C&A has just started its own startups program. Read on LABS. Photo: Shutterstock
Technology

Brazil generated 17,000 jobs via startup acceleration programs in 2019

From IBM, Visa and Oracle, to construction products makers such as Votorantim. There is an increasing number of companies betting on this to innovate more and faster

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A growing series of support programs for startups has offered countless opportunities for companies that need to gain traction–and for workers and entrepreneurs who want to put their talent into practice. The movement started around 2015 in Brazil, but has gained strength in the past two years. Last year, more than 17,000 jobs were created through acceleration programs. Endeavor, a global organization that supports entrepreneurs, conducted 27 programs in eight Brazilian states, resulting in the acceleration of 227 companies and more than 500 supported entrepreneurs.

According to Endeavor, corporations that opened up to these programs showed a growth of 76% in their revenues between 2018 and 2019. “Some companies are looking to work with more mature companies, but that does not make working with startups unfeasible,” says Pedro Almeida, Endeavor’s acceleration manager.

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They are companies from the most varied sectors, with programs that offer mentoring, access to customer base, incorporation of newcomer solutions in the portfolio of products and services and, eventually, capital injection or purchase of participation.

In partnership with Endeavor, C&A, an international clothing store chain, received applications for its first acceleration program, Conecta C&A, earlier this year. The company chose to select ten scaleups, the “older sisters” of startups, for having a higher level of maturity and expertise in developing innovative solutions for retail.

“There is a clear trend and very strong movement in the last two years of closer ties between startups or scaleups and large corporations. Brazil is going through a maturation of its ecosystem of startups, which are gaining muscle. Corporations, on the other hand, realized that creating innovation at home is not enough and they are moving towards the open innovation model,” analyzes Almeida.

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The continued focus of IBM and Visa on startups

Another company that opted for the scaleup model was IBM, which in December announced the open innovation program IBM Open Ventures. The company identified 40 scaleups with solutions that solve the most urgent business challenges for different industries, of which 12 were pre-selected by an executive board. In the final selection, Growth Tech, Tangerino, TNS and Elaw were chosen to have access to IBM technologies, including more than 190 cloud APIs, IBM Watson services, blockchain and IoT, available on IBM Cloud and Red Hat services and portfolio.

Photo: IBM/Courtesy

Scaleups are in a more mature stage, have a profitable and replicable business model, with some traction in the market, and are more ready to interact with large corporations, an easy task for those just starting out

Marcelo Salim, head of Open Ventures at IBM.

The cycle to identify new scaleups will be constant, with other qualifiers taking place throughout the year. Global IBM has an area that deals with mergers and acquisitions, but in Brazil, Open Ventures does not have that focus. “We are going to work with scaleups on our projects. An additional advantage, because there are no strings attached, conflicts of interest and we do not expect to take equity for what we are giving”, explains Salim. Among the differentials of technology companies like IBM, is the access to solutions and technologies that would be unfeasible for startups to pay.

Visa started its acceleration program in 2017 and is already moving into its fourth annual edition. During that period, it accelerated 66 startups, of which 17% have already closed deals with the company or some partner client. “There are startups that have already closed four different deals. We have a startup radar divided into segments ranging from analytics, credit, CRM, loans and financial management, to cryptocurrencies, entertainment, artificial intelligence, mobility, insurance and retail, among other areas. We are closing a contract with two companies, whose solutions will be incorporated by Visa, including one that has already integrated with Visa’s APIs in California”, explains Beatriz Montiani Carvalho, director of innovation and engagement at Visa.

Beatriz Montiani Carvalho, director of innovation and engagement at Visa. Photo: Marcelo Soubhia/Visa/Courtesy

At Oracle, the program started in 2017, with the name of Oracle Startup Cloud Accelerator (OSCA), and taught 12 startups to work, in the six-month period, together with the Oracle team for mentoring and receiving Oracle Cloud credits, connection with local, regional and global customers, coworking space, use of Oracle Innovation Customer Labs and connection with investors.

In 2019, the program was renamed Oracle for Startups, with an online format and maintaining the same benefits. The company accounts for more than 600 participating startups globally, with approximately 130 in Latin America.

In Brazil, we will announce six new companies, which will be encouraged to participate in projects with Oracle customers

Marie Timoner, Oracle for Startups leader for Latin America.

At TOTVS, the iDEXO program has existed since 2017 and is the arm of open innovation, created to connect startups to large companies. According to Juliano Tubino, vice president of Business at TOTVS, more than 300 companies were evaluated in two years. Today there are 69 B2B startups, with solutions such as reimbursement of employee expenses, medical prescriptions and visual standardization of store windows, serving 12 verticals.

The focus is on generating business. There are no financial contributions or annual editions, but a continuous flow of prospecting, selection and work with startups, which can be from outside the country. “We offer prototyping at UX Labs, mentoring for technical and commercial integration with TOTVS, networking events between community startups, discounts or free software and services, presentation to customers and a coworking space,” lists Tubino.

Breno Barros, Stefanini’s global director of Digital Innovation and Business, says that the company launched the Open Startup open innovation program in 2015, to search for startups that could complement and modernize its portfolio. In the first edition, 500 startups were evaluated, and the selection criterion aimed at choosing those that already had complementary products and revenues above R$ 500 thousand.

“We arrived at a short list of 40 startups from the most varied sectors and selected 20 with the highest adherence. But we were able to do business with just two, which taught us that we didn’t have to select as many companies,” explains Barros. 

In the second edition, in 2016, the company selected 10 segmented startups in finance, insurance, industry and retail. “Of these, eight generated business with a sales growth of 60%,” highlights Barros.

The program was extended to two years, and in 2018, the third edition was held with 15 companies and another segment: media and communication. Registration for 2020 will be open soon. “The program is a strategic alliance, generating a sales force for them in 41 countries and helping companies to internationalize. In addition, we provide developers at our base free of charge,” says Barros.

Innovation in the construction sector: Votorantim, AkzoNobel, and Vedacit

Another very active sector is the construction sector, with an eye on the innovations that are being generated by construtech companies. Humberto Shida, global CIO at Votorantim, a cement company, says that they revised the entire innovation strategy in 2016, to create an open innovation ecosystem, while considering the company’s culture, which has a conservative profile. The company mapped all the actors it wanted to relate to: startups, investors, research centers, funds and the government, questioning them about what attracted them and what repelled them.

In 2017, Votorantim launched the Digital Cement program, known today as VC Connect, using the 100Open Startups platform and the Industry 4.0 theme, receiving more than 100 applications. Of these, 12 were pre-selected to seven, who conducted concept field proofs. The winner was Geoinova, focused on territory management–one of the main challenges for Votorantim, which has many lands.

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“Then, we created our own platform because we wanted to open the range of startups. Today companies of any segment and size participate in continuous testing programs. In addition, we structured the internal processes–legal, supplies, billing–to work with startups that could not be treated with previous processes, aimed at large companies. We evolved into a R&D program with Embrapii and Senai Cimatec”, tells Shida.

AkzoNobel, Coral Paints manufacturer, created, last year, the global program Paint The Future, which will have a regional edition in 2020. Among the more than 150 countries in which the Dutch multinational operates, Brazil was chosen to carry out this first edition. Registration starts in March and aims to open doors for new solutions, proposing challenges to meet locally mapped needs. In the first edition, the program received 160 applications from around the world, and 21 pre-selected startups had the chance to collaborate with industry experts and improve their solutions.

“The program represents a unique opportunity for international exposure with a global organization like AkzoNobel. In the first edition, five selected companies had business contracts, joint development agreements or supply agreements”, says Elaine Poço, AkzoNobel’s sustainability director for Latin America.

Also in the construction area, Vedacit Labs is the first open innovation program in the waterproofing market. The program is already in its second edition, with R$ 2 million in investments. In the first–in partnership with the Liga Ventures–, in 2018, 442 were registered, with 30 pre-selected. Fifteen went to the pitch day, and five were chosen in two verticals: digitalization of the construction industry and sustainable buildings.

They are: NETResuos, for the management of waste from construction sites; Obra Azul, a marketplace that works as an “ifood” for small shopkeepers and “uber” for bricklayers, both from Belo Horizonte (in the state of Minas Gerais); Programa Doce Lar, from Navegantes (in the state of Santa Catarina), which will be called EDPA and offers low-income housing renovation, with 11 franchises; Lógica-e, from São José (in Santa Catarina), which develops sensors for the construction chain, as a solution to verify the application of asphalt blankets; and Construcode, from Salvador (Bahia), specializing in digitizing the project plans with QRCode scattered on construction sites.

“We offer business opportunities (to them) as internal supplier–NetResuos and Obra Azul–, but the main focus is the market. We want to offer solutions, services and technology for the construction chain and not just products”, summarizes Luís Fernando Guggenberger, innovation and sustainability manager at Vedacit.

On March 2, the five selected from the second edition will be announced, which received 456 entries and focused on IoT sensors and sustainable buildings. “We are waiting for the round of negotiations, because the program offers a Seed Money in the amount of R$ 100,000, in exchange for up to 5% of participation, in addition to six months of residency at WeWork in São Paulo and four months of acceleration in Liga Ventures”, signals Guggenberger.

Translated by Jennifer Ann Koppe