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In 2021, the buzz around new tech investing in Brazil was so loud, it appeared the country was awash in venture capital – and undergoing an economic transformation akin to the phenomenal growth of the Asian Tigers.
On the surface, that appearance seems to be reality. But take a closer look, and the cracks begin to show. Many of the projects receiving funding are large-scale glamour ventures. Fine, in theory. But it’s the broad base of small-scale entrepreneurial projects that will give Brazil a solid economic foundation and higher standard of living. And it’s these projects that are being left behind. In other words – while a dozen well-funded hero projects look good on paper, a thousand well-funded smaller projects do good in the world.
Brazil doesn’t need a Warren Buffett type putting $500 million into one company. It needs a mechanism that allows for adequate funding to be directed to numerous new early-stage ventures. And that’s what tokenized global equity crowdfunding will provide.
Brazil’s current venture capital market
Right now, Brazil is seen as a darling of venture capital. As Forbes reports, “During the first six months of 2021, a total of $5.2 billion was invested in startups based in Brazil. Four new unicorns emerged, digital products firm Hotmart, crypto exchange Mercado Bitcoin, online retailer Madeira, and digital bank C6Bank.”
But look closely, and you’ll notice a common thread; these are all very large-scale projects. Each soaks up enormous amounts of funding from large-scale investors. Helping the rich get richer does very little for a country whose development is hamstrung by a historically entrenched dualist economy.
So, where does the funding for smaller-scale projects come from? Brazil’s Banco Nacional de Desenvolvimento Econômico e Social (National Bank for Economic and Social Development, also known as BNDES) is the single most important source of finance for SMEs in Brazil. BNDES has promoted new venture growth for the past 20 years, mainly using credit subsidies. 2018 OECD figures showed that small enterprises, including micro-enterprises, accounted for 48.6% of BNDES business – up from 30.6% in 2016.
So far, so good. But the BNDES model has its limitations. One key issue is that there’s very little due diligence done on the businesses being given credit. This has led to the failure of many ventures within just two years of launching – because they were never viable, to begin with.
The amount of funding available through the BNDES credit scheme is also small scale. Applicants are eligible for up to a maximum of two million BRL, paid in three installments. That’s equivalent to around $400,000 USD. If a new business needs $2million to $5million to grow, it needs to look elsewhere. This means SMEs with viable products and big ambitions are left struggling for funding. Many potentially successful ventures are lost – and so is the immeasurable value they could have brought to the Brazil’s economy and citizens.
What Brazil needs is the democratization of funding. This will allow many more entrepreneurs and investors to participate in a much more fertile new-venture ecosystem. And it will release Brazil’s full economic potential.
The extraordinary entrepreneurial spirit of Brazil
A 2015 survey found that one in six adults in Brazil was either trying to launch a business, or owned a venture less than 42 months old. Alongside this clear appetite for innovation, there are a number of other attributes that leave Brazil well-positioned to become a world-leading centre for entrepreneurial success.
1. Scale
Brazil is the largest economy in Latin America and the ninth biggest worldwide. It also has the fifth-highest population. Brazil’s middle class is growing fast, meaning increasing demand for higher education and strong domestic consumption.
2. International trade access to the rest of the Americas
Brazilian companies have free access to Argentina, Paraguay, and Uruguay through the Southern Common Market (aka MERCOSUR) and seven other associated countries. Brazil is also part of BRICS, another trade group made up of Brazil, Russia, India, China and South Africa.
3. Favourable geography
Brazil is large and naturally diverse. Its mid-latitude location and convenient time zone means markets in the Americas, Africa and Europe are easily accessible.
4. Openness to foreign investment
The government has declared their support for foreign investment in Brazil and are extremely ‘pro-business’, meaning there’s no regulatory barrier to overseas financial interest in local businesses.
5. Developed infrastructure
Brazil has one of the most highly developed road and railway systems in the world, plus an extensive network of river and ocean ports.
Image credit: iStock
When you consider all Brazil’s physical and political advantages, it’s easy to see why it’s the perfect environment for entrepreneurs to thrive. All that’s missing is the last part of the equation; investor funding that’s easily available in the right amount at the right time.
Introducing the Dacxi Chain; the world’s first global tokenized equity crowdfunding platform
Dacxi strongly believes in the potential of Brazil’s innovation tech-based economy – and that the early stage funding crisis is the barrier holding it back. And Dacxi believes that it provides the solution, with the Dacxi Chain. The Dacxi Chain is a global tokenized equity crowdfunding platform. It could provide Brazil with the investor funding and investment opportunities it needs to rapidly develop, and take its rightful place among the world’s economic powerhouses.
The Dacxi Chain is built upon the belief that innovation is blind to race, religion, gender and culture. There are countless fantastic ideas and entrepreneurs in every country. Brazil is no exception. With the right funding ability, Brazil’s entrepreneurs and innovators can and will change the country for the better. They just need the system, support and the confidence in funding to do it. The Dacxi Chain will help connect entrepreneurs and investors simply and easily – in a regulated, well-managed environment that gives success its very best chance.
The Dacxi Chain uses blockchain technology to deliver a level of innovation funding unlike anything seen before. At last, funding will be able to be distributed fairly and equally everywhere in the world. The scale is global, but the benefits are local.
Founding local business ecosystems
Many developed and emerging economies have demonstrated that a single successful core business can form the genesis for an entire local business ecosystem. Ancillary businesses develop to serve the needs of the core business, and the requirements of its staff and their families. This multiplier effect quickly leads to an improvement in the quality of life of the whole community.
Finland is a prime example. The country was once an economic backwater, dependent on a low-value forestry industry, and Nokia was a rubber-boot manufacturer. Not only did Nokia evolve into a world leader in telecommunications and make a fortune for its shareholders, it seeded literally thousands of other, smaller tech companies. These companies together turned Finland into one of the most vibrant tech countries in the world.
Dacxi believes the same can happen in Brazil. The Dacxi Chain aims to provide the country with an efficient worldwide system of equity crowdfunding – based on the unique capabilities of tokenization. This will help local entrepreneurs realize their dreams, and raise the capital they need to build a vibrant and broad new economy. And it could turn Brazil into a South American panther to rival – or even surpass – the Asian Tigers.
Further reviews:
For the latest information on Dacxi Coin and the Dacxi Chain, visit dacxicoin.io. You can download the Lightpaper, and join the Dacxi Coin telegram community. For media enquiries please contact pr@dacxi.com
This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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