Land of unicorns and fintech empire: this is São Paulo, the largest innovation ecosystem in Latin America

The hottest innovation hub in Brazil and the entire region has a strong unicorn presence, a powerful fintech sector and record startup funding figures. The cosmopolitan vibe, the size of the domestic market and the public and private support networks also drive entrepreneurship in São Paulo, a well-established ecosystem that continues to grow.

Known as the “terra da garoa” (“land of drizzle”) for its unpredictable weather and dramatic swings in temperature, the capricious nature of São Paulo’s climate belies the city’s thriving innovation ecosystem: stable, fast-growing and firmly established as the largest hub for innovative entrepreneurship in Brazil and all of Latin America, coming in 16th in the Startup Blink global ranking. São Paulo’s entrepreneurial ecosystem is valued at US$108 billion. In comparison, the one in Mexico City (the second largest in Latin America) is valued at $22 billion, according to Startup Genome.

São Paulo is also home to 12 of the 17 current Brazilian unicorns (companies valued over $1 billion before going public In 2021 alone, two Brazilian unicorns took the next step: neobank Nubank and e-commerce platform VTEX were successful IPOs

Beyond successful startups, access to capital is one of the city’s strengths: Brazilian startups raised a record $9.43 billion in 2021, 165.63% more than in 2020.


São Paulo, the winning fintech horse

The Startup Ecosystem Report 2022 ranks São Paulo 4th in the global fintech ranking. Companies in this sector are dominating the city’s startup scene, with a total of 166 based in São Paulo. They also captured more than a third of the total investment in 2021. It is also the sector that raised the most funding in the first half of 2022, although Brazilian startups are starting to see a drop in investments.

For Gabriel Pereira, expert in ‘open banking’ for Brazilian startup TruePay, the Fintech sector has a higher level of maturity than others in São Paulo, making it better prepared to face potential economic setbacks. “Our financial ecosystem, our banks and our infrastructure are a model for many places in the world. We have pioneering initiatives like the PIX digital payments system, a strong credit sector, and our fintechs are stronger than average because they have raised a lot of investment.”

"We have a strong fraud prevention system and our fintechs are stronger than average because they have raised a lot of investment"

Neobanks, financial institutions that offer their services 100% online, such as the aforementioned Nubank or the recent unicorn Neon, are particularly noteworthy in this sector. The latter hit unicorn status in February 2022 following a $300 million investment by BBVA, a solid indicator of the promising future of these innovative financial solutions.



Second in importance to fintechs are e-commerce and proptech initiatives (which apply technology to the real estate sector), like unicorns QuintoAndar, which specialises in buying and renting homes, and Loft, designed for buying and selling properties. Other notable projects are also making inroads in the fields of agriculture, such a Agrolend, the “Nubank for farmers”, and education via platforms like Descomplica.

The ingredients of a winning recipe

What has São Paulo done to become the innovation leader among Latin American cities? These are some of the keys that the experts cite:

  • A large local market. With 214 million inhabitants, Brazil is the largest economy in Latin America and represents 54% of the region’s digital market. São Paulo alone contributes 3 % of Brazil’s GDP and has a population that tops 12 million. As a result, startups based in the city have stronger growth prospects in their own market than other Latin American entrepreneurs forced to look to the global horizon, such as those in Chile or Argentina.
  • Active innovation ecosystems. Even though São Paulo leads the way, several Brazilian cities, including Belo Horizonte, Rio de Janeiro and Curitiba, also excel in startup territory, which strengthens the country’s overall innovation.
  • Access to capital. The city is the regional headquarters of the country’s leading banks, as well as those from other countries. It is also one of the hubs of the SoftBank Latin America Fund and the birthplace of venture capital firms like Kaszek, one of the most prestigious in the region.

Innovation, a commitment at every level

São Paulo startups also benefit from accelerators, incubators and other initiatives designed to support them. Notable examples include Latitud, a platform that assists early-stage founders with training through a selective scholarship programme, offering tailor-made resources for local startups such as Latitud Go, which has already invested in over 90 companies in the region. “São Paulo is a vast, professional and cosmopolitan city, and its startup ecosystem is much more developed than that of most Latin American cities”, says Gina Gotthilf, co-founder and COO of Latitud. Yet she goes on to clarify that “entrepreneurship in São Paulo can be difficult due to the region’s notorious political and economic instability, particularly considering the fluctuations of the Brazilian real against the dollar”.


The public sector also contributes to boosting the entrepreneurial landscape: Brazil has a fintech law, the Brazilian government has created the Legal Framework for Startups and Brazil’s Central Bank has launched a national regulatory sandbox (a testing ground for new business models that are not yet covered by current regulations). The national government is also developing initiatives to boost the startup ecosystem, like InovAtiva, while at the local level notable projects include Desenvolve SP, which offers easier credit for São Paulo-based companies, and PIPE-FAPESP, which supports technological research by SMEs.

"São Paulo is a vast, professional and cosmopolitan city, and its startup ecosystem is much more developed than that of most Latin American cities

The training available and the ability to attract talent to the city also play a major role in the city’s innovative climate, says Ricardo di Lazzaro, founder of the biotech startup Genera. “We have very skilled people and some of the best universities in Latin America. I studied at the Universidad de São Paulo, as did many of the founders of the unicorns”, says the researcher, recognised as one of the outstanding innovators under 35 in Latin America by the Spanish version of the MIT Technology Review. “Because it is a centre for work, study and technology, many people from all over the country converge here. A lot of global entrepreneurs are from São Paulo, like the co-founders of Facebook and Instagram [Eduardo Saverin and Mike Krieger], because our education system is really good”.

The combination of public and private support networks, entrepreneurship hubs and talent without borders has yielded a solid startup ecosystem that is mature enough to withstand the challenge ahead. The ability of startups to leverage local strengths and spark global interest has led the city, through which numerous unicorns roam, to excel in the region as a whole. With the necessary ingredients and a perfected recipe, São Paulo is defending its leadership in the haute cuisine world of innovation.

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