Rio, Brazil: The startup city guide

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Marie Boran
Image of Christ the Redeemer statue overlooking Rio, Brazil.

Rio de Janeiro is a famously popular tourist destination that heaves with revelers 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 led historic surge in Latin American startup investments in 2021

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

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

As with VC investment globally, this growth slowed in 2022 but Brazilian startups still managed to bring in funding to the tune of US$3.6 billion between January and August.

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

Brazilian startups managed to raise US$3.6 billion in funding between January and August 2022.

– BT Law

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.

Although 2022 was a quieter year it still saw fintech startup Neon bring in US$300 million in funding, followed by Creditas with US$260 million, and Velvet with US$200 million, according to Bloomberg.

And while VC funding was down on 2021, foreign investment in Brazilian startups increased in 2022, with a focus on tech and innovation sectors, according to LABS (Latin America Business Stories). Citing a study from innovation platform Distrito, it was reported that non-resident investors took part in 39 percent of funding rounds in the first half of 2022.

The study showed that startups in the fintech, ecommerce, and agtech sectors received the most investment, with US investors leading the way, followed by Germany and Japan.

Jean Sigrist, Mariana Vasconcelos and Felipe Matos discussing the startup ecosystem of Brazil at Web Summit 2022. Image:

So, whether you’re early-stage or an established startup, Brazil in 2023 is a good place to be.

Overall 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 declared “investment in Brazilian startups is booming” while the Rio Times reported that four million new businesses opened in Brazil in 2021 – a record high according to the Brazilian micro and small business support service, Sebrae.

This growth slowed in 2022 but if we look to verticals like fintech (Brazil is home to 689 fintech startups), where Latin America saw a decline of 29 percent in the first half of 2022 when compared to the 2021 average, it should be noted that the volume of investment in 2022 still surpassed 2020, an indication of a healthy sector remaining buoyant despite a global economic decline.

According to Latitud’s 2022 report on the LatAm startup scene, Brazil represents nearly 80 percent of all funding raised in the region since 2014 with neobank unicorns Nubank and C6 Bank leading the charge. Digital banking, in particular, is king in this region; US$2 out of every US$3 invested in B2C fintech is going into this sub vertical.

From a women in tech perspective, Latitud’s report showed that 20 percent of all LatAm fintech funding in 2021 went to women-founded startups with Brazil’s Geru and and Keycash raising more than US$50M combined.

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.

In 2023, Rio’s startup ecosystem ranks third in Brazil, seventh in South America, and 180th globally, according to StartupBlink.

Rio de Janeiro’s startup ecosystem ranks seventh in South America.

– StartupBlink

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 generated 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 in 2021 closed a round of funding at US$84.5 million, with investors including the Chan Zuckerberg Initiative (CZI) and U2’s The Edge.

A relatively new sector emerging on the Rio startup scene is foodtech. One of the notable startups in this space is Fazenda Futuro (Future Farm), a plant-based company producing burgers, meatballs, sausages, even faux tuna. This Series C stage startup has raised over US$80 million to date.

For context, there are currently 246 foodtech startups across Brazil. Another Rio-based one is a hybrid of foodtech and fintech: Nutrebem is a payment and nutrition tracking platform for the school cafeterias that allows parents to track what their children are eating. Founded in 2012, Nutrebem has raised over US$8.4 million in funding to date.

Brazil leads in Latin American unicorns

Did you know Brazilian startups account for 66 percent of all unicorns in Latin America? Bloomberg calls it a “unicorn paradise”.

Little over a 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 were 21 unicorns across the country, making Brazil fertile ground for these fast-growing, high-worth companies.

Notable Brazilian unicorns include:

  • Mercado Bitcoin | Established in 2013, this pioneer of the Brazilian cryptocurrency scene is now the largest crypto and NFT exchange in Latin America.
  • 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 bought a 40 percent stake in this digital bank in 2021.
  • Hotmart | A monetization platform for creators, Hotmart’s Series C funding round was led by TCV – a firm that has backed digital giants including Netflix and Spotify.

Unicorns, as we know, do not materialize out of thin air. Its 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.

Rio: A top digital nomad destination

WeWork Rio Claro bringing us all the light, bright vibes. 😍More here: #wework #weworkbrasil

— WeWork (@WeWork) November 20, 2020

Rio is an attractive prospect for digital nomads. Travelers 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 travelers too: WeWork, EDX Co-working, We Company, and My Office 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 marginalized and low-income women who have traditionally been excluded from pursuing careers within the country’s tech sector.

Reprograma is an inclusive program that has delivered training and run bootcamps for almost 1,000 young women and girls over the past five years, 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 organizations that operate in this arena include Cloud Girls Rio, which has over 600 members and 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 group with more than 500 members.

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

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