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Controversies

Controversies are present in any startup ecosystem. These sensitivities are natural and are part of the maturing process of any community. Tackling these issues would hopefully lead to positive change for the community.

Government speed

  • Government’s inability to cope with fast-paced innovations is an issue raised by the startup community. The government’s regulations are inadvertently becoming obstacles to new products, services, and business paradigms. An interesting example would be Fairplace, a local startup that focused on peer to peer lending (similar to Zopa).  It was shut down because there's no clear regulation about peer to peer lending in Brazil.

Accelerators with no track record

  • Local Accelerators with no track record offer startups very unfriendly term sheets. These accelerators do not have a single big exit, even though they take around 15% equity for around $10k.

“pay it forward culture”

  • The “pay it forward culture” of Silicon Valley where an up and coming entrepreneur will work for an experienced entrepreneur to learn is not strong in Brazil.  The mentor-mentee relationship is not as present as there are very few experienced serial entrepreneurs that give back to the community. Many of the successful angel investors in Brazil are foreigners such as Fabrice Grinda or Florian Otto.

Consultants, not mentors

  • Startup mentors usually just want a piece of equity or a consulting gig. Since most of the successful founders do not become mentors or engage in the local startup community, there are many white collar consultants looking to take advantage from naive founders.

Open Source Legal Documents

  • Lack of templates or standards for company incorporation, legal documents and default ways to do business in startup world. Every deal is unique and that costs a lot of money for local entrepreneurs and VC's.  

More money more problems

  • The government is granting money to develop the local startup ecosystem. However, it continues to overtax startups (17% on revenue!) and is not moving fast enough to remove dependencies.

  • "If the government wants to help entrepreneurs, they shouldn't incentivize them with capital.  They should remove obstacles." @ericarcher