Welcome to this week’s news round-up on the Brazilian innovation and technology ecosystem. Here are the key developments in Latin America’s largest economy during the week ending March, 13, 2020:
The market for consumer electronics in Brazil will soon start feeling the impact of the spread of the coronavirus. The country imports about 80% of the components needed to assemble products like smartphones and PCs from Asian countries like China, according to the Brazilian Association of the Electrical and Electronic Industry (Abinee).
Abinee has conducted three surveys in 2020 with its members on the impact of coronavirus on operations and about 70% have reported issues around receiving imported components, such as screens and semiconductors. For the first time, Abinee members now say they may not be able to deliver products to their customers if the current situation continues for another month and a half.
According to analyst firm IDC, the forecast for the Brazilian device market for 2020 is currently of about 1-2% growth, but things can change very fast. With the worsening issues around supplying products and consumer demand drops drastically due to measures such as isolation of large urban centers, there could be a market retraction of up to two digits.
The analyst firm noted that the dollar hike in relation to the Brazilian real, in addition to the reduction in incentives for local manufacturing, has prompted an increase in production costs of about 20-30%. According to IDC, it is inevitable that the cost increase will soon translate into higher prices to the consumer.
Actors of the tech and innovation scene in Brazil have been putting strategies in place to contain the spread of Covid-19. Google has shut down its São Paulo space for tech startup entrepreneurs, Google for Startups Campus, until further notice. Cubo Itaú, of Brazil’s oldest tech entrepreneurship hubs, also went into lockdown after one of its residents tested positive for coronavirus.
Telecommunications giant Telefónica entered into a partnership with the venture capital fund Redpoint eventures as part of a global innovation strategy to be closer to startups active in priority markets for the company.
The idea is to invest in ventures that generate returns for the telco company, through technologies focused on increasing revenue from new products or as a supplier, with tools that improve internal efficiency, Priority areas include digital transformation, 5G networks, cybersecurity, cloud, artificial intelligence, blockchain, fintech and Internet of Things.
As part of the new approach, the company’s open innovation hub Wayra will also double the amount it typically invests in startups 1 million reais ($205,000) per startup.
In addition to Brazil, Telefónica announced new investments in other key markets for the company, such as Spain, the United States, with Silicon Valley fund Alter Venture Partners, and in Israel, with Vintage Investment Partners.
Microsoft‘s Women Entrepreneurship (WE) fund has announced its selection of the first round of women-led, technology-based startups. Of the 924 startups that have applied for the program, a total of 20 ventures were selected. The WE fund has the aim of raising 100 million reais ($20.6 million) in five years and is halfway there. According to the Brazilian Startup Association, only 16% of technology-based startups in the country have at least one female partner.
Even though Brazil’s General Data Protection Law is set to come into force in August this year, business readiness is still low. According to a report by the Brazilian Association of Software Companies (ABES) in partnership with EY, only 38% of the 400 business polled said they are compliant with the requirements.