Can UK tech companies crack the Brazilian market?

Businesses are always being advised to expand into new markets. But what are the practicalities? Nick Booth followed 18 technology start-ups to Rio de Janeiro to witness the challenges

With European economies stagnating, the most exciting potential for growth comes from emerging nations. These have been neatly categorised into acronyms – just in case you forget who they are and lose your way.

Which should you go for though: the TIMPs (Turkey, Indonesia, Mexico and the Philippines), or the emerging superpowers known as the BRICS (Brazil, Russia, India, China, South Africa)?

As luck would have it, I was invited to accompany a group of technology start ups on a Clean and Cool Mission to Brazil, backed by UK Trade and Investment and Shell’s GameChanger programme. The point of this public and privately-funded venture was to make connections in an exciting new market.

The 18 companies chosen to go on this mission had previously earned the right to be here by impressing judges with their business cases, and some of them had such blindingly obviously selling points you’d expect them to be snapped up.

For example, Brazil has 1.1 million dairy farms, 23 million cows and an energy crisis. What if someone made a plug and play digester in a box that turns crap into cash? Surely they’d be popular. If they offered affordable finance options and were looking for reseller partners, you’d expect a stampede, surely.

So the offerings from Antaco, Elemental Digest, Re Hydrogen and Seab Energy all seem, on the face of it, winners, because they offer simple ways to turn waste into money. Slurry from abattoirs, orange peel from orchards, cow dung, the left overs from the sugar cane crop, food waste, coffee grinds, you name it – they can all be converted into pure methane or ethanol and used to fuel cars, heat houses or generate electricity.

Better still the risk of investment has been lessened, and the pain of installation taken away, because all these companies have invented instant waste processing systems, which they deliver in a box or, in this case, a shipping container. It’s practically plug and play. Surely, for a massive industrial farmer or hotel chain, the choice of paying to get rid of waste, or converting it into money, is a no-brainer.

But it’s never that easy. There weren’t that many takers. “Brazil has always relied on its commodity products and they don’t know how to innovate or add value,” said one attendee.

“Brazil is not for beginners,” warned one of the hosts in Rio de Janeiro. “It has its own way of working. There’s still a suspicion of gringos.”

If you vendors struggle to sell a machine that turns crap into cash, with a 25% ROI, not to mention the cost savings you’d wonder how the more complicated sales would go.

Codbod, for example, has invented a system that helps companies understand the profile of their environmental impact. This helps companies meet regulations and win more orders. But try explaining that one to an audience listening in their second language.

Another cloud software start-up, Trakeo, helps navigate its users through a minefield of compliance regulations, in the 38 nations that are prepared to buy biofuel from Brazil. Again, this is not an easy concept to get across. At the risk of over simplifying, it could be described as a system that removes the barriers to entry to a $10bn dollar ethanol market that Brazilian sugar cane growers are currently excluded from.

Codbod’s Michael Groves and Trakeo’s founder Tim Stephenson both know it’s going to be a long slog getting into this market. They should take heart from Tim Vallings, director of another software vendor, Rezatec, who struck lucky first time.

Rezatec runs a big data service that uses satellite data to quantify the carbon profile of a forest. This is a necessary prerequisite for the efficient carbon market that governments want to create. Manually measuring tree density costs $500 per square meter, but Vallings promised to do it for $100. As luck would have it, there was a Brazilian service provider in exactly the same business, but the one thing they lacked was a really good automated forest analysing system. So the two vendors were soon exchanging business cards and heading off to the bar together.

Meanwhile, Embedded Technologies seemed to score a direct hit with its Silent Herdsman invention, which uses comms technology to identify cows in heat. This is information that leads to rapid insemination (thanks to the liquidity of the bull sperm bank deposits held by breeders) which, in turn, creates a surge in milk yields, as cows get pregnant with less delay. After her presentation, inventor and CEO Annette MacDougal was being invited to several urgent meetings. So maybe these pitches do work. Patience and persistence are called for though.

Oh and take a tip from Vallings. Give the translators your script before you make your presentation. That way you give them the chance to give the performance of their lives over the headphones. Otherwise, they’ll struggle to keep up with you and your audience will be left baffled.

“Sixty years ago, this country was not much more than a glorified coffee plantation,” said Julion Ramundo, director of Brazil’s BNDES bank, which funds that country’s start ups. “But we have brought many new businesses through since then. There are very good opportunities in Brazil. Just don’t be put off if you have to have more than six meetings. We like to date.”

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