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INNOVATION

Deep techs, science-based startups that develop solutions to complex problems, are gaining focus and interest in Brazil

Survey identified 875 companies of this type in Brazil; 55% of them in the state of São Paulo

Alexandre Affonso/Revista Pesquisa FAPESP

Biologist Rafael Souza has lost count of the number of times he has ventured into remote locations in the Cerrado and other Brazilian biomes. He visits these rural areas with a clear objective: to collect plant and soil samples. Upon his return, he takes the material to the lab to begin the most crucial stage of the work. He sequences the DNA of the samples and cross-references the data using artificial intelligence to identify microorganisms with the greatest potential to help plants absorb nutrients or resist adverse conditions. These microorganisms, a type of bioinput for agricultural crops, have been a topic of interest to Souza for a long time. For his doctoral research in molecular biology and genetics, completed at the University of Campinas (UNICAMP) in 2018, he studied microbial diversity in sugarcane farms and its impact on production. From 2019 to 2021, he did a postdoctorate at UNICAMP’s Center for Research in Genomics Applied to Climate Change with a grant from FAPESP, studying microorganisms that promote drought tolerance in varieties of maize.

“Brazilian agriculture is a major consumer of bioinputs,” says Souza, referring to the success of Bradyrhizobium, for example, a genus of bacteria that helps fix nitrogen into the soil, used in 80% of the soybean growing area nationwide. “But little development of these technologies is done here.” In 2021, Souza and biologist Jader Armanhi, also a PhD student at UNICAMP, founded Symbiomics, a startup based in Florianópolis that produces strains of microorganisms for four bioinput families: to improve plant nutrition; to make phosphorus soluble and fix nitrogen in the soil; to protect against pests and pathogens; and to reinforce metabolic function. The company licensed the microorganisms to a partner—Stoller, part of the Corteva Agriscience group—and the first products are expected to hit the market in 2026. Symbiomics has already received almost R$15 million through several funding rounds, including from Brazilian investment fund Vesper, based in Santa Catarina, and American venture capital company The Yield Lab.

The company is an example of a deep tech, a category of startups that seek to use science to create solutions to complex problems, such as expanding the food supply, creating new therapies for diseases, or generating clean energy. They are distinguished from other startups in that they seek to create innovations with disruptive potential, adopt lengthy research and development (R&D) cycles, and require considerable long-term investments. “They have a strong basis in science, and they are often founded by researchers,” says Daniel Pimentel, director of the consultancy Emerge Brasil. “Investors are more accustomed to information technology businesses created to launch software or applications with the aim of generating returns in a short time frame. They still have difficulty understanding what deep techs do and their potential to generate extraordinary profits. But this is starting to change.”

In October, Emerge Brasil released the “Deep Techs Brasil 2024 Report,” which identified deep techs operating across the country. The consultancy collected startup data from development institutions and supplemented it with information collected directly from startups. It found 875 companies that fit the profile, operating in areas such as biotechnology, nanotechnology, computer science, advanced materials, and mobility. The market sectors most represented in the results were human health and pharmaceuticals, with 243 companies, and agribusiness and animal health, with 202.

The study found that 70% of the companies were still developing their technologies, while 30% had advanced to the stage of increasing scale and entering the market. Those that are successful usually take about five years before they start to grow. “Because they are at the forefront of science, they often need more time to mature,” explains Guilherme Ary Plonski, a senior professor at the Institute of Advanced Studies (IEA) and the School of Economics, Business, Accounting, and Actuarial Science (FEA) of the University of São Paulo (USP). The survey estimated that 20% of Brazilian deep techs are expected to grow in 2024, while 6% are likely to see their annual revenue fall. The majority (62%) were founded in the last five years.

One of the biggest challenges faced by deep techs in Brazil is obtaining sufficient funding. They are far from the first choice for venture capital funds: according to data published in the Emerge Brasil report, 84.5% of venture capital investment in Brazil in 2023 was in digital businesses and the financial sector. Deep techs often rely on angel investors—individuals with capital to invest in emerging companies based on their potential for growth—and public funding, preferably in the form of grants. These two sources represent 70% of investments in deep techs, according to Emerge Brasil.

Alexandre Affonso / Revista Pesquisa FAPESP

The report highlights that institutions such as the Brazilian Funding Authority for Studies and Projects (FINEP), the Brazilian Support Service for Micro and Small Businesses (SEBRAE), and the Brazilian Agency for Industrial Research and Innovation (EMBRAPII) have played an important role in promoting this type of business. It places a particular emphasis on FAPESP’s Innovative Research in Small Businesses program (PIPE), which funded 28% of the listed deep techs (see sidebar), hailing it “an enduring public policy that constantly and predictably stimulates entrepreneurship and innovation.” According to economist Carlos Américo Pacheco, president of FAPESP’s Executive Board, the foundation has been operating as the main public funding agency for technology startups, playing a role in the initial phases of these companies. “In the early stages, the startups still have no revenue. In Brazil and many other places around the world, there is no market in this sector because it is difficult to evaluate the company prior to making a capital investment,” he explains. Since 1997, PIPE has supported research projects carried out by companies that need to improve and detail their business plan (PIPE phase 1), develop an innovative technology or process (phase 2), or scale up their products and services (phase 3).

Recently, FAPESP began contributing to investment funds (IFs) in partnership with the Brazilian Development Bank (BNDES) and other financial institutions. “We are currently working with five IFs that invest in companies that have graduated from the PIPE program. We also selected two angel investor groups and two participatory investment platforms (crowdfunding) to raise funds and invest in companies that are part of PIPE. This way we can go beyond research funding, supporting companies in their growth phases,” says Pacheco.

Inspectral, a startup that created a technology for analyzing water quality in reservoirs using images taken by cameras on drones, successfully combined different funding sources to establish itself in the market. Founded in Presidente Prudente, São Paulo State, in 2019, it has already received investment from agencies such as FAPESP (through phase 1 and 2 PIPE projects), FINEP, the Brazilian National Council for Scientific and Technological Development (CNPq), and SEBRAE, in addition to the angel investor group BR Angels, which invested R$2 million in Inspectral in 2023. The company was started by researchers Alisson do Carmo and Nariane Bernardo. Carmo, who has a PhD in cartographic sciences and remote sensing from São Paulo State University (UNESP), joined forces with Bernardo, a university colleague with the same background. The deep tech began by analyzing water quality for hydroelectric plants seeking to monitor the proliferation of macrophytes—plants that can multiply rapidly in reservoirs. During their degrees, the pair had worked on analyzing water bacteria and quality parameters in river basins.

Inspectral uses images from multispectral cameras installed on drones and satellites capable of measuring wavelengths of light invisible to the human eye. Algorithms use the images to determine water quality parameters, such as turbidity, and then estimate the presence and prevalence of bacteria and other microorganisms. “The results are obtained quickly, allowing the client to make decisions more swiftly,” explains Carmo. The startup adapted the technology to analyze the incidence of forest fires and the recovery of native forests based on drone and satellite images. It achieved revenues of R$1 million in 2023 and was forecast to hit R$4 million in 2024.

“Public funding has been essential, but the level of funding obtainable by deep techs effectively limits their growth,” says Bernardo Petriz, cofounder of Peptidus Biotech. The biotechnology startup, founded in 2021 and headquartered in the Brasília Technology Park (BioTIC), uses generative AI to develop bioactive peptides—molecules composed of amino acids that can have therapeutic effects. Petriz and his partner, Octávio Franco, had the idea of starting the company after creating a peptide that acts against skin aging in a lab at the Catholic University of Brasília (UCB). The technology was licensed abroad. Franco is a professor on UCB’s postgraduate program in genomic sciences and biotechnology and Petriz completed his PhD at the institution.

After studying the market, the researchers concluded that the best opportunities in Brazil were in the animal health sector. They then formulated a peptide called MastPep, which fights the bacteria that cause mastitis, a disease that causes inflammation in the mammary glands of cows. Research into the new peptide was carried out at UCB and Dom Bosco Catholic University in Campo Grande, Mato Grosso do Sul. “We would have needed US$3 million to structure part of our laboratory operation and develop the assets, and we obtained less than a tenth of that through public funding,” says Petriz. MastPep is now undergoing the final phase of testing. The company is now preparing to expand its staff, which will be possible thanks to R$280,000 in funding from the CNPq to hire researchers on 24-month contracts. It also plans to seek other sources of investment.

Alexandre Affonso / Revista Pesquisa FAPESP

Globally, US$79 billion was invested in deep techs in 2023, according to the Boston Consulting Group. The figure is 26% lower than in 2022, when investments in the sector peaked. Companies based in the US received half of the total. Europeans were next with 20% of the funding. The survey also found that since 2019, deep techs have represented roughly 20% of global venture capital investment, especially in the areas of biotechnology and new materials.

The term deep tech was coined in 2014 by Swati Chaturvedi, founder of American investment platform Propel(x). The idea was to distinguish this type of startup in order to facilitate its introduction to the market and attract the right type of investment. One of the main differences between Brazilian deep techs and those from developed countries like the USA is the robustness of the innovation ecosystem, composed of private investors, public funding agencies, universities, and research centers. “In Brazil, the biggest obstacle to increasing scale is the more limited amount of funding,” says Fernando Peregrino, chief of cabinet staff at FINEP. The agency, managed by Brazil’s Ministry of Science, Technology, and Innovation, released a document titled Proposed Guidelines for the Development of a National Strategy to Support Deep Tech Startups and their Ecosystems in Brazil at the 5th National Conference on Science, Technology, and Innovation, held in Brasília in July. The proposal recommends simplifying regulatory and legal procedures and calls for the creation of appropriate support mechanisms for deep tech companies. As examples, the document emphasizes the need to allocate more nonrepayable grants to these startups; to promote mixed funding models; and to use government purchases to boost the market. In November, representatives from FINEP, BNDES, SEBRAE, and the Brazilian National Confederation of Industry (CNI) signed a commitment to create a public policy supporting deep techs.

Production engineer Plinio Targa, CEO of brain4care, took part in discussions on FINEP’s proposals held in Brasília in July. “This type of initiative is important to promote a highly innovative sector,” he says. Brain4care created a noninvasive technology for monitoring intracranial pressure, which is already used by more than 80 hospitals and clinics in Brazil. A sensor on a band attached to the patient’s head captures neurological data, which is processed by an AI system to generate indicators signaling the risk of increased intracranial pressure. It allows medical professionals to anticipate care and prevent neurological disorders from getting worse. The device, which could offer an alternative to performing surgery on the patient to insert a sensor into the brain, has been used in people who have suffered traumatic brain injuries, a stroke, hydrocephalus, and other neurological conditions.

The innovative idea was conceived by Sérgio Mascarenhas de Oliveira (1928–2021), a researcher at USP’s São Carlos Physics Institute (see Pesquisa FAPESP issue nº 221). With support from FAPESP’s PIPE program, the startup was founded in 2014 by Mascarenhas, USP pharmacist and biochemist Gustavo Frigieri Vilela, and engineer Rodrigo Andrade. Targa joined as an angel investor and partner in 2016. Last September, FINEP approved a R$5.4 million grant for clinical studies that will evaluate the socioeconomic impact of technology in the emergency treatment of neurological conditions within the Brazilian national health system (SUS). The company has just entered the US market.

Although funding is a major bottleneck, increasing the sources of investment would not solve all of the problems faced by deep techs. According to FINEP’s Peregrino, Brazil needs to train more researchers if it wishes to ensure it has enough people qualified to create a robust system of science-intensive companies. “In South Korea, there are around 7,500 researchers for every one million inhabitants, here in Brazil we have 800 to 1,000 researchers for every one million people,” he points out. He also notes that deep tech founders in Brazil find it difficult to set up adequate research infrastructure and hire specialist professionals. “In more mature markets, these challenges have been better addressed,” says Peregrino.

Stimulus for technology companies

Fifty-five percent of Brazilian deep techs are located in São Paulo, according to a survey by the consultancy Emerge Brasil. The report highlights that the state has created innovation ecosystems based around its public universities, the Technological Institute of Aeronautics (ITA), and research institutions such as the Brazilian Center for Energy and Materials Research (CNPEM) and the Institute for Technological Research (IPT). It also praises the way São Paulo incentivizes and supports technology companies.

“The high concentration is partly due to the greater availability of resources to promote innovation among startups than in other states, through FAPESP’s Innovative Research in Small Businesses program (PIPE),” explains Daniel Pimentel, director of the consultancy. Twenty-eight percent of deep techs identified by the survey received funding from the PIPE program, which has supported nearly 2,000 companies in the state since 1997. One example is nChemi, a nanotechnology startup developing new materials. Founded in 2015 by researchers from the Federal University of São Carlos (UFSCar), nChemi created an ultra-thin film based on metal oxide nanoparticles, which can be used as a coating for a range of products, from surgical instruments to industrial machines. “The material extends the lifespan of products, and in the case of surgical instruments, it improves their performance,” says Bruno Henrique Ramos de Lima, who has a PhD in materials science and engineering and is CEO of the company.

The coating can also be used in plastic extrusion molds and screws, including PVC, increasing the durability of the equipment. The innovation material took five years to develop, during which time Lima and his partners, engineer Tiago Conti and business administrator Lucas Tognolli, had to dedicate their time exclusively to the startup. nChemi achieved a revenue of R$480,000 in 2023 and expects to grow by 20% in 2024.

The story above was published with the title “Science-intensive businesses” in issue 347 of january/2025.

Projects
1.
Automated monitoring of water resources for detection of macrophytes using computer vision and bio-optical models with integration of multispectral satellite and drone images (nº 21/03110-8); Grant Mechanism Innovative Research in Small Businesses (PIPE); Principal Investigator Alisson Fernando Coelho do Carmo; Investment R$843,869.65.
2. Developing a synthetic microbial community to promote drought tolerance in maize (nº 18/19100-9); Grant Mechanism Postdoctoral Fellowship; Supervisor Paulo Arruda (UNICAMP); Beneficiary Rafael Soares Correa de Souza; Investment R$202,839.44.
3. Magnetic nanoparticles for the immobilization of biomolecular compounds (nº 17/00850-5); Grant Mechanism Innovative Research in Small Businesses (PIPE); Principal Investigator William Alberto Leonel Ferreira (Nchemi Engenharia de Materiais); Investment R$573,071.72.
4. Development of a minimally invasive inductive sensor to monitor intracranial pressure (nº 14/50618-3); Grant Mechanism Innovative Research in Small Businesses (PIPE); Principal Investigator Sérgio Mascarenhas Oliveira (Braincare); Investment R$913,895.75.

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