Innovating in crisis: will Brazil’s burgeoning tech startup scene rescue its economy?

China’s stock market crash has sent ricochets around the world, but in Latin America’s largest economy, Brazil, it has added damage to an already desperate situation.

Brazil has heavily depended on China as its main trading partner since 2009 – a lucrative relationship, involving exports of iron ore, crude oil and soy, that contributed significantly to the huge economic growth Brazil enjoyed between 2006 and 2010.

But China’s worrying financial climate is just the latest blow to a Brazilian government that has suffered intense criticism over the last year.

Having enjoyed a majority approval throughout her entire first term between 2010 and October 2014, the fortunes of Dilma Rousseff, Brazil’s first female president, began to reverse just a few weeks after her reelection.

On November 14, police arrested prominent politicians and businessmen in six Brazilian states in relation to “suspicious” contracts worth $22 billion at Petrobras, a state-owned energy corporation.

After bribery and other political corruption were alleged to have occurred when Rousseff was part of Petrobras’s board of directors between 2003 and 2010, millions of Brazilians called for her impeachment – and, on 15 March, took to the streets to protest the scandal, as well as Brazil’s biggest recession since the Great Depression.

Following years of growth thanks to a commodity boom, GDP contracted by 0.2% in the first quarter of 2015, with a decline of 1.5% expected for the full year. By July this year, unemployment had increased 56% year-on-year to 7.5% and Rousseff’s approval ratings had plunged to just 8%, making her Brazil’s least popular democratically elected president since a military dictatorship ended in 1985.

But amongst the political chaos and economic turmoil – and a subsequent lack in public funding – an emerging startup culture is embracing technology to help transform sectors like education, agriculture and healthcare.

In the days leading up to the latest protests on August 16 – staged in 200 cities across all of Brazil’s 26 states – enterprise software giant SAP invited a dozen international journalists to Sao Paulo to showcase how its technology and support is empowering a wave of startup companies to enact such change.

SAP’s Startup Focus programme, for example, is designed to help big data companies accelerate their development. When a startup joins the programme it receives free use of HANA, SAP’s in-memory data platform, to develop and deploy real-time applications. It also gets marketing and sales enablement support and opportunities to pitch SAP’s partners in the venture community.

SAP does not take equity from participating startups, but when they reach the go-to-market phase – of which 135 of the 1,800 companies in the programme are already at – it takes 25% of every product sold.

One of the startups in the programme that has already gone to market is Brabov, which develops solutions for prevision livestock. Agriculture is an important case study during Brazil’s current financial crisis because despite having the world’s largest beef cattle herd – a whopping 211 million – the country is failing to monetise it effectively.

To put it into perspective, the U.S. has half the cattle that Brazil does but generates double the revenue from its livestock: $44 billion, compared to just $23 billion.

Brazil’s failure to maximise the earning potential of its cattle can be attributed to a lack of productivity. Almost all of its 300,000 farms manage their livestock manually with either notebooks or basic Excel spreadsheets, a hugely time-consuming and inefficient process.

When Rodrigo Castihus wanted to carry on the family cattle farming business without losing money, he realised the whole process could be better managed through smartphones and tablets – and he turned to SAP’s StartUp Focus programme for help.

The result was a mobile app that allows farmers to manage cattle from anywhere with advanced insights available through a simple interface. A weight prediction algorithm also allows app users to identify low-performing animals in advance and predict when livestock will reach target sale weight.

With 4,000 users, there is a long way to go before Brazil’s 300,000 cattle farms see the value of bringing technology to livestock, but if and when they do it is sure to boost the industry’s contribution to the national economy.

Narrowing the education gap

SAP has also sought to make a mark in Brazil’s wildly disparate education sector through SAP Exponentes, a CSR programme that each year provides free technology and support to five companies helping to enhance the lives of Brazilian people.

One of the companies inducted into the programme this year was Geekie, a social business seeking to transform the way Brazilian children are educated and narrow the gap between rich and poor.

In Brazil, just half of students complete high school – and out of those who do finish, only 10% achieve the minimum required levels in mathematics and Portuguese.

The only way for kids from state schools to enter university in Brazil is to take the Vestibular entry exam, which spans several days with different disciplines tested. Brazilian universities look at the points achieved in this exam when selecting students and granting scholarships and other financing.

Geekie’s technology allows students to take a mock test, which the company analyses to predict what grades they will achieve and the universities they will be able to get into. It then devises a personalised study plan to help the student get into the university they want.

“Personalised learning is an old concept,” Geekie’s CEO Claudio Sassaki told Information Age, “but being able to do it on a massive scale is new.

“In 200 years, very little has changed in teaching. We want to use technology to make content adapt to the way each student learns best, rather than the other way around.”

In the last 12 month, Geekie’s technology has impacted 3.5 million students in terms of access to the platform. It has transformed something that would normally take a teacher ten months – devising paper assessments, giving feedback and creating a study plan – into an instant process.

The more Geekie learns about the student, the more personalised the study plan becomes – and it is able to analyse a student’s learning history to identify the gaps that must be filled before they can move on to a more advanced subject.

The most important thing about Geekie, however, is its monetisation model. Sassaki quickly realised that state schools couldn’t afford the technology, and the inequality gap would further widen if he only sold to private schools. So for every one product sold to a private school, Geekie offers it to a state school for free. Every student in the last year of high school also has free access to the technology for the admissions exam.

This year, the technology has reached 415,000 students – and last year there were 3 million free users. In an analysis of the technology’s impact, there was a 30% improvement in grades with students that used the platform compared to those who didn’t.

There is no better illustration of Brazil’s burgeoning startup mentality for technology-driven transformation than the public school in Brazil’s largest favela, Rocinha, that uses Geekie’s technology as a transmitter of content, while teachers are better utilised as facilitators to that delivery of education.

“That’s where I see education going,” said Sassaki, “and who would imagine it would happen in a community like Rocinha.”

In a country with vast disparity between rich and poor, Brazil’s grassroots embrace of technology to accelerate growth across stale industries and drive social change could be the productivity boost its economy needs to prosper again.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...