Google's masterplan to foster LatAm tech startups in 2018
Google will invest in the development of its São Paulo-based startup fostering center to widen its footprint in founder communities in Latin America in 2018.
The company already has about a billion users across its product portfolio and believes the next billion will come from emerging countries rather than developed economies.
This, according to Campus São Paulo director André Barrence, was core to picking Brazil for Google's first tech startup hub in the Americas.
"Brazil was chosen because of its adoption of Google products and also due to its strategic importance to the company - we have identified great potential here in terms of the local startup ecosystem," Barrence said.
"We have over 98,000 members at present. By comparison, Campus London has about 89,000 members but it has been around for five years - which is interesting, given that London has a much larger addressable audience than us," he added.
"It is undeniable that there is a huge unmet demand for support from Brazilian and Latin entrepreneurs - we are here to help address that and create a bigger and healthier startup ecosystem."
AR + VR
Campus São Paulo was first announced in 2014, when Brazil was celebrating a booming economy while the rest of the world was dealing with a slowdown. Things changed considerably for Brazil since then, but according to Barrence, Google's strategy for the local startup community in the country hasn't.
"Campuses are long-term investments in the ecosystems where Google is based. So there will be better moments and others not so good, when the business context is more challenging," Barrence said.
"Despite the difficulties Brazil has been facing from an economic and political standpoint, the national startup ecosystem has never been stronger. It is a rebellion of sorts, founders are showing that it is still possible to thrive," he added.
A strategy shift
Before the launch of Campus São Paulo 16 months ago, more than 20,000 people were already signed up as members, according to the Google executive. Initially, the venue was predominantly sought by early-stage ventures needing business advice rather than developing their technology offerings.
With 200 open work spaces, the building currently has an average daily flow of 600 users. Barrence describes it as a "rather lively" Campus, but things have become less hectic, mainly due to a strategy shift. Today, early-stage ventures are catered for with a series monthly events and workshops while the acceleration program has changed its approach.
The first edition of the local acceleration initiative had 900 entries, says Barrence, and the caliber of the ventures that applied demonstrated that there was an opportunity to support later stage businesses. The company also decided that for the second edition of the program it would focus on later stage ventures and on technologies rather than specific sectors.
"We want to take startups to their next stage of development in terms of their product robustness and technology, as well as their business strategy," the executive said.
According to Barrence, Google is "patient for results and impatient for progress". This is closely related to the Objectives and Key Results (OKRs) methodology adopted in the residency program. "We want to create a sense of urgency for these startups and also help them innovate to reach goals that are not easy to accomplish."
"When focusing more on technology application in certain sectors rather than the other way round, we leapfrogged considerably as we managed to identify leading-edge technology development in Brazil," Barrence said.
"But more than accelerating 15 or so resident startups, our greatest achievement is to accelerate the Brazilian ecosystem as a whole. This is quite noticeable when we look at the amount of local initiatives coming up in the last 15 months," he added.
"Does that mean there is a correlation between cause and effect? No, but there is a strong correlation between creating an impact in the community and getting other initiatives to cater for needs that the Campus alone won't manage to meet."
Creating a regional hub
Extending the geographical reach of the Campus is a top priority for Barrence's team. Brazil is a country of continental dimensions, so Google is looking to partner with local organizations in other states to connect with the venue in some way.
"We face integration challenges locally and regionally. So we are expanding our partner network in places where the Campus is not physically present," Barrence said.
From a national standpoint, the expansion began by using spaces where Google is already present, so the city of Belo Horizonte in the state of Minas Gerais, now houses entrepreneurial programs too. Dubbed Founders Circle, the initiative takes place at the company's engineering center and delivers content as well as events for local ventures.
More tech inventions
The same expansion approach applies to Latin America. Campus São Paulo has a mission to serve other ecosystems nationwide but also across the region via a number of initiatives.
An example is the recent launch of the Campus Exchange Program, where fintech startups from six Latin countries took part in an immersion program with relevant local players, including Nubank and Guia Bolso, as well as ventures currently being accelerated by Google.
To facilitate further regional integration, the São Paulo venue has also set up collaborations with other Latin accelerators including Mexico-based Centraal and Argentine hub AreaTres, in addition to other organizations such as TechStars and Brazilian Startup Farm.
When comparing the level of startups seen in the São Paulo hub to other parts of the world where Google has its Campuses, Barrence pointed out that cities such as London and Tel Aviv are "a few steps ahead" of the Brazilian startup community.
"Entrepreneurs in those cities have more clarity about their businesses and are looking for funding as a means to expand and there is a considerable deal flow, whereas the Brazilian ecosystem is more about access to content, experts and mentoring rather than funding," Barrence said.
"Investors do come to the Campus and we have a great deal of events with angel networks. But I believe that focus on funding is the next step when we think of the maturity curve of the startup community here," he added.
Facing local challenges
Another feature of the São Paulo venue, says Barrence, is that startups are using emerging technologies such as machine learning and others to solve problems that are specific to Brazil, but that can be replicated in countries with similar challenges.
This motivated the company to add immersions in centers of excellence within its global network to the acceleration program. For example, it sent IDWall, a startup developing fraud detection systems with artificial intelligence to Tel Aviv to further develop its product. Other founders have also been to Silicon Valley with guidance of Google executives and partners to assist in aspects such as pitches to tech investors.
Despite all the resourcefulness and creativity of local entrepreneurs in creating solutions for the local environment, Brazilian ventures face all manner of practical challenges, many of them related to outdated regulations that hinder startup development.
"We still have a very imperfect set of tax, labor and legal regulations for companies that have high growth potential - and therefore risk," Barrence said. "So even though capital availability has increased in the last few years, more resources could be available if there was more security for investors."
Google has been lobbying alongside local organizations such as the National Startup Association and Brazil Angels, as well as global organizations such as Endeavor to bring awareness of startup needs to legislators, especially when it comes to financing and legal structuring.
"We help qualify the debate along with other actors in the ecosystem but the community and the society in general should do something about this - it is too important and the potential impact from not having a stance on the matter is too great," Barrence said.
Looking ahead
For the coming year, the main goal for Barrence and his team will be to further increase Campus São Paulo's influence in developing the local and regional startup community.
"We want to continue to demonstrate [to founders] that this proximity with us is valuable - even more so when we are talking about long-term goals," the executive said.
"We also want to have more Google mentors and experts getting closer to this community, getting them to understand the role our tools will play in their growth as well as providing more content for them to grow, which is particularly important in an early stage," he added.
Going forward, Barrence also believes that Campus São Paulo will continue to act as a catalyst of a movement of sorts, where more organizations and traditional companies looking to innovate begin to see the value of working with new ventures.
Does that mean there is room for more technology firms to offer their own startup fostering spaces - such as Facebook, who launched its own accelerator in São Paulo last year - to Brazilian companies?
"I think the local and regional startup community offer a lot of opportunities - so many that there is definitely space for everyone. If done correctly, these initiatives can help local entrepreneurs enormously," Barrence said.
"We have hundreds of people working here daily, but our business is not based on simply offering a coworking space. By chance we have that, but our business is about combining the best of Google's problem solving culture, the best of local and regional startups and, crucially, information," he added.
"Our role in this wider context is to organize information, make it accessible and useful to entrepreneurs as they develop their ideas. Our focus is knowledge - we do that very well and will continue to do that in future."