After a cycle of euphoria, in which venture capital seemed abundant and disciplinary measures took a back seat, the venture capital market in Brazil entered a phase of purification.
This is the reading presented by Bruno Teixeira, partner at Raio Capital, Sidney Levy, president of Invest.Rio, and Bianca Martinelli, general partner at Alexia Ventures, during a panel mediated by Juliana Ventura, editor-in-chief of Pequenas Empresas & Grandes Negócios, during Voices, a technology and innovation event organized this Wednesday (10/12), at the Rio Art Museum.
Teixeira recalled that Brazil experienced a period of “euphoria” with startups, in which “very good and other less” investments were made, with lax evaluation criteria and money invested in companies with little economic foundation. Today, he says, the situation has changed: “There is capital available. The most difficult thing is to be able to create a business that makes sense.”
Bianca reinforced the diagnosis with recent figures: the volume invested in venture capital in Latin America increased again and Brazil recorded an increase in investments in the last quarter. The difference, he points out, lies in the behavior of the funds. “Capital has not disappeared. It is more demanding.”
For participants, this requirement translates into a focus on capital efficiency, strong unit economics, revenue retention and a clear path to profitability. In other words, growth alone is no longer enough. “Investors are very interested in retention, how you pay for the cost of acquiring a customer and the long-term sustainability of the business,” Bianca said.
Global capital, allied state and the weight of geography
If money is more demanding, competition has also increased. “Capital is global,” summarizes Levy. According to him, an entrepreneur from Rio de Janeiro not only competes with startups from São Paulo, but also with companies around the world.
At the same time, the explosion of artificial intelligence-based solutions is reminiscent, he says, of the early days of the U.S. auto industry, when more than a hundred automakers competed for space until the market was consolidated into a few groups. “There will be a purge at some point. It’s normal that there are a lot of them and it’s good that there are a lot of them.”
In this context, the president of Invest.Rio defends a clear role for public authorities: not to replace private capital, but to create the conditions for its development. “It is not the role of the state to risk taxpayers’ money on bets. It is the role of the state to provide infrastructure, develop people and talent.”
At Invest.Rio, this translates into actions such as sponsoring major innovation events, bringing together entrepreneurs and investors, training math and technology talent, and investing in critical infrastructure, such as data centers and high-performance computing to train AI models.
The discussion also highlighted a structural challenge: the geographic concentration of capital and startups in Brazil. According to a survey cited in the panel, more than 65% of the country’s technology companies have never received an investment. In practice, most resources remain concentrated in São Paulo, Rio de Janeiro, Minas Gerais and the southern states.
For the Raio Capital partner, this is the result of a combination of factors: little economic openness, high bureaucracy, high credit costs and the absence of coordinated policies between government, academia and the market. “Being an entrepreneur is a very thankless job in Brazil,” he said, emphasizing that successful ecosystems around the world have managed to combine strong universities, a dynamic business environment and proximity to capital.
Levy sees artificial intelligence as an opportunity to reposition Rio. He cited tax incentive initiatives in the port region, programs to attract technology companies and the “Desafio Rio,” a poster that presents the city’s problems and invites startups to propose solutions that can be contracted by public authorities.
Stricter selection, relationship with investors and ambition beyond Brazil
Although the tightening of liquidity has made capital more selective, this does not mean that risk has disappeared. In the early stages, mortality remains high, but, for Teixeira, this should not be considered a problem in itself. “Every investment is an account of risk and return,” he explained.
The key, for him, is to be clear about the level of risk assumed and the expected return, rather than treating volatility as a surprise. In this approach, the relationship with the founders is central. Raio Capital has started to value proximity with the invested teams even more, precisely to be able to help when things do not go as planned. “It’s very productive, especially early in the life of a business, to have people on your side to ask the tough questions,” he said.
Bianca, in turn, highlighted that while capital becomes scarcer in longer cycles, expectations of ambition have also increased. Brazilian startups, he says, cannot limit themselves to thinking only about the domestic market. “Brazil is huge, but today technology allows us to dream bigger. The question is: can what is built here compete on a global scale?” he asked.
For funds, the answer involves a combination of robust technology, proprietary data, a scalable go-to-market strategy and clarity on potential exits, in an environment where IPOs remain rare and acquisitions tend to be the most likely route to liquidity.
At the end of the panel, Juliana asked those across the counter for advice. Bruno summed it up in two sentences: think big and solve real problems. “Thinking big takes the same work as thinking small,” he said. And he added: “Good ideas are great at the bar table. Good businesses solve problems. If you don’t have a customer, you have nowhere to start.”
Bianca highlighted the importance of resilience, alignment between partners and the ability to execute consistently over time, recalling that the relationship between founders is “longer than a marriage”.
The final message addressed to entrepreneurs, in a more demanding market, was clear: capital exists, including at the beginning, but it seeks mature teams, sustainable businesses and solutions capable of differentiating in an increasingly competitive global scenario.
Voices is an initiative of Editora Globo and Sistema Globo de Rádio, sponsored by Rio City Hall and the Municipal Ministry of Education, with support from Zapt, trail sponsorship by Claro Empresas and Insper and a partnership with Play9.
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