Setembro, 2007 •Pannel 3 – Entrepreneurship and opportunities brought by Open Innovation •Open Innovation Seminar 2008 – Allagi Cláudio V. Furtado GVCepe Mesa 3 – Empreendedorismo e oportunidades trazidas pelo Open Innovation •16 de junho de 2008 – São Paulo/SP
Apresentação do Prof. Cláudio Furtado, diretor do GVCepe, no Open Innovation Seminar 2008
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Setembro, 2007
•Pannel 3 – Entrepreneurship and opportunities brought by Open Innovation
•Open Innovation Seminar 2008 – Allagi
Cláudio V. Furtado GVCepe
Mesa 3 – Empreendedorismo e oportunidades trazidas pelo Open Innovation
•16 de junho de 2008 – São Paulo/SP
São Paulo – March, 2008
An overview of the PE/VC market in BrazilSize and structure
Cláudio V. Furtado
Director - GVcepe
Setembro, 2007Disclaimer
All information regarding the Brazilian PE/VC market was based on a survey of the 89 PE/VC firms
with offices in Brazil, including PIPEs.
The survey was concluded in July 31 of 2007 with a 100% response rate.
The categorization of management firms as PE, VC and PIPE organizations was made based on a
self-description of the management firms, as well as an analysis of existing portfolio companies
reported by the firms.
Before completing the questionnaire, respondents were asked to explicitly certify the truthfulness of
information.
Setembro, 2007GVcepe Overview
Founding Members Sponsors
First PE/VC research center in Brazil
Supported the 1st broad study about the Brazilian PE/VC industry (2005 Census)
2 areas of work
Research: 2005 Census, Industry Guide, Case Studies, Support to Master’s Candidates Dissertations
Education: Diploma Program, Forums, Seminars, Workshops, Business Plan Competition, Lectures
Partnerships with international universities and research centers
Support to international researchers interested in the Brazilian PE/VC industry
Setembro, 2007Industry overview – 2nd cycle
Overall Figures – July 2007
USD 16.7 bn total commitments
89 fund managers
153 funds
117 offices in 13 cities
984 professionals (357 partners/managers)
404 portfolio companies
194 investments (2004 to 1H/2007)
28 IPOs (2004 to 1H/2007)
BRL 16.2 bn raised
Funds
Portfolio
Companies
FUNDS
MANAGERS
•Capital •Returns
Capital and
Value Creation
Equity
Stakes
Investors
Setembro, 2007Unprecedented investor interest
2,99x
Source: 2007: GVcepe mid-year survey. 1999-2004: GVcepe industry census
Capital commitments in the industry
3,714,95 5,02 4,7 4,79
5,58
16,72
0
2
4
6
8
10
12
14
16
18
1999 2000 2001 2002 2003 2004 2005 2006 1H07
US
$ b
n
.
3x
PE/VC funds raised US$ 11.1 bn since 2005
US$ 6.2 bn raised by pre-2005 firms and US$ 4.9 bn by new entrants
Equivalent to 20% of total VC commitments in the US for 2005/2006
200% increase in 2.5 years
Setembro, 2007New players in the field
33 new management firms, mostly local, entered the industry in the 2005- July 2007 period
20 management firms have more than 10 years of experience (a complete investment cycle)
Diversified investment strategies
Entering firms
•pioneers
•privatizers
ITC and industry consolidators
Buyout and seed investors
Source: 2007: GVcepe mid-year survey. 1999-2004: GVcepe industry census
Setembro, 2007Big in Brazil
10 largest Private Equity
Firm State TeamDate of
inception
Funds
managed
Portfolio
companies
Commited
capital (US$
bn)
1. GP Investments SP 56 1993 6 11 $1.85
2. Advent International SP 9 1997 4 5 $1.59
3. UBS Pactual RJ 22 1997 4 11* $1.50
4. BNDESPar PE RJ n/a 1982 1 5 $1.30
5. Gávea Investimentos RJ 15 2006 2 9 $1.07
6. AIG Private Equity SP 9 2000 4 4 $0.80
7. Pátria Investimentos SP 39 1994 5 6 $0.70
8. Actis Capital SP 6 2007 2 0 $0.50
9. Tarpon Investment SP 14 2005 1 2 $0.50
10. ABN AMRO Real SP 6 1999 2 3 $0.45
*Based on CVM data
5 managers in the US$ 1 bn club
10 largest fund managers concentrate 61.4% of all capital
56 companies in their portfolio
Source: 2007 - GVcepe mid-year survey.
Setembro, 2007Big in Brazil
10 largest Venture Capital
Firm State TeamDate of
inception
Funds
managed
Portfolio
companies
Commited
capital
(US$ mn)
1. Votorantim Novos Negócios SP 17 2000 1 6 $300
2. Ascet Investimentos SP 7 2000 1 4 $150
3. BNDESPar VC RJ 8 1982 1 33 $123
4. FIR Capital Partners MG 32 1999 3 15 $87
5. DGF Investimentos SP 15 2001 2 11 $63
6. Jardim Botânico Partners RJ 13 2003 2 6 $60
7. Intel Capital Corporation SP 5 1999 2 7 $57*
8. Rio Bravo Investimentos SP 10 2000 6 20 $50
9. CRP Cia de Participações RS 10 1981 5 18 $49
10. Franchising Ventures SP 7 2007 1 6 $40
* Estimate based on press information released by Intel
10 largest VCs manage almost US$ 1.0 bn
126 companies in their portfolio
Only 1 among 10 of the largest VCs started after 2003
Source: 2007 - GVcepe mid-year survey.
Setembro, 2007Big in Brazil
10 largest Seed Capital
Firm State TeamDate of
inception
Funds
managed
Portfolio
companies
Commited
capital
(US$ mn)
1. Verticals Capital RJ 21 1997 2 1 $140
2. Jardim Botânico Partners RJ 13 2003 2 6 $60
3. Fundo Criatec RJ 22 2007 1 0 $40
4. Semeia Brasil SP 7 2005 1 0 $30
5. Mifactory SP 4 2002 1 2 $20
6. Invest Tech SP 16 2003 1 4 $20
7. Monashees Capital SP 5 2006 1 3 $12
8. Ace RJ 13 2005 1 4 $10
9. GC Capital SP 4 2007 1 1 $10
10. Confrapar MG 8 2005 2 1 $9
* Includes fund managers that also invest in Venture Capital
10 largest manage less than US$ 0.5 bn
20 companies in their portfolio
6 of 10 started in the past 3 years or less
Source: 2007 - GVcepe mid-year survey.
Setembro, 2007A sustainable trend on strong country fundamentals
Main factors
Economicgrowth & stability
Tax
Reform
Declininginterest rates
Privatepension plans- consolidation
Newregulatoryframework
Govt. Programs
InnovationCompetitiveness
Participationof local
institutionalinvestors
Capital marketdevelopment
Ability to complete theinvestment
cycle
Active IPO market
Experiencedmanagers
PE/VC great successstories
Demographicshifts
(education & consumption
Technologicalleadership
•MACROECONOMIC
•INSTITUTIONAL
•SOCIAL & TECHNOLOGICAL
FINANCIAL &
PE/VC MARKETS
Highlyentrepreneurial
population
Infrastructuredemand
Floating exchange rate
Setembro, 2007A sustainable trend on strong country fundamentals
Main factors
Demographic shifts (education & consumption)
Substantial decrease in the illiterate in the past years, but there’s still a long road ahead
Investment in overall education is 6% of the GDP (Brazil: 10 thousand new PhDs per year)
Micro-credit initiatives expanded the low/middle classes consumption
The decrease in the interest rates and inflation boosted the economic growth
Technological leadership
Ethanol leading edge market and technology
Petrobras’ deep water technology increased the Brazilian oil & gas reserves
2% of the world scientific production (Could Seed/VC Capital play a key role on this improvement?)
73% of scientists in the universities vs. 11% in the companies (US: inverse relation)
Infrastructure demand
Privatization wave in the end of the 90’s
PPPs (Public-Private Partnership) Law approved
Logistics, Transportation and Energy Generation needed to support the economic growth
Buyout funds and Strategic players shall have an important participation in the next steps
Setembro, 2007A sustainable trend on strong country fundamentals
Main factors – Highly entrepreneurial population
The improvement and spread of entrepreneurial and innovation skills in the Brazilian population is a
requirements for sustainable growth
GVcepe, supported by its academic and corporate partners, is well positioned to continue developing
and improving innovation, venture capital and entrepreneurial capabilities in Brazil
Partnerships
Partnerships
Case Studies
Education and Research
Setembro, 2007A sustainable trend on strong country fundamentals
Main factors – Highly entrepreneurial population
13.5 million of entrepreneurs in Brazil (20.7 in the US; 2.2 Japan and 2.5 in Germany)
Intel+UC Berkeley winner of 1999; IPO in 2004 (US$ 60 million).
Winner of GV-Intel and 3rd place in Intel+UC Berkeley in 2007; FINEP funding (R$0.75 mn).
Industrial Valves. Founded in 1987; Several VC rounds; IPO in 2006 (US$ 494 mn)..
EPR Software. Founded in 1983 (Microsiga); IPO in 2006 (US$ 436 mn).
Fiscal Printers. Originated from a Master’s Dissertation in 1989; IPO in 2007 (R$ 407 mn).
Biotech. Founded in 2002 by 5 researchers of the genome map project backed by a VC.
Website. Founded by 4 undergrad students in 1999; Three VC rounds. BUSCAPÉ
Founded by 2 grad students in 1998; Angel investment followed by VC round; IPO in 2004.