Caroline Kahl

Patience and will power

You are a foreigner and would like to open up a company in Brazil?
Do not mean to discourage you, but you need to be prepared and a have a lot of patience. A recent study by the Brazilian Ministry for Development proves what us entrepreneurs already went through and what the World Bank published in 2003/2004 putting Brazil at that time on the position of the 6th worst country in the world. Now we are on the 83rd position, up 67 positions.
Founding a company in Brazil takes an average of 40 days. São Paulo breaking the record with 77 days and Rio de Janeiro with 65. By the way, the indicated costs are misleading. Calculate at least with R$ 2.500. Besides the basic administrative fees you can´t do anything without an accountant for the whole registry process in so many public organs and without a lawyer who elaborates your articles of incorporation.
But let me tell you, that is the statistics, my first company foundation lasted 3 months, the second company took only 10 days until it was running.
How? Jeitinho de gringa ;-)

Brasil Suites

Soon from now, Rio will have what is missing here, a place you can recommend to your friends where to stay dans la cité merveilleuse and which will be highlighted in Wallpaper. Just spotted a concept of what I want here, but you´ll never guess where.....in Athens/Greece!
Standing ovations, incl the music on their site  (J: did you hear me????)
It is good to feel at home, welcome to the Brasil kind of lifestyle!

Digital Cities in Brazil

Porto Digital in Recife may have to confront competition if Dário Berger, mayor of Florianópolis (state of Santa Catarina), realises what he plans: a Brazilian Silicon Valey in his city. Nowadays 300 IT- and software development companies generate revenues of about R$ 400 million p.a. and wants more.

Please dear politicians in Rio, we have a port, a beautiful centro which needs revitalization, Lula gave us the tax incentive to attract foreign VC funds to invest into tech companies, what we miss is that YOU, HERE give us the support and we will make Rio the center of technology in Brazil!

Porto Digital is located on the historical ground of the Old Recife Quarter and adds an urban redevelopment component to the project by recovering the city’s old harbor and port area. Several buildings have been renovated with an area of allover 22,000 square meters meanwhile restored.
The neighborhood’s current infrastructure is suited to host ITC companies thanks to its excellent road network and banking services, as well as the fact of being only 7 kilometers away from the largest airport in the northeastern region. As a further feature, 7 kilometers of optic fiber cable and 26 kilometers of duct have been installed, making it one of the country’s most modern urban areas in terms of communication.
In adition to the redevelopment of urban and technology infrastructure, there are appropriate sectoral policies in place and a full set of tools to complement Porto Digital’s structuring projects. 
Among them are the Investment and Promotion Fund, the Human Capital Fund with a focus on vocational training, and the Guaranty Fund offering guarantees of up to 70% for loans by public banks to software companies. The Municipal Act 16.731/01 also benefits companies through financial incentives allowing for a reduction of up to 60% of the local sales tax on services (ISS). 
In the four years since it started operations, Porto Digital was able to transfer 1,600 jobs to this city area and to attract 10 companies from other regions in Brazil, as well as four multinational corporations, in addition to hosting two technology centers.

Global giants like Microsoft, Oracle, Nokia, IBM e a Motorola, amongst others, are clients of Porto Digital companies. Their research, design and technology centers develop products and applications  for the world.

Brazil is the star of the (investment) market

A lot is happening in Brazil this year of elections, speaking about who will become President of this country, not speaking about Schumacher against Ayrton Senna (an enquete on Schumacher´s site in terms of popularity of the two, which was "invaded" by Brazilians after the news came out here, Orkut style).
This year´s elections probably won´t have such an impact on worldwide financial markets as in 2002 when Lula was running for president and the world´s financial markets held their breath about the economic and financial impact, Lula can prove a track record now.
Brazil's currency rose to a five- year high and bonds jumped, pushing benchmark yields to a record low, after the government began to buy back debt it sold to international investors. The buyback is helping strengthen the currency because it lowers the country's external debt, reducing the government's need to buy U.S. dollars in years ahead, said Gray Newman, chief Latin America economist at Morgan Stanley. Brazil has also begun to turbo-charge its debt management efforts by buying back up to $20bn of short term foreign currency debt and Brady bonds. And it paid back FMI loans before the deadline. Only that a stronger local currency implies a threat for the competitiveness of the export sector Brazil depends upon so much. But if foreign investors invest into public bonds the infrastructure will benefit from that and so does the export segment. The government estimates that thanks to the tax incentive a possible foreign investment of about R$ 75 billion could be attracted in 4 years for projects in energy, transports, logistics and telecommunications.
The government is discussing to cut taxes for overseas investors,the 15% withholding tax foreign investors have to pay when investing into the country's domestic government bonds. Currently foreign investments account for aproximately R$ 5 bilhões (0,5%) of those bonds.
And those foreign investments may be exempt from CPMF tax, incl. for IPOs.
And even more important (reading that out loud to my bsuiness partners Fabian and John): tax incentives to be expected for venture capital funds which invest into IT companies ;-)
We, if acting as exporters, may be even having finally in Brazil a bank account in USD which up to date was imposible.
All measures taken together, the buybacks and tax cuts will help improve Brazil's credit rating and will attract foreign investors.

But Lula, Palocci: sorry to say that, if the spread (around 8,1%) and the Selic (Leitzins) maintain as high as their are, I need foreign investors, cause I will never be able to pay the local interest rates my Braz. bank charges me. Never ever will I accept those astronomical interest rates for bank loans if foreign investors will charge me less for a ROI. That trade-off I calculate well and you loose. Brazilian banks waste their money on governamental loans which makes money so scarce and oblige me to pay interest rates per month what a German bank charges me per year? Forget it. Public defecit spending accounting for as much as 8,13% of the GDP, that is absurde!!!
Dear Brazil, you better cut deficit spending, the private sector needs the money more than you do do push economy (prayers of an entrepreneur in Brazil who recognises its potential and believes that "Brasil vai ser um país do futuro E DO PRESENTE!").

Spectacular Growth Rates..

...in many segments of the Brazilian market, especially in Mobile.
Mobile Operator OI just announced that its customer base increased by 50% in 2005 to a total of 10,3 million clients. Oi is part of fixed line operator Telemar and according to spokesmen the growth rate is due to cross marketing effects. Oi was one of the first mobile operators to run on GSM technology and has a market share of 11,99% , 4th place in the ranking after Vivo (34,54%), TIM (23,42% ), Claro (21,64% ) in Brazil according to Dec 05 figures. GSM technology in Brazil currently accounts for about 52%, leaving behing CDMA (28%) and TDMA (20%). Something to bare in mind though about this country: from more then 87 million cellphones and a growth rate of 31% in comparison to Dec 04, 80% of Brazilian cellphones are pre-paid. (Source: Anatel, Dec 05 figures)

Empresários da Areia

Browsing through the newspaper on Sunday reveals some interesting stories and numbers, fiscal deficit on the one page and on the other Verão 2006: 400 barraqueiros and an average of 200.000 people generate some revenues of R$ 50 million per month between the beaches of Leblon and Leme, with products from Agua de coco - Zen Massage. Of course prices differ for locals or tourists ;-)
But please pay a little more for the candy from the Capitães da Areia...

Skype and Google fund Fon

Fon just raised $21.7 million from Google, Skype, and Sequoia Capital. The cash infusion has been led by Index Ventures, the same company that also backed Skype. More.

Mobilefest Brazil

Mobilefest - The Internation Festival of Mobile Creativity in Brazil will happen in September, 2006 in São Paulo, Brazil.
It is the 1st Brazilian Festival of Mobile Art, based on the sociological implications that mobile phones and mobile technologies have been promoting in our culture.The  agenda is composed by two days of cultural and technical activities. MOBILEFEST will include an international symposium, workshops and recognition awarding of the best works and mobile applications developed by Brazilians.

Brief scenery of the telecommunications in Brazil:
Country size: 8.511.996 Km2
Population: 185,1 million inhabitants
Mobile covering: 163,7 million
Number of mobile lines: 82.351.644
Pre-paid: 80,85%
Pos-paid: 19,15%
Lines activated in November of 2005: 1.111.914
Mobile density: 44,55%
Growth in 2005: 34,58%
Number of Operators: 8
Technologies: GSM (49,83) CDMA (28,22%) TDMA (21,78)
SMS 2005: 7,5 billion messages *
MMS 2005: 10 million messages *
Homes with Microcomputer: 16,3%
Computers with Internet access: 12,2%
Television Covering: 90,3%
Electric illumination: 96,8%

Google and Sugar

Guess who was spotted on Sunday in São Paulo coming straight from Davos: Senhores Google!
Guess whom they visited (besides their Brazilian subsidiaries): Cosan, one of Brazil´s leading sugar and alcohol plants/manufacturers.
Not the first foreigners who show an interest in this market with such spectacular growth rates. Brazil is one of the top suppliers of the world.
Guess what happens if one day the EU stops subsidising its sugar industry and Brazilian sugar enters that market? Brazil expects to conquer 40% of that piece of the sugar-pie. And let us not forget the rising demand for alcohol as alternative fuel, here and abroad. Brazil's carmakers sold more vehicles adapted to run on alcohol last year than conventional petrol-driven models.

But experiences showed: it is not hard to identify and cooperate with suppliers here in Brazil, identifying trustworthy and serious sellers abroad is much more difficult. But propbably as challenging as any market which involves so much $$$.

O Maior Som da Cidade

Do not miss the Motorola Brazil promotion to win a MotoMix 05 CD!