CAROL QUINTANILHATechnological innovations proposed by small Brazilian companies received a strong stimulus at the third edition of the Venture Forum, an initiative of the Financier of Studies and Projects (Finep), with the collaboration of FAPESP, the Brazilian Association of Venture Capital (ABCR) and the Brazilian Association of Open Companies (Abrasca). During the Forum, which took place at the Hotel Maksoud Plaza, in São Paulo, on April 18th and 19th, on the one hand were executives from 45 financiers of venture capital, Brazilian and foreign, eager to invest in enterprises that result in a high financial return. On the other, 16 small business people presented their innovative products and systems, which need support to get them to the market.
These 16 companies were chosen by consultants from Finep, out of a total of 300 that signed up for the event. Six of these companies are already receiving funding from FAPESP, under the Small Business Innovation Research (PIPE), to carry on research on their premises. As matter of fact, parallel to the forum, the Foundation presented its 3rd Exhibition of “FAPESP and Technological Innovation”, a display in small stands of another 54 companies that are taking part in PIPE and 21 projects under the Partnership for Technological Innovation Program (PITE), which unites companies and academic institutions.
New perspective
The two events reinforced the need for bringing research closer and closer to the means of production. In Brazil, the link between the generation of knowledge and its transformation into wealth “is still fragile”, in the assessment of Professor Carlos Henrique de Brito Cruz, FAPESP’s president, at the opening session of the Venture Forum. He regards it as fundamental, at this moment of the country’s development, to draw together those who are developing technology – in companies and in the academic institutions – with the investors who are willing to bet on making products and systems with added technological value a reality.
“There is today an opportunity we can’t miss to overcome the lag in technology and to put science and technology at the epicenter of the country’s economic activity”, said Ronaldo Mota Sardenberg, the Minister of Science and Technology, present on the second day of the event. Another guest, the president of the Federation of Industries of the State of São Paulo (Fiesp), Horácio Lafer Piva, used an example to stress the need for investments in the strengthening of technological development. “In my travels around Brazil, I come across people with excellent ideas but with difficulties in finding investors”, he explains.
On the side of capital, the expectation is great. “The number of investors who signed up exceeded our expectations”, said Jorge Ávila, a director of Finep. The audience that heard the presentations of the 16 company representatives have at its disposal about US$ 3.8 billion to be invested in good and profitable ideas. According to the ABCR, US$ 750 million was disbursed last year in Brazil, to be invested in newborn or start-up companies. Figures of this size bring a gleam to the eyes of the entrepreneurs from the 16 chosen companies.
Different scenario
Meetings like the Venture Forum are essential for drawing together the entrepreneurs and the investors. They are the kickoff for new business to become a reality. Experiences like this have been taking place in the United States for some years now. Paul Myers, a director of The Capital Network, an American company that organizes in the United States events similar to the Venture Forum, gives an idea of the potential for this kind of encounter. “Out of the 230 companies that have already taken part in the forums carried out by us in the USA since 1996, 77 obtained funding , right at the event, and the total amount invested came to US$ 270 million”, Myers reckons.
Peter Jones, of the Darby Technology Group, said that US$ 100 billion was allocated to projects in companies in the United States in 2000 – an all-time record. “The Internet gave this movement a push”, he said. The scenario for this year is very different. The total invested should fall to US$ 40 billion, on account of the investors’ disappointment with the scant returns offered by businesses connected with the Internet. Not necessarily a bad thing, he thinks. “Venture capital is now turning to other sectors of technology, and seeking opportunities with more discernment and attention.”
Altruism and ambitions
During the Venture Forum, the investors had the opportunity to confirm that this new scenario also applies to Brazil, and were quite clear when delivering their message to the entrepreneurs. “Venture capital is avid for high returns”, said Luiz Spínola, of UBS Capital America. “We are not investing for altruism, but to earn money at the point of exit.”
Exit is the moment of leaving the business, taking out the profits, which should be bigger than those obtained in the financial market. The risk is the possibility of the enterprise being a flop, a natural situation that surrounds innovative businesses where there has not yet been much experience. The investors’ intention is not to stay in control or to remain with the company forever. The essence of the activity says that the investor should leave the business when he or she thinks that it has reached a sufficient stage of maturity to bring a good return.
Search at the university
“We mainly invested in companies with infrastructures connected with the Internet, but we are now visiting universities and incubators”, said José Carlos La Motta, one of the partners in E-Platform, a fund with four partners and a stake from Unibanco. He reveals that they are negotiating with a group of researchers from Rio Grande do Sul. “For the time being, I cannot say who they are, nor what it is”, he sidesteps. “Our objective is to go into newborn companies with a stake of between 25% and 30%”.
Clóvis Meurer, a director of Companhia Riograndense de Participações (CRP), exhibited what everyone says isfundamental for the development of venture capital in Brazil: success stories. CRP was one of the financiers of the Internet provider NutecNet, in the mid-90s. Nowadays, having gone through a period with the name of Zaz, the business is part of the international mega-gateway Terra, which belongs to Spain’s Telefônica. After setting up two funds for investment in start -up companies with a technological basis, RSTec, for Rio Grande do Sul, and SCTec, for Santa Catarina, they are preparing SPTec. “We are setting up a branch in São Paulo”, Meurer warns.
Both the investors and the entrepreneurs went away satisfied with the exchange of experiences brought about by the 3rd Venture Forum. “Being in touch with innovating ideas is always productive”, said Cláudio Vidal, an executive with Santander Private Equity. “We need to multiply opportunities like this “, proposed Professor Brito Cruz. Two new rounds of the Venture Forum have already been scheduled: the first, for August, in Belo Horizonte, and the other, in October, in Rio de Janeiro.
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