A growing start-up hub in Southern hemisphere - São Paulo
The next city in World Innovation Ranking 2024 series is São Paulo. As usual, in the basis of the developed methodology was a process for collaborative discussion among experts from various realms and disciplines in order to map the innovation ecosystem.
Geography
The city is located in one of the most populated regions - South America. The population with suburbs is more than 20 million of people. São Paulo alone contributes 3 % of Brazil’s GDP. Although located in the predominantly Spanish-speaking region, Brazil has the largest population in Latin America.
São Paulo connected to the sea by a narrow straight, having access to the global port centers. It lies about 220 miles (350 km) southwest of Rio de Janeiro and about 30 miles (50 km) inland from its Atlantic Ocean port of Santos. Through one of the largest airport in South America, it connected to key cities in Europe and North America and Middle East like Istanbul, Miami, Dubai, Buenos Aires and Santiago de Chile. The time zone of São Paulo is close both to NYC and to London, the biggest financial centers. The location within Brazil itself is central and close to the Capital and the other key location - Rio de Janeiro.
The megalopolis also continues to attract people from the country’s rural regions in a flow that constantly feeds the bottom of the social pyramid as life improves for those already there.
Investment Climate
São Paulo is home to 13 of the 17 current Brazilian unicorns as of March 2024, two Brazilian unicorns took the next step: neobank Nubank and e-commerce platform VTEX were successful IPOs.
Foreign investors in Brazil receive the same legal treatment as local investors in most economic sectors; however, there are foreign investment restrictions in the health, mass media, telecommunications, aerospace, rural property, and maritime sectors. Achieving higher levels of productivity and sustainable growth remain a key challenge that has become more urgent and will require bolder action, as World Bank states.
Brazil is a part of several blocks including Mercosul, which means products run in Brazil has an advantage for expansion to neighbouring countries. Brazil is a signatory to the UN Convention against corruption. The country is also a signatory to the OECD Anti-Bribery Convention and a participating member of the OECD Working Group on Bribery.
Brazil offers a start-up visa, one of the prerequisites is to present an investment or business plan to be executed in a 3 year time frame.
Human’s Capital
São Paulo is known by large and diverse population in terms of social background, culture, education, origin etc. The overall population in urban area around 20 million people, many of them live in favelas - areas with the highest concentrations of poor class. During last decades, the growth of population has slowed down to 1.8 percent in 2022.
Paulistanos are of different origin including Italian, Portugese, African, Japanese. Nowadays, the city still receives waves of immigrants from the Carribean and Africa as an example. More than 90% percent of the population are literate.
Human Capital index (HCI) of Brazil is a subject of growth for several periods consequently (0.7953 in 2022, 0.7803 in 2020, 0.7525 in 2018), the index itself higher in South East of Brazil e.g. Unemployment rate in Brazil is at 7.8 percent in 2023, consequently falling since 2020.
São Paulo is one of the largest health care hubs in Latin America. Among its hospitals are the Albert Einstein Israelites Hospital, ranked the best hospital in all Latin America and the Hospital das Clínicas, the largest in the region.
The ratio of doctors to population in the city is one of Brazil’s highest. Moreover, a good number of São Paulo physicians and surgeons enjoy international reputations in their specialties and conduct considerable front-line medical research.
Universities and Innovation
The University of São Paulo ranks as one of the top universities in the world. The QS ranking puts USP on 85th place. According to edurank this university is #1 in Brazil and #1 in all Latin America.
In 2022 USP launched innovation center in partnership with China.
Other leading universities are Universidade Estadual de Campinas (Unicamp) - #210, Universidade Federal de São Paulo (UNIFESP) - #441, UNESP - #477.
São Paulo's student population is largely made up of Brazilian students, with just three percent of enrolled students at the above six universities classified as international. Its two greatest strengths as a study destination are its prominent place in the Latin American economy, with many job opportunities for graduates, and its affordability compared to other student cities.
USP office through business incubators, technology parks and specific training, it promotes entrepreneurship, offering technical and managerial support and Complementary Training to entrepreneurs. It also works on the transfer of technologies, worrying about making them available to society.
Besides that, another important event at universities related to innovation is UNICAMP - The São Paulo Advanced School on Technology & Innovation Strategies and Policies for Economic Development takes place at the University of Campinas every summer.
Key Events
As the most prominent events in 2024 in São Paulo are São Paulo Tech Week, São Paulo 2024 Venture Capital World Summit. São Paulo Expo is one of the most modern and efficient exhibition and convention centers in Latin America. Total exhibition space is 100,000 sqm, and Auditorium from 70 to 7,810 seats.
Accelerators and Incubators
São Paulo startups benefit from accelerators, incubators and other initiatives designed to support them. Top accelerators include ACE Ventures (early stage VC firm with 109 investment and 19 exits; Start-Up Brazil (28 investments, 2 exits), Paris Ventures (6 investments), Latitud, a platform that assists early-stage founders with training through a selective scholarship program.
Notable incubators are Velantic Investments, Eretz Bio, Investidores.vc.
Technological Centers
A special organ was designed to bring all R&D centers in the production sector, special mention to São Paulo Technology Parks System (SPTec), managed by the State Department of Economic Development, Science, Technology and Innovation (SDECTI). The department offer opportunities for companies to transform research into product, stimulating the synergy of projects among companies and making them more competitive.
Most of the initiatives have resulted in definitive accreditation, of which eight are in operation. Among others are:
São José dos Campos’s technology park (PqTec);
Piracicaba’s Technology Park;
Parque Tecnológico de Botucatu;
Technopark – Campinas;
Unicamp’s Science and Technology Park;
There are also several other parks in process of accreditation and construction.
Consumer Market
With 220 million inhabitants, Brazil is the largest economy in Latin America and represents 54% of the region’s digital market.
Brazilians tend to do product research and look for deals before making a purchase. To save money, Brazilian consumers often shop in popular discount chains. However, they still expect quality products. Furthermore, customers demand high-quality sales service and customer support. Online customer support service is highly useful in maintaining contact with customers, but customers expect a fast response when they contact companies via social media, as they mostly hope to have a reply in under one hour. Consumers have more access to information than ever before, and they will likely search for reliable information about brands and products to assist in the purchase decision.
Based on data of MasterCard Economic Institute (MEI), Real Consumer spending in 2024 is at level of 1.9% YoY, while Real GDP is at 1.6% YoY, we conclude the economy is at recovery.
In Conclusion
Several factors such as geographic footprint, talents, venture capital has led the city to the leadership level in Latin America. With the notion in mind that Brazil is still rapidly growing territory, São Paulo can be a perfect intersection where ideas can give a significant result.