Rio, Brazil: The startup city guide

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View of Christ the Redeemer and the Sugarloaf, Rio

Rio de Janeiro is a famously popular tourist destination that heaves with revellers during the annual Carnaval festival, but it’s also a city with “one of the most powerful markets in Latin America” – one that’s “becoming one of the best places to build a startup”.

There are plenty of reasons to visit – or relocate to – the beautiful and culturally rich city of Rio de Janeiro.

Brazil’s second-largest city – and the third-largest metropolitan area in South America – Rio is a major coastal metropolis with a population of 3.6 million people. It’s the birthplace of samba and bossa nova, hosts the biggest street festival in the world, has some of the most beautiful beaches on Earth, and houses dozens of museums, including the National Museum (which houses one of Brazil’s largest collections) and the Museum of Modern Art.

With all this to offer, Rio is an attractive prospect for startups, digital nomads and multinational employees looking for a different pace of life in a fast-growing economy. As TechCrunch notes, “there’s something to be said for having the option to brainstorm at a café overlooking the ocean or team-build during a hike into the mountains”.

Brazil leads historic surge in Latin American startup investments

To understand the importance of Rio as a burgeoning startup hub, it’s vital to contextualise Brazil’s place in the Latin American tech ecosystem.

According to the Miami Herald, Latin America is the fastest-growing region in the world for startups. A whopping US$19.5 billion of venture capital was invested in Latin American startups in 2021 – more than three times the amount invested in the previous year.

What’s interesting about this record-setting level of investment is that Brazil is leading the charge.

Infographic on Brazil startup ecosystem
2021 was a busy year for the Brazilian startup ecosystem. Image: Web Summit

In 2021, according to CrunchBase, the majority of “supergiant funding rounds” (US$100 million or more) in Latin America were won by Brazilian startups: Nubank raised US$750 million in pre-IPO financing; Nuvemshop, which helps businesses to transition to online trading, raised US$590 million in Series D and E rounds; and real estate startup Loft raised US$525 million in Series D funding.

Whether you’re an early-stage or established startup, Brazil is an exciting place to be right now.

Venture capital funding in 2021 reached a record US$6.4 billion, with US$9.4 billion overall raised by startups. In March 2021, the country saw its biggest ever software acquisition when enterprise giant Totvs bought RD Station for US$32.5 million.

The Wall Street Journal declares “investment in Brazilian startups is booming” while the Rio Times reports that four million new businesses opened in Brazil in 2021 – a record high according to the Brazilian micro and small business support service, Sebrae.

Rio attracting more startups than ever in 2022

São Paulo might be viewed as the tech capital of Brazil – it is, after all, Latin America’s largest tech hub – but Rio punches above its weight when it comes to fostering new firms.

While São Paulo is home to the majority of Brazil’s startups (2,700+), the city of Rio comes in second with more than 720 as of November 2021.

Rio is, of course, the tourist capital of Brazil, and that makes it a key player in the fast-growing travel tech sector. One of Brazil’s biggest homegrown startups is Rio-based Hurb, the largest online travel agency in the country.

Travel industry news site Skift says Brazil is “a fertile ground for travel technology companies”, with a tech scene that’s “blossoming despite the pandemic”. In fact, according to São Paulo consultancy Loureiro Consultores, this sector is set to generate about US$6 billion in business over the course of 2022.

Edtech is another growth sector in Rio. Descomplica, an online educational platform helping students prep for college admission, has been in business since 2011 and recently closed a new round of funding at US$84.5 million, with investors including the Chan Zuckerberg Initiative (CZI) and U2’s The Edge.

Overall, the top five startup sectors in the city are fintech, retail tech, edtech, medtech, and real estate.

Rio: A top digital nomad destination

WeWork Rio Claro bringing us all the light, bright vibes. 😍More here: https://t.co/0DNFGkMUcx. #wework #weworkbrasil pic.twitter.com/MGrAcrrerU

— WeWork (@WeWork) November 20, 2020

Rio is an attractive prospect for digital nomads. Travellers can enjoy the beach life by day and city life by night, fitting in some work in between.

Digital Nomad World reported: “Recent years have seen a number of co-working and living spaces springing up [in Rio], attracting a vibrant crowd of remote workers from across North and South America, Europe and beyond.”

Notable digital nomad guides have praised Rio for its affordable cost of living in comparison with Europe and North America, the large community of fellow remote workers, an efficient transportation system, and a “laid-back pace of life and inviting locals who will ensure you feel right at home”.

There are plenty of co-working spaces for Rio bound digital nomads and business travellers too: WeWork, EDX Co-working, We Company, My Office and Tribo are all set up in the city.

Rio’s inclusive startup ecosystem

You may have heard of Brazilian UNESCO prize laureate Mariel Reyes Milk, the winner of the 2021 UNESCO Prize for Girls’ and Women’s Education.

Mariel co-founded Reprograma in 2016 to reach marginalised and low-income women who have traditionally been excluded from pursuing careers within the country’s tech sector.

Reprograma is an inclusive programme that has, over the past five years, delivered training and run bootcamps for almost 1,000 young women and girls, equipping them with technical and soft skills useful for working in tech.

Mariel Reyes Milk runs a reprogramma event in Brazil
Mariel Reyes Milk runs a Reprograma workshop in Brazil. Image: Unesco

“We focus on black women, those identifying as non-white, transgender, as well as unemployed women including mothers wanting to return to work. Any woman, really, who has dreamed of studying technology but never had the chance because of societal barriers or lack of opportunity and resources,” Mariel has said.

Similarly, São Paulo-based PrograMaria has been running since 2015, helping close the gender gap in the tech sector by running workshops and supporting women in technology all across the country.

Although women represent just 9.8 percent of all Brazilian startup founders or co-founders, the women in tech scene is steadily growing.

In Rio, events and organisations that operate in this arena include Cloud Girls Rio, which counts Intel, Mentimeter and Oracle among its supporters. There are also PyLadies Rio – which encourages women’s participation and contribution to open source communities and projects – and Coders in Rio Girls, a Meetup.com group with more than 500 members.

Brazil leads in Latin American unicorns

Less than one year ago, unicorns were not a very common sight in Brazil. There were only 11 startups with a valuation of US$1 billion or above. In 2022, there are 21 unicorns across the country, making Brazil fertile ground for these fast-growing, high-worth companies.

Notable Brazilian unicorns include:

  • MadeiraMadeira | This retail site became Brazil’s first unicorn of 2021 when it raised a US$190 million round in early January.
  • C6 | JP Morgan recently bought a 40 percent stake in this digital bank.
  • Hotmart | A monetisation platform for creators, Hotmart’s Series C funding round was led by TCV – a firm that has backed digital giants including Netflix and Spotify.
  • Mercado Bitcoin | Established in 2013, this pioneer of the Brazilian cryptocurrency scene is now the largest crypto and NFT exchange in Latin America.

Unicorns, as we know, do not materialise out of thin air. It’s strong interest in the Brazilian startup ecosystem that is fuelling their creation, and one of the bigger contributors to Brazil’s rise is Japanese investment firm SoftBank.

“SoftBank is emerging as one of the main investment leaders in the region, in particular for consolidated companies in the so-called late-stage,” said Gustavo Gierun, co-founder of Brazilian SaaS startup Distrito, in an interview with Latin American Business Stories.

In fact, many of the venture capital funds that have led or participated in the largest investments in Brazilian startups in 2021 have foreign headquarters. Alongside SoftBank, other notable investors in Brazilian startups are Tiger Global Management, Tencent, Accel, Ribbit Capital and QED Investors.

With unicorns, beaches, carnivals and co-working spaces aplenty, it’s clear that Rio is the startup ecosystem to watch in 2022 – and beyond.

Web Summit Rio is coming in May 2023. For the latest news and updates, sign up to our newsletter.

Main image of Christ the Redeemer overlooking Rio de Janeiro and Sugarloaf Mountain: marchello74/Shutterstock

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