Brazilian public and private sector actors have announced the launch of a 240 million reais ($45 million) venture capital fund focused on early stage investments in companies active in the Internet of Things (IoT) and connectivity space.
Managed by Indicator Capital, the fund was created by the Brazilian Development Fund (BNDES) and Qualcomm Ventures following a tendering process in 2019 to find a company to structure and run the vehicle. The fund will support up to 30 startups in Series A rounds over the next 10 years and it expects to close 7 deals in 2021.
In addition to the two organizations leading the initiative, which made a joint investment of 85 million reais ($16 million), Brazilian bank Banco do Brasil and Telefônica Ventures, the VC arm of telecoms firm Vivo, have also joined the pool of backers. Multilaser and Lenovo have also contributed, as well as other backers.
According to Bruno Laskowsky, a director at BNDES, the successful fundraising process "demonstrates how the allocation of public resources can be leveraged through partnerships with private investors to promote strategic sectors for the country such as the IoT ecosystem."
First of its kind in Latin America, the fund had an initial target of 120 million reais ($22 million) and was highly sought-after, according to the supporting organizations. Despite closing with double the amount originally planned, the fund couldn't accommodate the demand and strategic investors that could help accelerate the formation of Brazil's IoT ecosystem were prioritized.
"[The fund will play] a leadership role in IoT in Latin America. We are dedicated to definitely placing Brazil on the global Internet of Things map, alongside leading countries in this technology", said Derek Bittar, a partner and cofounder at Indicator Capital.
Brazil's National IoT Plan was announced as one of the pillars of the country's Digital Transformation Strategy, created in March 2018. The strategy, delivered in June 2019, provides a mechanism for strengthening the national innovation ecosystem and development of IoT.
The four core verticals of Brazil's IoT plan are Smart Cities, Healthcare, Agribusiness and Manufacturing. The plan was preceded by a study, funded by BNDES and carried out by a consortium led by consulting firm McKinsey. According to the research, IoT-related businesses could bring up to $200 million to the Brazilian economy by 2025.