A flourishing center of entrepreneurship and innovation.
At first glance, Florianópolis is an unlikely place to become a global center of entrepreneurship and innovation. It’s an island on the South coast of Brazil, connected to the mainland by a suspension bridge. Its population is only about 350,000 people. And yet this one island has almost 3,000 tech startups today, with annual revenue of over $2 billion.
I first started hearing about Florianópolis earlier this year when I did a research project on global innovation trends. As I interviewed executives and investors around the globe I kept hearing about how this small city in Southern Brazil was an emerging center of innovation and entrepreneurship.
I had never heard of it before. So last week I flew down for a visit.
For many years, Florianópolis (or Floripa, as the locals call it) was known mostly for its beautiful beaches and perfect weather. Tourism was the main component of the local economy (the giant metropolis of São Paulo is only an hour away by airplane).
But Floripa is also a university town, the per capita income is high, the literacy rate is over 97%, and it has the 3rd-highest Human Development Index (HDI) in the entire country of Brazil (which in turn is by far the largest economy in Latin America). Add to that the fact that it has 42 beaches, lagoons, and waterfalls, and it’s a pretty sweet place to be.
So over the past 20 years many Floripa students finished their university studies and decided to stay right in this idyllic spot with its great lifestyle. And they began creating startup businesses (because that’s what young smart people do these days). One thing led to another, and suddenly Florianópolis has become famous worldwide as a flourishing ecosystem of entrepreneurship and innovation.
On my first night in Floripa I had dinner with local investors, executives, and entrepreneurs (arranged by my friend Leandro Piazza of 49 educação, who seems to know pretty much everyone on the island). Across from me at the dinner table was Daniel Leipnitz, CEO of Acate, a leading tech company association. He explained to me about their mission of supporting the end-to-end ecosystem from startups to large enterprises. They manage a network of innovation centers in Florianópolis, plus they have offices in Sao Paulo and Boston, connecting the Floripa startups with large markets.
As I continued to meet with people during my stay, I learned that this really does seem to be the “secret sauce” that Floripa has — a community commitment to fostering an ecosystem that benefits everyone in the local economy. I met with the partners at CVentures, a leading Florianópolis venture capital firm, and they discussed how they are not only active venture investors but also active in supporting local startup incubators and accelerators. Referring entrepreneurs to incubators and accelerators helps to build their pipeline of future venture investments.
I also met with Darwin Startups, a leading Fintech accelerator. Fintech is trending all over the world today, but the opportunities for disruption are especially profound in Brazil, where 4–5 large legacy banks control 80% of the market. I’m personally also excited about the social benefit angle on Fintech, as there are large unbanked populations in the Americas (up to 30% in some countries). These people in the lower economic tiers have historically been ignored by traditional banks, but Fintech startups have the ability to bring the power of personal financial services to them.
During my visit I met with the CEO and executive team at CERTI (a research firm, similar to SRI in Silicon Valley). It began 30 years ago as a public-private partnership with the Federal University at Santa Catarina, with a focus on applied technology research and a context of helping Brazil to make broad leaps in the country’s tech industries. Today they are a leading force in the Floripa ecosystem, with 14 centers of technology research, including Sustainable Energy and Green Economy.
An interesting fact from the history of Florianópolis is that many years ago the federal government banned heavy industry on the island (to protect it from pollution). This turns about to be an important factor in the island’s development into a center of universities and tech services. While other cities in Brazil (and around the world) have struggled to “graduate from smokestacks to services”, Floripa was able to leapfrog its way directly into a 21st Century economy.
I have spent my whole life in Silicon Valley and I am often asked what Silicon Valley’s secret sauce is. Why did one valley in California blossom into the global economic hub that it is today? There are many reasons, but two factors frequently mentioned are are the Bay Area’s great universities and hospitable climate — both things that Florianópolis has in abundance.
There are many other factors in creating a place like Silicon Valley, of course, but in the end it really just distills down to people. It takes smart, passionate, talented people to create a global center of entrepreneurship and innovation. It happened in Florence in the Renaissance, it happened in London in the 18th Century, and it happened in Palo Alto in the second half of the 20th.
What’s different today from previous centuries is that talent (especially tech talent) can choose where to live and raise a family. That’s a big deal, and makes the current industrial revolution much different than in past eras. So cities with a great lifestyle have a distinct advantage in attracting the sort of talent pool that a center of innovation and entrepreneurship requires. And the “Life Work Balance” in Southern Brazil is amongst the highest in the world, according to the 2019 Kisi Index Report.
I’ve been lucky enough to have visited most of the globe’s clusters of entrepreneurship and innovation, from Austin to Tel Aviv, from Berlin to Helsinki. After a week in Florianópolis, I am thoroughly convinced that this beautiful city-on-an-island will be one of the world’s centers of innovation and economic development in the 21st Century.
On 27 July 2021 I’ll be hosting a livestream discussion on 2021 trends in Venture Capital and startups in Brazil and across the entire Latin American region. Register here.