Last week, Brazilian newspaper Valor Econômico ran a large feature with the headline: “IT entrepreneurs are more educated than average.” However, at IT Decisions, we believe the truth behind the numbers is quite different: people starting technology businesses in Brazil are simply richer.
The article quotes a piece of research commissioned by Grupo RBS to M. Sense Pesquisa e Inteligência de Mercado, which surveyed 770 digital entrepreneurs and found the following about Brazilians IT start-ups:
- The majority of these companies are founded by wealthy people. Some 86% belong to the so-called Classes A and B – basically the top of the social pyramid in Brazil where the richest are the A bracket and E represent the poorest;
- There are not many female entrepreneurs in tech – 75% of these companies are led by men;
- About 61% of IT start-ups in Brazil were founded by people between 20 and 30 years old;
- Most have studied at university level (67% have a bachelors degree and 21% have masters degrees).
The article claims that these characteristics set IT entrepreneurs apart from the average entrepreneur in Brazil. Notably, people behind start-ups in other sectors are older (between 25 to 44 years old) and poorer (the classes A and B accounted for 19.2% of the total entrepreneurs in Brazil).
The justification for the fact that people starting IT companies are younger is due to the fact that technology is more ubiquitous in these people’s lives.
Valor’s article also mentions that 62% of the IT start-ups in Brazil are based in São Paulo and, because the South East of the country concentrates more wealth, people with deeper pockets are more likely to see opportunities in tech-related businesses.
The piece goes on to list case studies of tech entrepreneurs in Brazil, most of whom were educated in the top universities in Brazil and used their own resources to build their businesses before receiving millions in funding from trade investors and venture capital firms.
A case in point is Fernando Okuma, founder of local business network Kekanto. A University of Pennsylvania graduate, Okuma worked for JP Morgan and McKinsey before coming back to Brazil to study law at University of São Paulo (one of the most sought-after law schools in the country), where he met his co-founders.
IT Decisions says
It’s a shame that Valor chose to focus on education as the key to becoming a technology entrepreneur in Brazil. Ask most entrepreneurs if they really learned the skills that helped them succeed from a classroom. Some of the most successful entrepreneurs in the world – such as Steve Jobs or Sir Richard Branson – never even finished a university education anyway.
The really interesting result of the published research is that technology entrepreneurs are mostly male, mostly young, and mostly from the highest social classes. Going to great universities can open doors and give access to a better network of investors, but the potential entrepreneur needs plenty of cash to attend such a school in the first place.
The Brasil Maior program has promised 3.5 million government-funded scholarships, including the funding of study and research at foreign universities. This will naturally expand the network of those Brazilians lucky enough to benefit from a scholarship, but will it be enough to create new business opportunities across all social classes?
Genuine innovation and world-beating IT will not come from rich kids creating companies for the purpose of getting richer. We need ideas to spring from all corners of the nation if Brazil is to stay ahead of the international IT community. Good ideas and seed funding are at the heart of this debate.
We should be talking about how to create both at all levels of society not suggesting that a good degree from a good school is the simple answer – how about getting ApexBrasil to create a government-backed VC fund open to any applicant with a good idea?
Photo by Nate Bolt licensed under Creative Commons
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You are absolutely right. Not only that, I would argue that the availability of venture capital is also tied to social class (casts?), given that it operates as a mafia-like network that tends to accept only people like their own. Beyond that, I believe this is a worldwide problem — It is simply that in Brazil the social inequality is more prevalent.
In regards to education: For me, access to education is more than skills. It’s also about the social network formed during school and after graduation. Which also validates your point: In Brazil, schools like USP are in practice available only to rich kids, so only they have access to the network that enables and propels their ventures. In “developed” countries (the US, UK, etc…) I believe poor / mid-class kids have a little bit more chances to go to ivy-leagues and thus to get accepted into the mafia-like network.
This is why I think education plays a role on the poor entrepreneurship rates in Brazil: http://itdecs.com/2012/02/can-brazil-drive-innovation/
This is a very interesting read. I have been trained under the American way of entrepreneurship, and as a Mexican-born national, it was a different concept. In the region of the country where I have lived/worked (MIchigan), it is very clear that entitlement is not something that is promoted. In fact, many members of the already established rich class, and there are many, here, tend to hide their name on investments in a variety of business ventures.
That said, VC funding EVERYWHERE is tied to how close you are to VCs themselves, making a tight network of investors who tend to already come from rich backgrounds. The disparity amongst those that receive capital from any source is still great in this country, but not heavily based on socio-economic so much. It depends on education level and understanding of how the system work, leveraging networks.
Still, there is a huge divide amongst cultural groups. White entrepreneurs tend to lead most ventures. In Michigan, only 1.1 percent of firms were Hispanic owned, and the state carries a strong Hispanic population that keeps growing.
Access to education, capital networks and support, is key to develop entrepreneurial ecosystems. If you read this, go to our website after April 28, 2012, to read our perspective on entrepreneurial culture as represented in the Midwest as a model for future developments in other regions. (www.gvsu.edu/cei)