Nervousness and trembling. These were two of the sensations most commented on at the end of the companies’ presentation day for the investors at the Venture Forum. Even with two months of preparation, the partners from the 16 budding companies with a technological basis were nervous before and during their presentations. The majority, more used to laboratory benches, were aware that they had the task of seducing, in 12 minutes, the audience where there were people with the means to make dreams come true, in the shape of products or systems that were often the result of years and years of study and work. If only because the entrepreneurs know that they cannot rely on bank loans at the high rates of interest that make their ventures impracticable.
They all did well at the presentation. The message was concise and direct, dealing with the points that the investors needed to know about the company. A presentation that took into account the products, the prospects and the size of the market to be reached. The topics covered in the exposition also included the amount of capital needed and the possibilities the investor will have to achieve a profit in the future, through the sale of the participating stake, or even the sale of the company, or part of it, to another company in the sector, usually a larger one. A situation that is apparently complicated, but we might as well recall that even one of the richest men in the world, Bill Gates, needed an venture capital investor beginning of his empire, Microsoft.
Not one of the entrepreneurs complained that there was not enough time, on the contrary, many spent less than the predetermined 12 minutes. They all did well in the presentation. “The mere fact of having taken part and of having been trained for this was a positive point”, said Jaime Francisco Leyton Ritter, a biochemist and founder of Genosys, a company that started the series of exhibitions. It is part of the group of six companies that are receiving financing from FAPESP under the Small Business Innovation Research (PIPE). The other five are Proqualit, Unisoma, Tecnolab, Qualibrás and Clorovale.
These are companies that have received incentives to carry out research for technological innovation and for the development of products and systems within the companies. It is a policy adopted by FAPESP since 1995, when PITE, now with 52 projects approved, was launched, and it was continued with PIPE, in 1997. PIPE today embraces 147 projects that are in their first stage, when the studies on technical viability are being drawn up, and 61 in the second, for research to be developed and a prototype produced. FAPESP does not take part in stage three, which is the actual stage of production and marketing.
“FAPESP’s role is not to finance production, but to finance research within the companies and to conquer new environments that favor technological development. Although it is not a function of ours, we are also concerned in helping these companies to keep on, to introduce them to the investors and to provide them with the means to become professional and to grow”, explained Professor José Fernando Perez, FAPESP’s scientific director, during his presentation at the Venture Forum, when he used the opportunity to announce new targets for PIPE. “We want to finance about 100 companies a year and to expand the space for professionals who leave the university in search of employment, by integrating them as project coordinators.”
The dream that is common to all the companies at the event in the Maksoud Plaza is crystallized in the example of Nano Endoluminal, a company from Santa Catarina that develops and manufactures medical products like self-expanding prostheses and surgery catheters on abdominal aneurysms. Nano took part in the 1st Venture Forum that took place last year in Rio de Janeiro. It received a financial contribution of R$ 1 million from Companhia Riograndense de Participações (CRP), one of Brazil’s most traditional venture capital investors. The money will be used to strengthen the company’s activities in the field of intravascular research.
Besides Nano, other three companies among the 26 that took part in the two previous editions of the Venture Forum (in Rio de Janeiro and in Porto Alegre), now have similar agreements almost ready, according to Luciane Gorgulho, the superintendent of Finep’s area of institutional development in venture capital. “And another 12 are at an advanced stage of negotiations.” The business people who took part in the 3rd Venture Forum are negotiating with the investors. At this point, it is worth showing a bit about the products and the background of the companies, as well as about the need for investment that they presented at the event.
The company was born two years ago, to research the technique of recombinant DNA, used in several branches of molecular biology. The first fruit of the use of this technique by the company is now ripe: it is called hGH, a human growth hormone that is not yet produced in Brazil in medicinal form. “This is what makes us different. We have managed to make the same product at a cheaper price”, says Jaime Francisco Leyton Ritter, a partner in the company. In the United States, hGH moves US$ 280 million a year. After the presentation, Ritter was visited by six investors, two of them very interested. Now comes the stage of courtship. “We are going to talk and see who has the best proposal.” Genosys already has one agreement to produce the hormone signed up with the Brazilian-owned laboratory, Braskap, and it hopes to raise R$ 4.2 million to make the commercial launching of the medicament viable, and to carry out further research in biotechnology. In ten years, Leyton Ritter expects to sell R$ 37 million.
Founded ten years ago in São José dos Campos, the company achieved sales of R$ 5.5 million last year, from the supplying equipment and services to the cable TV industry. But, in order to consolidate and grow, it needs R$ 9.5 million to expand its production and to develop new products for its product line, which has 150 different items. Next year, Proqualit hopes to increase sales to almost R$10 million, according to its director Sergio Pretti. With PIPE, the company has a project for the development of an amplifier of frequencies emitted by satellite, which works coupled with the dish antennas for paid TV. Making this equipment in Brazil will avoid importing the product. In the course of the event, Pretti and Alexandre Trindade, the other partner, received six representatives of venture capital funds.
This company develops specific systems for decisions support in agroindustry (Sadia and Perdigão are some of its customers). With 17 years of activity, it intends to raise R$ 2 million from the investors, in order to conclude its projects. Its business plan forecasts sales of R$ 30 million over five years. The company has as one of its partners Professor Miguel Taube Netto, from the Institute of Mathematics of the State University of Campinas (Unicamp), and it has with PIPE a software project to control poultry abattoirs (Pesquisa FAPESP n° 63).
The company is being incubated in the Incubating Center for Technological Companies (Cietec), on the premises of the Institute of Energy and Nuclear Research (Ipen) in University City, São Paulo. According its partner, Isaac Newton Lima da Silva, Tecnolab’s main trump card is something that visualizes metallic structures inside concrete. Named IRISCan, the product eliminates a basic ritual in the maintenance of this kind of structure: the scraping of the concrete to check the state of conservation of the metal. “It will be a revolution for the procedures in the sector”, explains Silva, the inventor who developed IRISCan as the basis for the thesis for his doctorate at Manchester University, in England, in September 1999. The company has another two products at the development stage: Cover Meter, an old version of the IRIScan, which does not generate images, and the LPSD-1, an device that does an analysis of mechanical vibrations. To get them into the market, the company needs R$ 1.5 million. Silva has the prospect of earning R$ 23 million by 2006. A few hours after his presentation at the Venture Forum, he was already commemorating that he was being besieged by potential investors. “I was visited by five investors, and one of them was really interested.”
This company from Rio de Janeiro has developed technology for making digital 360 degree photographs – unprecedented in Brazil, and used, in particular, in websites, to show a tourist attraction or a hotel room in detail. Partners Bernardo Estefan and Eduardo Bezerra hope to raise R$ 1.6 million to conquer the market. The two are pupils in the economy and information technology courses, respectively, at the Pontifical Catholic University of Rio de Janeiro (PUC-RJ).
From its installations in Campinas, the company operates in the field of services and solutions for telecommunications and metrology. Engineer Gilberto Possa and his team provide repair services to equipment and the calibration of industrial apparatus. They are also developing, under PIPE, a piece of equipment that helps in the production and repair of the electronic boards for digital telephone exchanges. The company has customers of the size of Lucent, Motorola and Tess. For a start, Possa intends to raise R$ 4.8 million. “In 11 years, we have been working with our own limited resources. The time has now come for us to grow”, he says.
Specialized in equipment for dentistry, the company presented its products in the dental implant sector, the potential for which is enormous in Brazil, according to its director, Aguinaldo Campos Júnior. “Only 0.2% of the Brazilian adult population has implants, while in the USA this figure is between 4% and 8%”, he explains. The company intends to produce components at a lower price than the imported ones. To do so, it needs R$ 1.5 million from the investors.
The company produces software for synchronizing databases and for automating the ISO 9000 and ISO 1400 quality processes. Tornatti is associated to the Campinas nucleus of the Society for the Promotion of the Excellence of Brazilian Software (Softex), and it already has set up its capital base, with an investment from VentureLabs, a company that invests in start up companies with a technological basis.
A company from Santa Catarina, founded in 1992, which develops technology for digital maps that can be coupled with a database. The Business Plan presented foresees the need for R$ 1.5 million, for the company to expand its commercial activities. Enter-Plus has as its customers companies like Telemar, NET and Furnas.
Incubated at the Cietec of the University City in São Paulo, the company needs, to start with, US$ 2 million, to conclude its research into the production of fuel cells. The first prototype, which produces 50 kilowatts (kW) of electricity – suitable for buildings or small factories – is at the final stages. This equipment uses natural gas (methane) or hydrogen to produce electricity. Experts believe that hydrogen is the fuel of the future. Engineer Gilberto Janólio, a partner in Electrocell, also showed the investors the need for another US$ 30 million by 2004, to create an assembly plant for its generators.
Electrocell was formed by the partners of two other companies that are installed in the incubator: Janólio, with the DCSystem company, and Gerhard Ett, also an engineer, with Anod-Arc. The two projects have projects under PIPE. The first develops special batteries of lithium and titanium to meet the needs of telecommunications equipment, when there is a power failure at a telephone exchange, for example. In his laboratory, Ett is working on a technique to treat the surface of aluminum that is superior to the conventional process used in the factories that carry out this kind of service. The two have now joined forces in Electrocell.
Founded in Contagem (MG), the company presented to the investors a practical and useful innovation: a veterinary medicine kit with a syringe, ready for injection. Gilberto Lima, a partner in the company, says that the product cuts out hours and hours of work for people who deal with big herds.
It operates in the development of programs for the relationship of sites with their consumers. Based in São Paulo, the company has developed a system that directs the e-mails received by a bank, for example, to the specific person or sector that will deal with the subject contained in the message. Its partners hope to raise R$ 3 million with the investors. The company has a participating stake of the venture capital company, E-Platform.
This company from São José dos Campos is the first in Latin America to work in the field of CVD diamonds, a material that is beginning to be used on the tips of dentists’ drills, in precision apparatus and for industrial cutting. The company is now making drills with durability 50 times greater than the conventional metal ones (Pesquisa FAPESP n° 52). Clorovale is an example of a transfer from the academic world to the commercial world. Three of its five partners are still working with the National Institute for Space Research (Inpe), one of the study centers for the artificial diamond in Brazil.
In three years, the company hopes to sell R$ 10 million. To do so, it intends to obtain R$ 2 million from investors. For Professor Evaldo José Corat, taking part in the forum was extremely important. “As researchers, we used to have an amateur notion of this process. We had no idea of how to finance or to look for investors for the company”, he analyses. Clorovale, whose presentation was given by Professor Vladimir Jesus Trava-Airoldi, received visits from three investors.
This company from Belo Horizonte (MG) is developing an anti-theft system for automobiles called U-lock, in which the owner himself switches off the engine of the vehicle remotely, with a telephone call, in the case of robbery or theft. To expand its activities, the company needs R$ 640,000.
The development and production of natural medicaments and supplies for the pharmaceutical industry, based on Brazilian flora. This is the objective of this company located in Pindamonhangaba. It is registered with the Food and Drug Administration (FDA) of the United States.
Installed in Cietec, in São Paulo, the company has developed an apparatus to sterilize the air called Superar. It was invented by Gilberto Janólio, from Electrocell, and by some researchers from Ipen. They have developed and patented the device in conjunction with businessman Amílcar Cruzeiro, who runs Kiir. The company needs R$ 1.8 million to set up the production line for the apparatus. Superar is portable and works by raising the temperature of the air captured by the apparatus and then cooling it down, thereby killing the best part of the microorganisms present in the environment.
Moment of decision
Once the presentations were concluded, the representatives of the 16 companies went to their stands to receive the investors. It was the first contact. From then on, they dived into negotiations, in search of an understanding, always difficult, which can take months. It calls for intuition and the development of an enterprising spirit on the part of those who are in charge of the companies, in addition to a good dose of understanding of finances, marketing, and administration. Requirements that, if they are not mastered by the people who run the companies, will have to be supplied by Finep’s advisory services and those of the Brazilian Service of Support for the Micro and Small Company (Sebrae).
This technical and managerial support was obtained and absorbed by the businessmen during the preparations for the Venture Forum; after the event, it was transformed into knowledge that, even if it was not enough to lure a financial partner at this moment, will certainly be useful in the course of the life of these technologically based companies.
Preparation and competence
In the exhibition promoted by FAPESP at the Maksoud Plaza, along with the Venture Forum, several companies, besides the 16 chosen to give a presentation, also showed their competence and the progress achieved. This was the case of Lasertools, incubated at Cietec, in São Paulo (Pesquisa FAPESP n° 50). Made up of researchers from the Institute of Energy and Nuclear Research (Ipen), the company develops industrial laser applications and does, for example, the engravings on the panel of the radio in a car made by Ford in America.”We want to grow, and, to do so, we need an investment of R$ 1 million”, said a partner in the company, Spero Penha Morato. “We had a lot of visits during the exhibition, but we didn’t manage to attract investors. The best thing for us were the contacts with other businessmen who showed interest in using our laser services.”
Femto, another company that has concluded its project with PIPE, is getting ready for higher flights. Under the command of physicist Lídio Kazuo Takayama, the company produces spectrophotometric workstations, a complete automatic and robotic chemical analyzer capable of quantifying, for example, the presence of chlorides, iron and silicon in water, or to detect sulphides, phosphates and ammonia in domestic or industrial effluents (Pesquisa FAPESP n° 53).”We are getting ready for an international trade fair for spectrophotometric instrumentation that will be taking place in 2004″, said Lídio. “We already have our eyes set on the opportunities in the world market.” Although there is great potential for growth, Lídio rules out venture capital. “We have prepared ourselves over 12 years to get to this point, producing these products and investing in the company, without succumbing to bank interest rates.”
Several experiences marked the Venture Forum and the exhibition of projects under PIPE and PITE. The two events showed that it is possible to generate development by bringing closer together three groups that, until a very short time ago, did not get along: academic research, companies with innovative products, and capitalist investors. An encounter where they all stand to gain.
Electricity for the future
In its almost four years of existence, PIPE (Small Business Innovation Research) has become a wide-open space for achievements. One of the most gratifying experiences belongs to chemist Antônio César Ferreira, who took part in the exhibition of projects that took place alongside with the Venture Forum. After spending nine years working in the United States, where he also carried out post-doctorate studies, Ferreira came back to Brazil, thanks to PIPE. “I sent my proposal for a project in 1997, when I was still in the United States”, Ferreira recalls.
He set up the Unitech company in his home town, Cajobi, close to São José do Rio Preto, with the objective of developing components for fuel cells, a piece of equipment that generates electricity using hydrogen, raw material that can be extracted from natural gas (methane), from gasoline, from ethanol (the alcohol used in Brazilian cars), and even from water. Fuel cells are silent pieces of equipment that do not pollute and give off water as their residue. They are the great promise for the generation of electricity and for engines for vehicles. Some manufacturers, like Daimler-Chrysler, Honda and BMW, have already presented automobiles driven by hybrid hydrogen cells, which use gasoline as well.
The heart of Ferreira’s project lies in bipolar separators of ionic-conducting polymers, which the chemist developed in Cajobi. These parts carry out the chemical transformation of hydrogen into electricity. The first piece of equipment concluded by Ferreira generates 1 kilowatt (kW), which is sufficient for five 100 watt lamp bulbs. His objective is to put into the market next year 100 kW equipment, suitable for small factories. The fuel initially used is natural gas.
“With some modifications, we can use ethanol”, says Ferreira. Even with Brazilian technology under development, the Ministry of Development, Industry and Foreign Trade (MDIC) is about to sign an agreement with a German company, to develop in Brazil fuel cells that work with ethanol. In Germany, fuel cells are fed with methanol, alcohol that is extracted from cereals and wood. Minister Alcides Tápias, of the MDIC, says that he knows of the various ventures under development in Brazil for the production of fuel cells, and spoke about the agreement with the Germans. “We are going to develop a new technology with Brazilian researchers using methanol”, Tápias assured.
Pointed out as the generator of energy in the future, fuel cells still produce energy that can be regarded as premium. According to Ferreira, the cost of a kW generated by a fuel cell is US$ 1,500. The price for one kW from a thermoelectric power station (using natural gas, diesel or coal) is US$ 600. But the cell is three times more efficient in terms of energy”, he explains. That is why the fuel cell is triggering off a great technological race all over the world. “There are over 200 prototypes of fuel cells in existence for the generation of electricity.”
The challenge for Ferreira now is to expand his company and to put the product into the market. To do so, he is studying proposals from investors in venture capital that he received before the Venture Forum took place in São Paulo. While he decides the course to be followed by Unitech, Ferreira makes a point of saying that he was only able to develop his project in Brazil because FAPESP provided finance. “I would even plea to other institutions to also finance other small companies.”Republish