsel 2021 - Chapter Opening: Startups & Innovation

Brazilian Venture Capital Markets In A Post-Covid-19 World: What Have We Learned Through This Crisis?

The Brazilian startup and investment ecosystem has proved to be significantly more resilient than expected. From an economic perspective, during the peak of the coronavirus crisis, the venture capital industry changed the way it was conducting its business: since the industry was more risk-averse and had less appetite to increase its investment portfolio, it increased monitoring and portfolio re-evaluation measures, in addition to the amount of liquidity allocated at well-established and more mature companies. On the other hand, the industry decreased the amount of funds allocated in early-stage companies (seed rounds), partly because angel investors were less active due to loss of liquidity.

Overall, the technology market performed well during the crisis. It showed resilience and seized the opportunity to grow in an environment which needed to transition from an offline to an online world. Entrepreneurs quickly adopted measures to cut costs and expand the runway to avoid raising unnecessary new rounds in a scenario full of uncertainties.

But what to expect next? To have a proper glance at the future, one must first look at the past and present of this environment.

The Brazilian venture capital scene has been consistently growing fast. A report produced by KPMG and the Brazilian Private Equity and Venture Capital Association (ABVCAP) states that, between 2015 and 2018, venture capital investments leaped from R$5.4 billion to R$16.6 billion in total committed capital at year-end1, and from R$1.7 billion to R$2.4 billion in capital available for investments and expenses at year-end. It also stated that a significant part of such increment in the committed capital was due to “Fly-In” operations – investments from international funds without a specific allocation to Brazil2.

The venture capital scene in Brazil was undoubtedly flying high, but the pandemic spread fear in the Brazilian venture capital market. The industry’s answer was clear: it is not time to be pessimist. Even when the world economy was greatly affected by the Coronavirus pandemic’s effects, the Private Equity and Venture Capital industry confirmed its strength and resilience3.

During the peak of the Coronavirus pandemic in Brazil and considering specifically the 1st and 2nd quarters of 2020, there were approximately 41 and 40 companies invested through venture capital, respectively. Fintech & Insurtech, Healthtech, Adtech & Marketing, Software, and Transportation & Mobility were the preferred funded sectors4. Solely in the 1st semester of 2020, approximately 167 deals took place in Brazil, circulating $669 million. It is a growth of 52% compared to the 1st semester of 2018, when venture capital was already thriving, but the figures were at $440 million invested5.

The new strategic pattern of investors in Brazil can explain this resilience. First, they increased the allocation of resources towards monitoring their portfolio and company re-evaluation, and with that they increased their interactions and support to the invested companies in activities such as fundraising and business generation counseling. It seems to have balanced the fact that investors are less interested in increasing their investment portfolio and more risk-averse. Secondly, they increased the capital allocated to more established and more mature companies at a higher rate than the capital allocated to early-stage companies (seed).

Such an increase is mainly caused by the appetite of strategic players, as well as strategic horizontal consolidations and mergers between startups driven by the integration of products and services. Some theories point out two characteristics of the current scenario that may help to go deeper in the explanation: (1) the Brazilian ecosystem of innovation has reached a significant level of maturity, as founders are becoming more experienced and investors are becoming more rigid with the invested company’s product market fit, and (2) the pandemic impact has made startups cheaper.

Looking towards the future, we believe there are reasons for optimism in the venture capital market in Brazil: (i) As SELIC rates fall, family offices and other new players are entering the investment market in Brazil, which may opt to allocate part of their investments in the venture capital environment; (ii) Slowly, the hunger for high investment returns will recover itself, and the early seed market will be a good target for that appetite; (iii) Well-established startups that performed significantly well during the Covid-19 crisis and even increased their value will push through robust venture capital rounds; and (iv) The increase in M&A deals involving startups will probably be maintained.



1. The total committed capital is the total capital subscribed by investors, considering amount contributed and to be contributed in investment vehicles as of 31st December of each year.

2. KPMG; BRAZILIAN PRIVATE EQUITY & VENTURE CAPITAL ASSOCIATION (ABVCAP). Data Consolidation 2019. Private Equity & Venture Capital Industry in Brazil. Years: 2011-2018. Available (in English) at: 

3. KPMG; THE BRAZILIAN PRIVATE EQUITY AND VENTURE CAPITAL ASSOCIATION (ABVCAP). Data Consolidation: Private Equity and Venture Capital Industry in Brazil. 2nd quarter of 2020. Available (in English) at:

4. KPMG; THE BRAZILIAN PRIVATE EQUITY AND VENTURE CAPITAL ASSOCIATION (ABVCAP). Data Consolidation: Private Equity and Venture Capital Industry in Brazil. 2nd quarter of 2020. Available (in English) at:

5. DISTRITO. Venture Capital não para na crise e movimenta US$669 milhões no primeiro semestre. Available (in Portuguese) at: 




Pedro H. Ramos is a partner at Baptista Luz Advogados. Mr. Ramos graduated from Universidade de São Paulo (USP), holds a Master’s of Laws from Fundação Getulio Vargas (FGV) and is a former Stanford Law School researcher. He has been representing clients from the technology sector since 2009, while maintaining his acknowledged work in the academic and public policy spheres. He has been recognized by publications such as Leaders League, Global Data Review and Data Guidance, for his leadership on media, tech transactions and data protection. He is an advisor to the Interministerial Committee for Digital Transformation and a board member at ABStartups (Brazilian Startups Association).

E-mail:   Phone: +55 11 3040 7050


Sérgio Cury Meirelles is a corporate and venture capital lawyer with 10 years of experience both in Brazil and the United States. Mr. Meirelles specializes in the structuring of domestic and cross-border venture capital transactions, advising startups on financing rounds, corporate governance, investor relations, and compensation to founders and employees. He has assisted countless venture capital funds and startups from Latin America and the US in securing investment rounds. Mr. Meirelles also advises family offices and multi-family offices on the international structuring of investments in Brazil and abroad. 

E-mail:  Phone: +55 11 3040 7050