The Blooming of Brazil’s Tech Ecosystem Will Peak in 2020

Funny enough, I have carved out a specialty in content and PR services for Brazilian companies while working from San Francisco during the last five years. It’s odd because this specialty practice emerged during one of the most intense financial crises for the country from mid-2014 to 2016 – coupled with a political crisis in Brazil that resulted in the impeachment of President Dilma Rousseff.

During 2015, Brazil’s GDP fell by 3.8 percent due to a drop in salaries, restrictions on credit and a rise in the basic interest rate, per Wikipedia. The following year in 2016, it fell again by 3.6 percent with reductions across all sectors of the economy. It was the first time since 1931 that Brazil’s GDP had fallen in two consecutive years.

Today, Brazil – the lion of Latin America which is about the same size, geographically, as the U.S.—has come roaring back. The country boasts the largest economy in South America by far with a 2019 GDP of US$1.868 trillion (IMF), which makes it the ninth-largest economy in the world. Consumer consumption is picking up, inflation has been trending down since 2016, and economic and government reforms promise a higher growth trajectory in the near future, per Deloitte.

Yet, even through the darkest times of the macro-economic crisis in Brazil that started at the same time I launched my own consultancy, the tech sector in Brazil continued to slowly blossom and grow. The first Silicon Valley fund on the ground in Brazil—Redpoint eventures—opened shop in 2012, a few years before the crisis hit. Today, major investors from around the world have flocked to Brazil and Latin America including legendary firms such as Andreessen Horowitz, corporations such as Cisco, IBM, Intel and Microsoft, and SoftBank’s massive $5 billion LatAm fund that launched in 2019.

Brazil is emerging as a global AI innovation hub

One key trend we’re seeing today is Brazil’s emergence as a world-class AI innovation hub. There’s suddenly a rapid, tsunami-size wave of AI adoption by some of Brazil’s largest companies and startups that are even outpacing similar innovation bursts in more mature markets worldwide.

AI is poised to drive South America’s growth, per Accenture. “It offers South America a long-awaited opportunity to leapfrog toward greater levels of innovation, productivity and socio-economic progress,” according to Armen Ovanessoff, a principal director at Accenture.

For Brazil, the continent’s largest economy, Accenture forecast that AI can boost the country’s 2035 GVA by U.S.$432 billion – which represents an increase of 0.9 percentage points in comparison with the baseline scenario. It predicts AI will make a broad impact through an array of improvements to the country’s public services, transportation, distribution, healthcare and disease control.

Many view AI and data analytics to be the next transformative business evolution. If data is the new oil, then Brazil and other LatAm countries have discovered a huge reserve of it — and they are rapidly building their AI talent, R&D capabilities and tech differentiation to better compete.

Foodtech, mobile services and on-demand economy are on the rise 

Brazilians are heavy users of mobile services and social media. With a population of more than 212 million people today, the country’s internet penetration has reached 70 percent, far above the global average of 57 percent, per Pag|Brasil. Brazilians spend nearly five hours each day on the internet using their mobile devices, on average. It’s ranked as the third country in mobile internet usage, behind Thailand and the Philippines.

This has led to a huge opportunity for mobile services, including mobile banking (fintech is booming in Brazil), online delivery by motorbikes that can weave in and out of heavy traffic, and other forms of mobile commerce. Two of the largest players in mobile services and foodtech (delivery) in Brazil are iFood, Latin America’s largest foodtech and online food delivery company, and Movile Group, one of the world’s largest tech ecosystems for mobile marketplaces. Both companies are unicorns.

Here are seven predictions from them for what lies ahead in Latin America’s largest economy:

Gig-economy workers will gain more benefits, qualifying the regulatory debate. If they don’t they may switch to gig-economy companies that provide them.

In 2019, about 57 million people in the U.S. do some type of gig-economy work, according to Vox. About 44 percent of women now have a side gig hustle, and they love the flexibility. Fair treatment of gig-economy workers is how corporate leaders in this growing employment sector will differentiate themselves. Mean or cutthroat corporate cultures are perceived negatively and will lose partners/employees, users, market share and revenues. —Diego Barreto, CFO of iFood

AI will help South America achieve faster growth, innovation and socio-economic progress than expected.

It will begin to emerge as a leader in AI-enabled businesses in 2020, leapfrogging ahead of the pace set by more mature markets and surprising the rest of the world. By 2035, Accenture forecasts that AI will boost annual growth rates in South America by one percentage point. In Brazil, the largest economy on the continent, the government recently announced a new AI lab network of eight research facilities that will develop applications focused on cities, manufacturing, agriculture and healthcare. That followed the news of IBM’s involvement in the launch of a major AI research center in São Paulo in 2020. —Diego Barreto, CFO of iFood

Robots will become more common, from healthcare to senior home care to e-commerce.

New types of robots will emerge that service us in our homes and large residential and office highrise buildings from senior care to food delivery. Last year, iFood launched a new  partnership with Synkar for food delivery in Brazil. In healthcare, robots such as the da Vinci surgical robot are already assisting human surgeons in the operating room. The global medical robotics market is expected to reach $20 billion by 2023. Some of these new types of robots are now helping doctors examine and treat patients in rural areas via telepresence and helping patients with rehabilitation or with prosthetics. —Bruno Henriques, VP of Growth and AI at iFood

Drone delivery arrives in 2020, but focused on delivery acceleration vs. direct-to-consumer model. 

In fact, drone delivery of food ordered online may come to Brazil first before the U.S. While Uber Eats has tested out delivery of McDonald’s food orders at San Diego State University, the FAA says it doesn’t expect to have final federal rules for drone use over populated areas until at least 2021. During 2020, iFood expects to be the first foodtech giant in Latin America to begin using drones for speedier food delivery to real customers. Similar to Uber Eats, iFood will use the drones to deliver food to iFood hubs, and the last leg will be handled by delivery partners. —Roberto Gandolfo, VP of Logistics at iFood

Corporate social responsibility (CSR) will make a comeback in 2020, led by tech companies that are now some of the highest valued brands in the world.

The brands that do good in the world will be viewed as the most trusted brands. This preference for trusted and CSR-focused brands will gain more momentum from Gen Z (1996-2010) coming of age as established 20-somethings. Cause marketing is now “a must” for brands to win over millennial audiences who are poised to dominate the U.S. workforce and have the largest bucket of disposable income in 2020, according to the Pew Research Center. Millennials specifically look for brands to invest in the causes and communities they care about. —Fabricio Bloisi, CEO of iFood and Movile

Foodtech companies will emerge to play a leading role in a new and thriving food ecosystem around the world.

They are well-positioned as an economic force because foodtech companies are now involved in logistics and transportation innovation, R&D labs focused on AI, customized electric scooters that are designed for driver safety,  eco-friendly packaging and more. Food is intensely important to every person alive on the planet and it’s needed several times a day. It creates a vast economy of producers and consumers. —Fabricio Bloisi, CEO of iFood and Movile

The new foodtech economy is now influencing how houses and buildings are designed, and reinvigorating the sale of less desirable real estate properties.

The impact of our new food consumption habit is transforming the role, size and design of kitchens – especially in small places, and impacting building design with specific areas to receive food. Online food delivery’s popularity has also spurred a new model of virtual kitchens (aka ghost kitchens) that don’t have dine-in customers. That new model has spawned more purchases of cheap properties in close proximity to densely populated areas for kitchens that provide food exclusively for delivery. Restaurants are likely to buy into a new model to increase capacity. —Carlos Moyses, VP Corporate & LATAM of iFood

Chris Knight

Chris Knight has worked as a journalist, marketing consultant and brand evangelist in Silicon Valley and San Francisco for 25 years. He’s the co-founder and creative director of Divino Group and Every Media Company.

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