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Tech Roundup, Aug. 23, 2019 | Brazil’s Silicon Valley
Gustavo Ribeiro . Aug 23, 2019
You’re reading The Brazilian Report‘s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: How Florianópolis became one of the most important tech hubs in Latin America, earning the nickname “Brazil’s Silicon Valley.” Brazilian hackers have become malware exporters. Brazilian science still resists. Happy reading!
How Florianópolis became one of the most important tech hubs in Brazil
The island city of Florianópolis, in Brazil’s South,
is known for its idyllic beaches and marvelous seafood. But in recent years, the city has also crafted its image as a major innovation hub, with 4,000 startups popping up since 2015. Now, Floripa (as the city is affectionately known) is home to 20 percent of Brazil’s startups—São Paulo leads the way on 28 percent.</p>
<p>In 2018 alone, the island’s startups raised BRL 6.7 billion in revenue—earning it the nickname “Brazil’s Silicon Valley.”</p>
<p>Recently, many major players, such as online-discount company Peixe Urbano, have decided to move their headquarters to Florianópolis. American firms are following the trend, such as app developer ArcTouch—whose clients include Audi, Yahoo!, Salesforce, and Adidas.</p>
<h4>What made Floripa Brazil’s Silicon Valley?</h4>
<p><strong>Education. </strong>Florianópolis is home to the Federal University of Santa Catarina (UFSC), a highly-rated institution which has developed numerous research partnerships with companies. However, the city also benefits from the overall high education levels of the state. Santa Catarina also has the highest levels of productivity in the country: companies earn, on average, BRL 100,000 per worker, way above the national average of BRL 72,000.</p>
<p><strong>Synergy.</strong> In places such as São Paulo, the startup ecosystem can quickly become a cut-throat environment. Not in Florianópolis, as digital marketing specialist Marta Buyolo <a href="https://medium.com/umblernews/florian%C3%B3polis-in-focus-because-the-island-has-become-an-important-tech-hub-c29d9eefb9e6">writes</a>. “Entrepreneurs in Floripa are willing to share and exchange knowledge with anyone who asks for it. In that sense, cooperation among professionals has created a network that has mostly helped the ecosystem grow, becoming an example to follow for many other hubs. A new mindset that in the end benefits everyone, but especially people on the island.”</p>
<p><strong>Investment.</strong> Founded in 1986, the Santa Catarina Tech Association (Acate) is one of Brazil’s main entities to foster entrepreneurship. It runs several projects to boost investment, including MIDITEC, considered by the 2018 UBI Global ranking as the world’s fifth-best incubator (and the best in Brazil).</p>
<h4>Startups in Florianópolis</h4>
<p>A recent report by Bradesco says that Brazil’s next unicorn (a company worth over USD 1 billion) might not come from São Paulo or Rio de Janeiro, but rather from Florianópolis. Here are the two main candidates:</p>
<p><strong>Neoway </strong>is a company that provides data analysis using artificial intelligence to boost marketing sales. One of its success stories is a case with Microsoft, which used Neoway’s software to identify and deal with software piracy.</p>
<p><strong>Resultados Digitais (RD)</strong> helps clients increase efficiency through its marketing platform. The company now has 13,000 clients—including 1,000 foreign companies. According to Bradesco, “its main markets outside of Brazil are Colombia and Mexico.” The bank also predicts a 70-percent bump in revenue in the short-term, citing a potential client pool of 1.6 million companies.</p>
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<h2>Brazilian hackers have become malware exporters</h2>
<p>For years, <a href="https://brazilian.report/power/2019/07/25/brazil-handle-cyber-security-issues/">Brazilian cybercriminals</a> depended on rudimentary tools, often imported from Eastern European hackers. Their code was easily decrypted and suppressed—but not anymore. Information security companies have alerted to made-in-Brazil malware which is now being exported to other countries. A not so glorious sign of Brazilian technological sophistication.</p>
<p>Detected by Avast, Guildma is a remote access tool (RAT) focused on hacking banking systems. After infecting computers, it remains undetected, waiting for the victim to open his/her banking app, in order to steal login information and sequester bank accounts for fraudulent transactions. At first, Guildma targeted only Brazilian banks, but it has recently been used to hijack accounts in 130 financial institutions across the globe—as well as 75 subscription services such as Netflix, Amazon Prime, and even Facebook.</p>
<p>Anti-virus company ESET has identified a trojan horse malware called Amavaldo—created in Brazil, and expanded to Mexico. According to ESET, it has similar traits to other Brazilian-made malware: they are targeted at Portuguese and Spanish-speaking users, and usually use the same coding language, Delphi. Also, their encrypted algorithms remain little known.</p>
<p>A recent study by British cybersecurity company Upstream showed that 10 percent of smartphones used in Brazil are infected with some sort of malware. That amounts to 23 million phones and an average of 15 infections per minute. Brazil is the leading country in infections for fraudulent mobile transactions. Per Upstream, 99.9 percent of infections are on Android-based phones. That’s because Google Play has millions of apps more than the Apple App Store, and the company is unable to verify every one.</p>
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<h2>Brazilian science resists. But still lags behind …</h2>
<p>The <a href="https://brazilian.report/society/2018/12/31/brazilian-science-forget/">Brazilian scientific community</a> has been hit hard by the crisis, with the federal government freezing grants, scholarships, and funding for universities. Still, the country has obtained its second-best result in the impact of science produced in 30 years. </p>
<p>This ranking crosses information about scientific research stored on the Web of Science. The platform measures how often papers are mentioned, quoted, consulted, and used as the basis for other academic and scientific works. This time, Brazil managed a score of 0.89, which is the best since 2016, but still below the international average of 1.</p>
<p>Brazil’s scientific struggles are not limited to a lack of funds. While the country occupies the 14th position in the amount of published scientific papers, their impact is reduced when compared to those coming from other countries. There were an average of 4.42 mentions to each Singaporian paper in 2016—more than double of Brazil’s level of 2.12.</p>
<p>While it is true that Brazil spends little on research and innovation (only 1.3 percent of its GDP), other countries are managing to do more with less. Argentina is a curious case. Argentinian papers managed to be more impactful (2.55 mentions per article or paper), in a country which allocates merely 0.6 percent of GDP to innovation. Mexico scored slightly worse than Brazil, but invests far less: 0.5 percent of GDP.</p>
<p>This shows that while more funding is definitely necessary, Brazil must invest in better qualification of its teachers, managing research and innovation budgets more efficiently, and setting better variables to measure academic success. The current model has proven not to be the best.</p>
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<h2>The image of Brazil’s entrepreneurs</h2>
<p>Distrito, a company that carries out innovation and entrepreneurship projects, held a survey among 100 founders of 42 Brazilian startups—including 99, Stone, contaAzul, and Rock Content. Here are the main findings:</p>
<ul><li>100 percent had at least a college diploma, usually from the highly-regarded University of São Paulo—and usually from an engineering school.</li><li>98 percent are men—and João is the most-common given name.</li><li>57 percent have a postgraduate degree</li><li>30 years and three months is their average age</li><li>36 years and five months is their average age when their companies became unicorns.</li><li>8.7 years is their average professional experience before founding their startups.</li></ul>
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<h2>AT&T-Time Warner</h2>
<p>Brazil’s telecommunications regulator Anatel has postponed its decision on the AT&T-Time Warner merger. A decision is expected to be made early in September. Current legislation forbids companies from owning simultaneous majority stakes in content producers and broadcasters. AT&T controls the Sky broadcasting group in Brazil, whereas Time Warner owns channels such as HBO, CNN, and Cartoon Network, among others.</p>
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<h2>Bosch in Brazil</h2>
<p>With 3.5 percent of its revenue in Latin America allocated to research and innovation, German engineering and technology company Bosch inaugurated in Curitiba its fifth global open space for innovation—the first in South America. The company hopes to foster the surge of new business models and technologies for products related to the Internet of Things. Bosch’s other innovation centers are in Chicago, Guadalajara, London, Stuttgart, and Shanghai.
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