Entrepreneurship

oilfindersignBrazil focuses on entrepreneurship, innovation to improve economic stability

By Torunn Sinclair

In a nation where government and corporate careers provide stability in a largely still
unstable country, Brazil’s startup and entrepreneurial culture is growing steadily due to
an influx of private- and public-sector funding.

With Brazil’s GDP growing by just 0.9 percent in 2012, the Brazilian government is
looking for more innovative ways to expand its economy.

Brazil’s Ministry of Science, Technology and Innovation (MCTI) recently launched a
program, Startup Brazil, which “aims to strengthen the start-ups ecosystem in the
country, increasing Brazil’s competitiveness and stimulating its economic development
through innovation in the field of Information Technology,” according to the
organization’s website.

In its first year, the program, a public-private partnership, will place around 100 startups
with one of nine business accelerators located throughout the country. Each startup
company will be given a stipend used to improve its business. The startups can be foreign
or domestic, but if foreign, must plan to stay in Brazil to create a lasting impact.

The Brazilian government, however, is not the first in the country to initiate a startup
concept.

The technology park of Rio de Janeiro within the Universidade Federal do Rio de Janeiro
(UFRJ) has been working with small businesses for a decade to help them launch their
concepts and partner with larger corporations. The university has its own business
incubator and accelerator, called COPPE.

“If you think about Brazil at that time, the whole research and development part of the
university was really basic research,” said Filipe Martins, manager of UFRJ
Technological Park. “They weren’t looking beyond their boundaries and for interaction
with companies. The university started thinking about how it could connect with other
companies and how the research it’s developing could have some connections and how it
could innovate and create new business. The point is to grow the businesses before they
go to the real market.”

The oil giant Petrobras is Brazil’s largest corporation making up 8 percent of its GDP.
Petrobras is increasing its investment in entrepreneurial efforts and working with
established incubators to help it efficiently and effectively extract oil from Brazil’s presalt layer, which was discovered in 2005.

Small businesses that are part of Rio’s technology park are benefitting from the oil company’s investment into oil and gas research.

“A really important fact was the installation of the first research center of Petrobras at the
technology park,” said Martins. “Petrobras is the biggest Brazilian company. It invests in
a lot of new technologies and research.”

Almost 200 miles off Brazil’s coastline between South America and Africa and one to
three miles underneath the seabed lies as much as 16 billion barrels of oil formed from
sedimentary rock and its chemical reaction with seawater. This pre-salt layer is thought of
by many Brazilians as the answer to its economic uncertainty. The amount of oil that can
be extracted, and infrastructure required for this endeavor, will create thousands of jobs.

Carlos Henrique Dumortout Castro, a business consultant who works with the Petrobras
investor relations department, said that Petrobras currently produces around 311,000
barrels per day in the pre-salt layer. The company hopes to produce 2 million barrels of
oil a day by the year 2020.

Castro said “the country may not be able to wait seven years” for the positive economic
impact of Brazil’s pre-salt to take effect.

He admits that the company has taken on a large feat by creating a timeline for such a
success. He said the organization has invested $236.7 billion in some 940 projects around
the world dedicated to innovating new technologies to help Petrobras become more
efficient and sustainable when extracting oil and producing ethanol.

“We work with a lot of universities around the world; they receive a package to develop
certain types of projects,” Castro said. “When you have more of the company exploring,
there’s more to discover.”

John Lyons, a reporter with the Wall Street Journal working in Sao Paulo, agrees with
Castro and believes there is much more of Brazil to still discover. He said that Brazilians
believe in the concept of Manifest Destiny — that they are entrepreneurial and they can
win with the country’s combination of an agricultural interior and its coastal cities.

“Brazil is a nutty, reverse version of the U.S.,” Lyons said. “All the ingredients are
similar, this country just needs innovation.”

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