In the past five years, Brazil has seen a startup boom.
The country’s top startups have traditionally been São Paulo and Belo Horizonte, but now a new wave of cities are building their own thriving local startup ecosystems, including Recife with Porto Digital Hub and Florianópolis with Acate. More recently, a “Black Silicon Valley” is taking shape in Salvador da Bahia.
While finance and media tend to focus on São Paulo and Rio de Janeiro, Salvador, a city of three million people in the state of Bahia, is considered one of the cultural capitals of Brazil.
With 84% Afro-Brazilian population, Africa has deep, rich and visible roots in the city’s history, music, cuisine and culture. The state of Bahia is almost the size of France and has 15 million inhabitants. Bahia’s creative legacy is pretty clear as almost all of Brazil’s major cultural legacies have their roots here, from samba and capoeira to various regional delicacies.
Many people are unaware that Brazil has the largest black population in any country outside of Africa. Like their colleagues in the United States and across America, Afro-Brazilians have long fought for socio-economic justice. As with their colleagues in the US, Brazil’s black founders have less access to capital.
According to research by Professor Marcelo Paixão of the Inter-American Development Bank, Afro-Brazilians are three times more likely to withhold credit than their white counterparts. Afro-Brazilians also have more than double the poverty rate of white Brazilians, and only a handful of Afro-Brazilians have held legislative positions, despite making up more than 50% of the population. Not to mention, they make up less than 5% of the top tier of the top 500 companies. Compared to countries like the United States or the United Kingdom, the racist funding gap is even greater, as more than 50% of the Brazilian population is classified as Afro-Brazilian.
Bahia could be an epicenter of innovation in Latin America
Salvador (Bahia’s capital) is the natural birthplace of Brazil’s Black Silicon Valley, which revolves primarily around a local ecosystem center, Vale do Dendê.
Vale do Dendê coordinates with local startups, investors and government agencies to support entrepreneurship and innovation, and runs startups acceleration programs that specifically focus on helping Afro-Brazilian founders. The Vale do Dendê Accelerator organization has already been in the spotlight on international and national publications as it has done innovative work to bring startup and tech education from the mainstream to traditionally underserved communities.
In almost three years, the Accelerator has directly supported 90 companies that are cross-industry and have a high level of representation in the creative and social impact sectors. Almost all companies have achieved double-digit growth and various companies have raised additional funding or business support. One of the first portfolio companies, TrazFavela, a delivery app that focuses on connecting customers and goods from traditionally marginalized communities, was supported by the Accelerator in 2019. Despite the lockdown, business grew 230% between March and May after the incubation and recently signed an agreement for further support and investment from Google Brasil.
There is clear recognition of the business case for Afro-Brazilian companies. Another company that was initially supported by mentoring from Vale do Dendê is Diaspora Black (which focuses on black culture in the tourism sector). It was powered by Facebook Brasil and grew 770% in 2020.
The same goes for AfroSaúde, a health technology company focusing on low-income communities with a new service to prevent COVID-19 in favelas (urban slums which, by the way, have a high black representation). The app now has more than 1,000 black health professionals on its platform creating jobs while tackling a health crisis that has been hugely racialized.
We are on the verge of a renaissance here in Bahia
Despite the challenging economic situation in Brazil, large national and global companies and investors are taking note of this startup boom. The large IT company Qintess has come on board as the main sponsor to make Salvador the leading black tech hub in Latin America.
The company announced an investment of around 10 million reais (nearly $ 2 million) over the next five years in black startups, including a collaboration with Vale do Dendê to train around 2,000 people in technology and more than 500 startups under its leadership by Black founders. Also in September Google With support from Vale do Dendê, a 5 million reais (around USD 1 million) Black Founders Fund was launched to strengthen the Afro-Brazilian startup ecosystem.
There is no doubt that the new wave of innovation will come from emerging economies, and the African diaspora can play an important role. With the world’s largest African diaspora population in the hemisphere, Brazil can lead the way in this regard. Vale do Dendê is committed to building partnerships to make Brazil and Latin America a more representative startup and creative economy ecosystem.