Rio de Janeiro, with a young population who is developing a taste for setting up in business, is generating entrepreneurial dynamism, with the backing of government policy.
With 2,835 startups, 125 of them based in Rio de Janeiro, and 2.7% average annual growth in the tertiary sector, Brazil is increasingly becoming a buzzing scene for innovation. This was highlighted by an infographic on Rio’s innovation ecosystem presented by the organising committee during the final of the Seedstars World event which took place in Geneva in early February. The figures clearly indicate that Brazilian society is on the move and that cultural changes are now setting in. Brazil’s 200 million inhabitants, 6 million of whom live in Rio, already represent a huge consumer market and now there is a growing interest in entrepreneurship – especially innovation-based entrepreneurship – as setting up one’s own business is increasingly valued in Brazilian society.
Innovation becoming central to Brazilian culture
Entrepreneurial activity receives good media coverage in Brazil, with media attitudes to entrepreneurship viewed by respondents to the latest survey as 86% positive, compared with a 50% positive rating in Europe. Moreover, Brazilian society as a whole has a high opinion of entrepreneurship. Fully 89% of the Brazilians polled for the survey said that “becoming an entrepreneur is a highly desirable career choice” and 86% stated that they value very highly entrepreneurs who succeed. In addition to the support provided by government policy, there are a number of basic economic and demographic factors helping to encourage people to start up a business. Brazil has a young population, with 40.9% of its inhabitants under 24 years of age. These young people are increasingly well-educated and are becoming infused with entrepreneurial attitudes. Success stories such as Peixeurbano, Brazil’s answer to Groupon, result in young people identifying with these ventures and stimulate the desire to set up their own businesses. Some 36% of the working population surveyed say they are hoping to set up their own business in the coming years. Another favourable factor is the relatively low cost of business start-up procedures, just 4.6% of GNI per capita in 2013, compared with 33.1% in the United States.
Economic environment fostering the entrepreneurial spirit
This desire to set up one’s own business is also encouraged by a stimulating economic environment: Brazil saw a 1.2% rise in GDP – with the Internet market accounting for 1.5% of the country’s GDP – last year, compared with a 0.2% drop in GDP in the European Union. The forecast for e-commerce is very optimistic: this sector is expected to be worth $29 billion by 2017, with annual increases of 26%. Moreover, Brazilians now possess an increasing number of devices, with close to half owning more than one mobile phone. Mobile technology is becoming an integral part of people’s everyday lives, one example being the rise of ‘showrooming’ – consumers using mobile devices to compare prices online while standing inside a bricks-and-mortar store. Thus people’s habits are changing and the surge in mobile penetration is in turn fostering the development of new mobile apps. The scale of the phenomenon is also indicated by the forecast increase in companies’ allocated budgets for digital advertising, from under $2 billion currently to an estimated $4 billion by 2016.