In this week’s edition of PYMNTS’ Weekly Tech Center Roundup, we set our sights on Brazil, where, despite the political and economic issues that tend to dominate the headlines, the country’s technology market is still going strong.
Before we jump into the post, here are a few quick facts about Rio de Janeiro, Brazil, and its tech scene:
- Estimated population was 6.35 million as of 2014.
- The city’s GDP per capita is $19,131.
- According to the Brazilian Association of Startups, as of 2015, there were 335 startups in Rio.
- Tech giants, such as Siemens, Cisco and Microsoft, are building technology centers in the city.
- In an effort to spur job growth, the Brazilian government offered tax and legal incentives for technology companies within Rio.
- The Cariocas startup community was launched in 2015 and is an example of the startup scene’s maturation, providing a place of support and information for startups in the city.
Efficiency Drives Growth
More recently, Brazil has become known for many things; unfortunately, its growing tech community may not be at the top of the list.
From economic downturns to the Zika virus outbreak, it’s easy to see why other happenings in and around the country can easily be overshadowed. But as the host of the quickly approaching 2016 Summer Olympics, Rio de Janeiro’s tech scene is also being thrust into the spotlight.
In a recent piece from TechCrunch, it noted Brazil’s tech industry has been relatively immune to some of the economic slowdown that has impacted the country. In fact, the venture and entrepreneurial ecosystem grew by 20 percent from 2014 to 2015 alone.
In general, venture capitalists are boosting their investments in Latin America, with funding reaching $594 million in 2015, a stark increase from $387 million in 2012, the Latin America Venture Capital Association confirmed.
After a recession, it’s typical to see a “belt-tightening among companies and consumers,” the article explained, adding that Brazil is no different. But where the country’s startup community has diverged from the norm is with the growing trend of companies being able to thrive because they are focused on offering solutions that improve efficiency and sustainability.
The efficiency-driving technology trend is one that investors can’t seem to ignore. There’s been a flurry of investment activity for startups in B2B and consumer finance, the article observed, and it’s expected that ventures will continue to keep an eye on the growth.
“What we do know, however, is that efficiency-driving innovation will have its place, come whatever market environment,” Joshua Kempf, cofounder and CEO of online B2B industrial products distributor Gaveteiro.com.br, explained in his TechCrunch piece.
“Those entrepreneurs and investors who can thrive in a tough macroeconomic scenario are surely well-positioned for long-term success in the world’s seventh-largest economy.”
It seems as though many startups and entrepreneurs in Brazil have been able to weather the country’s economic issues unscathed, and Kevin Efrusy, a partner at venture and growth equity firm Accel Partners, explained that it's because of the relationship between what’s going on in technology versus what’s going on in the economy.
“I know it sounds strange, but the tech and macroeconomic cycles are pretty uncoupled. Adoption of smartphones, digitization of the economy, adoption of the cloud — they’re all in their early stages in Brazil and have a long way to go there,” he told TechCrunch.
“These [trends] don’t decline in a recession.”
The Olympic Game Plan
Athletes aren’t the only ones getting ready for the upcoming Olympic games.
Tech companies from around the globe have their eyes on Brazil and are eager to ensure they can get a piece of the Olympic pie when the games begin in Rio later this summer.
As the exclusive payment provider of the Olympic Games, Visa is using the opportunity to roll out the next generation of payments wearables. The payments giant announced that its Visa-sponsored athletes will be able to use an NFC-enabled payment ring at the Rio 2016 Olympic Games.
The ring enables these athletes to make purchases with only their ring at any NFC-capable payment terminal and includes a microchip made by Gemalto, with an embedded NFC-enabled antenna that supports the contactless payment capabilities. Visa’s payments wearable is not only water-resistant to a depth of 50 meters but also doesn’t need a battery or to be recharged.
Homesharing service Airbnb has also looked to change its payment acceptance game within Brazil.
The country is Airbnb’s fourth-largest market, and the company noted Brazil’s recession environment has enabled its service to become a source of income for many of its customers.
The company has updated its payment infrastructure in Brazil by establishing local partnerships with payment processing companies. The move has allowed Brazilians to use their preferred payment method — national credit cards processing in Brazilian Reais (BRL) — to partake in booking rooms on the homesharing site.
Airbnb now also accepts two common local payment methods —Boleto and an option that enables financing. Boleto provides those who don’t have credit cards with the ability to participate in eCommerce by printing a ticket with a barcode during online checkout that they can then take and pay at a local store. Guests can also now pay for their bookings in three separate installments with individual due dates.
But the new spotlight on Brazil has also sparked some concerns. The country’s businesses recently scored “significantly poorer” across a range of cybersecurity metrics when compared to other global markets.
The study, from security ratings company BitSight, found that Brazil had disappointing results on indicators such as email security, filesharing policies and the rate of machines compromised. The companies were generally considered to be much more vulnerable to cyberattacks, such as malware infections or botnets. It was observed that roughly half of the Brazilian companies analyzed partake in unsafe peer-to-peer filesharing practices via corporate networks, which the study said was happening at a much higher rate than other countries.
As the country prepares for the upcoming Olympics, which is expected to bring 400,000 international people into Brazil and jumpstart a boost in cross-border payments needs, it may be time for companies to also step up their cybersecurity game.