Tech Roundup, Jan. 24, 2020 | São Paulo aims at leading Brazil’s leap to industry 4.0

Tech Roundup Jan. 24, 2020 | São Paulo aims at leading Brazil's leap to industry 4.0 Photo: Metamorworks/Shutterstock

You’re reading The Brazilian Report‘s weekly tech roundup, a digest of the most important news in technology and innovation in Brazil. This week’s topics: The end of electric scooter rental in Brazil? São Paulo’s industry 4.0 plans taking shape. Brazilian startups attract record investments in 2019. And much more!

São Paulo’s industry 4.0 plans take shape

Straight from the World Economic Forum in Davos, Switzerland,

São Paulo Governor João Doria announced the first two companies to form part of the state&#8217;s Center for the 4th Industrial Revolution (Industry 4.0) set to take place in May of this year. The two chosen companies were cellulose firm Bracell and pharmaceutical corporation AstraZeneca.</p> <p><strong>Why it matters.</strong> The Center will be part of <a href="">CITI, a startup hub</a> connecting companies, research and education facilities in São Paulo. This is a flagship project for Mr. Doria—who needs more national projection for his aspirations to become a presidential candidate. If successful, CITI will totally revamp the area that is currently home to Ceagesp, São Paulo’s food storage center, opening up more room for real estate investments in the city’s high-priced and highly occupied West Zone.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p><strong>Industry 4.0.</strong> Brazil&#8217;s Center for Industry 4.0 will initially work with legislation and regulations to speed up the use of policies linked to data, the Internet of Things, robotics, AI, intelligent cities, and blockchain. The plan is to turn São Paulo into Brazil&#8217;s answer to Silicon Valley.</p> <p><strong>Future of the job market.</strong> Back in 2018, <a href="">we wrote</a> of the potential for investment in innovation to boost Brazil&#8217;s ailing industry and job market, with the sector&#8217;s productivity indexes tanking. While increased levels of automation and productivity are set to cause a significant boost to employment opportunities in the technology sector, the wider reality is that thousands of jobs will be made redundant, as production lines will contain more and more machines and fewer and fewer humans.</p> <hr class="wp-block-separator"/> <h2>Startups ditch scooter rental in 14 Brazilian cities</h2> <p>The urban Brazilian fad of 2019 appears to be fading fast, as electric scooters have been taken off the streets of 14 of the country&#8217;s cities this week, leaving leading services Yellow, Grin, and Rappi only operating in São Paulo, Rio de Janeiro, and Curitiba. This follows news of American scooter startup Lime packing up its operations in Brazil altogether, making it seem as if these nascent services are already raising their respective white flags in the country.</p> <p><strong>What happened?</strong> Both Lime, Rappi, and Grow—responsible for Yellow and Grin scooters—claimed their retreats in Brazil were down to &#8220;<a href="">operational adjustments</a>.&#8221; Critics of the services say the business model itself is unsustainable, with the vehicles not being sufficiently durable to withstand heavy usage on city streets, and the companies not making enough of an effort to collect damaged scooters or those abandoned in rivers, which has been a not-uncommon occurrence in the cities around the world where electric scooters are offered.</p> <p><strong>Passing fad.</strong> Electric scooters were <a href="">all the rage</a> in mid-2019, particularly in the financial district of São Paulo, where bankers could be seen zipping up and down expensive avenues on a regular basis, avoiding the need for paying for parking and (theoretically) increasing public transport use. São Paulo is one of the few cities where the scooters will still be available, but the long-term future of the services has now been cast into serious doubt.</p> <p><strong>Regulation.</strong> Electric scooter companies in Brazil have also undergone their fair share of regulatory headaches, with the vehicles being temporarily removed from the streets of São Paulo in May of last year, due to the startups&#8217; refusal to abide by local government requirements. Both São Paulo and Rio de Janeiro issued a list of rules demanding that the companies be responsible for collecting faulty equipment, providing safety headgear to users, and issuing monthly accident reports to the council.</p> <hr class="wp-block-separator"/> <h2>Brazilian startups attracted more investment than ever in 2019&nbsp;</h2> <p>Brazilian startups broke records for their volume of investments received in 2019, according to a study by innovation consultant Distrito. Last year, tech firms took in a total of USD 2.7 billion across 260 funding rounds, an 80-percent increase on 2018&#8217;s results.</p> <p><strong>Fintechs.</strong> In 2019, startups in the financial sector increased their foreign investment by a stunning 276 percent, attracting a total of USD 935 million and outstripping all other business sectors. Just under half of that figure went to Nubank, the digital bank that is already worth USD 10 billion, making it Latin America&#8217;s most valuable private tech company.</p> <p><strong>SoftBank.</strong> One of the major contributors to this record-setting figure was Japanese conglomerate <a href="">SoftBank Group</a>, which piled around half of the total investment in Brazil&#8217;s startup ecosystem last year (USD 1.3 billion), including funding for homegrown unicorns Loggi, Gympass, and Quinto Andar.</p> <p><strong>More to come?</strong> While SoftBank has admitted it is set to invest less in Brazil this year after hiccups with WeWork and Uber, Gustavo Gierun, cofounder of Distrito, believes the good results will continue throughout 2020. &#8220;The Brazilian market has developed more and there is liquidity on the global market … [Brazil&#8217;s startup ecosystem] has become more sophisticated over the years and attracted more and more foreign investors,&#8221; he told <em>Estadão</em>.</p> <hr class="wp-block-separator"/> <h2>Take note</h2> <p><strong>Serpro.</strong> Yesterday, a presidential decree signed by Jair Bolsonaro initiated the process to privatize Serpro—Brazil&#8217;s Federal Data Processing Service. <strong>The Brazilian Report</strong> subscribers, however, have already been aware of this development since December, in <a href="">our report</a> that highlights the risks to data privacy in the country.</p> <p><strong>Data breach.</strong> The public University of Campinas (Unicamp) has announced that its computer systems have suffered a cyberattack and that personal data is likely to have been breached. A statement from the institution says that &#8220;contingency measures are already in place&#8221; and that &#8220;for now,&#8221; users of the university&#8217;s system do not need to take any individual action. However, Unicamp said it is not clear on the extent of the data breach.</p> <p><strong>Banco do Brasil.</strong> One of Brazil&#8217;s major banks, Banco do Brasil is working towards striking up partnerships with and exploring equity investments in fintechs, as a bid to expand its plans for digitization and improve the service it offers to clients. Controlled by the government, Banco do Brasil is also attempting to attract a number of technology-based positions in its corporate structure, lamenting that the institution is currently not an attractive firm for young talents specializing in product development.</p> <p><strong>High infidelity.</strong> Dutch relationship app <a href="">Second Love</a>—designed for married individuals who are looking to have affairs—already has some 780,000 Brazilian users, according to its press office. What&#8217;s more, the app is in high season, as a study carried out by Second Love found that summer months are the peak times for Brazilians to pursue extramarital affairs, with a &#8220;demand&#8221; 45 percent greater than in the rest of the year.

Euan Marshall

Euan Marshall. Originally from Scotland, Euan Marshall is a journalist who ditched his kilt and bagpipes for a caipirinha and a football in 2011, when he traded Glasgow for São Paulo. Specializing in Brazilian soccer, politics and the connection between the two, he authored a comprehensive history of Brazilian soccer entitled “A to Zico: An Alphabet of Brazilian Football.”

Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Most recently, she worked as an Editor for Trading News, the information division from the TradersClub investor community.

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