Venture Capital Investments in Brazil Surpass Private Equity in 2020

RIO DE JANEIRO, BRAZIL – A report prepared by ABVCAP in partnership with KPMG shows that investments in private equity (PE) and venture capital (VC) totaled R$23.6 billion last year.

Despite the turbulence caused by the Covid-19 pandemic, the private equity and venture capital industry invested R$23.6 billion in Brazilian companies, the second highest figure ever. This figure in 2019 was 7% higher than in 2020.

“The strong performance of the PE and VC industry in such a challenging year is further evidence of the solidity of the Brazilian corporate investment ecosystem,” says Piero Minardi, ABVCAP’s president.

Attention is drawn to the fact that for the first time the VC industry, known for its investments in startups, has exceeded the volume invested by PE funds. According to the report, VC funds invested R$14.6 billion in the country, compared to R$9 billion in the PE segment.

In September alone, Neon Fintech and Vtex e-commerce company received investments of US$300 million and US$225 million, respectively. In total, 255 companies reported having received investments from VC and PE funds in 2020. Among this group, 200 received investments from VC funds and 55 from PE funds.

“The growth of VC investments in 2020 reflects the maturing industry and the significant number of large Brazilian entrepreneurs who innovate, take risks and develop outstanding businesses for the economy, among the best and boldest in the world,” says Roberto Haddad, KPMG’s leading private equity and venture capital partner in Brazil.

In addition to strengthening the Brazilian start-up ecosystem, the difference in the volume of VC and PE investments can be explained by private equity funds’ sensitivity towards the economy. “These are opposite trends. The trend is for VC, driven by technology, to continue to grow, while PE is more sensitive to macro issues,” said Piero Minardi, ABVCAP’s president, in late 2020.

Venture capital continues to grow in 2021. In the first month of the year, Brazilian companies received US$630 million, equivalent to 18% of the total invested in 2020, according to data from Distrito, which monitors the market. There were 41 contributions in January, Nubank’s being the largest. In a G-series round, the fintech raised an impressive US$400 million and was valued at US$25 billion.

Source: Exame