Challenges of entrepreneurship beyond the South-Southeast axis

Challenges of entrepreneurship beyond the South-Southeast axis: how to promote bio-entrepreneurial protagonism in other regions?

It is not something new that large metropolises dominate the ecosystem of innovation in bio, but how and why should we also promote bioentrepreneurship in regions further away from this reality?

From the first half of the 20th century, the State of São Paulo had already become the main center of economic development in Brazil. Only in 2021, it received around US$7.77 billion in venture capital — totaling 65% of startups’ contributions — more than the total raised by Colombia (US$6.6 billion), the second Latin American country with the most received venture capital investments in the same year, according to Distrito.

On the other hand, according to mapping carried out by the Brazilian Association of Startups (AbStartups), only 31.7% of all Northeastern startups mapped regardless of the segment received investment, either through angel investors or acceleration programs. There are many factors that cause this uneven result, for example, part comes from the historical process of the exodus from the various Brazilian regions to the Southeast. This secular migration of populations still impacts the development of several localities.

And what is the impact of this on bio startups?

In the area of ​​biotechnology, we can see that, together, the Northeast, Midwest, and North regions represent only 10% of all companies surveyed by Profissão Biotec. Despite the challenges faced, the Northeast already presents itself as a new innovation hub in Brazil, with emphasis on Ceará and Pernambuco states. This happened because of major partnerships that are being made between companies, institutes, and universities.

Data from the Profissão Biotec, 2022.

Taking this into account, the Biominas team invited Agna Tavares, a business acceleration analyst in Ceará state, to talk more about the main challenges of undertaking in the North-Northeast in the area of biotechnology:

According to Agna:

“There are many challenges to undertake in biotechnology. Not only in terms of investment but also considering a historical perspective of economic and social development in each region. The creation of universities itself is linked to this advance in scientific and educational knowledge, which is directly related to the creation of qualified labor, essential for the formation of people with an entrepreneurial bias.

There was a massive investment by the government for the development of these South/Southeast regions from an industrial perspective as well, and this has always been influencing to bring investments and facilitating access to credit. Just think about the amount of money invested in Venture Capital in São Paulo and Ceará, for example. This investment allows for several other things, such as facilitating the logistics network and creating a greater density of economic agents that, together, allow the creation of a more robust Biotechnology Innovation System.

Our difficulty as a North/Northeast is the decentralization of these agents, added to the still incipient investment in technology by the “triple helix”: the government does little to promote industrial/technological development, companies have no incentive and it is not competitive for them to be born in this region with few support networks (such as incubators, accelerators, etc)”.

Why should we change this?

Fostering innovation and entrepreneurship in different ways in places far from the main innovation hubs or even considered remote help regional development, being a strategic way to combat the asymmetries found in different regions of the country.

We can emphasize that the emergence of new startups can generate jobs for communities, which strengthens the economy. In addition, investing in bioentrepreneurs at the regional level helps not only in economic development but also in the protagonism of local actors. This provides opportunities for citizens, who develop solutions to problems they experience in the localities.

How?

We can change this reality in several ways, whether through the promotion of promotion or training policies.

According to the Brasil 61 radio agency, there is a possibility, which is being evaluated by the Brazilian National Congress, of including startups among the beneficiaries of regional constitutional funds. Currently, these funds apply a certain percentage of federal taxes collected in financing programs for the productive sector in the Northeast, North, and Midwest regions to promote the development of the places where they are applied, aiming at reducing regional inequalities.

It is studied that the Constitutional Fund for Financing of the Northeast (FNE) is directed to companies that develop activities in the mineral, industrial, agro-industrial, tourist, commercial sectors, or in the areas of services, science, technology, and innovation, such as described in the bill PL 5306/ 2020 and the idea is that the benefit can be extended to startups.

But to undertake a lot of training is necessary, from understanding the local market, understanding the demands and specifics of business models in life sciences and that is where pre-acceleration and acceleration programs that can reach these different locations come in.

Despite the challenges, more and more opportunities arise!!!

Thus, biotechnologist Agna comments on the opportunities present in these regions:

“But yes, despite these challenges, we have a lot of opportunities here. Governments are increasingly encouraging the formation of Local Productive Arrangements in Biotechnology, which means that there is a whole framework of incentives for the creation of biotech companies. In addition to laws and tax incentives, there is direct promotion through public notices for innovation, programs to support entrepreneurs, and everything else.

The biggest opportunity is that now we can see the richness of the ecosystems of the N/NE, not only in terms of economic opportunity, the proximity of some regions to Europe/USA and space but also because of the richness of biodiversity that has been discovered in these places.

In general, the Northeast is also being discovered, mainly as an innovation hub, as there are increasingly mature initiatives to encourage and foster these more startups and scale-ups. The “Valleys” (such as Rapadura Valley, Caju Valley…), Porto Digital in Recife, the accelerators, together with innovation notices (such as Inovafit, bank notices, such as Banco do Nordeste) have all been creating incentives for to develop the initiatives technologically and commercially.

There is still a high number of “brain drain”, but the people who decide to develop initiatives here in the N/NE are growing more and more. For now, the biggest companies I see are “software as a service”, but I see a positive outlook from more product, service and deep biotech companies as well.”

And based on these words, we can see a movement of the North-Northeast innovation ecosystem, so that the challenges of undertaking in this region are minimized through various initiatives!

And what has Biominas done to contribute to this change?

An example of encouraging researchers and entrepreneurs from a region that is not yet a protagonist in life sciences entrepreneurship was the Biotech Rondônia pre-acceleration Program of the Rondônia State Government, carried out by Biominas in 2021.

This work was an action that strengthened the state’s bioeconomy in which researchers brought solutions in areas of interest in the region, making use of existing resources and potential in Rondônia, such as the rich biodiversity.

Find out more here!