Brazil tells the largest ecosystem of startups From Latin America, but it still goes against it when it comes to attracting capital to innovation. This is what the study “Identification of Regulatory Gaps in Angel Investment in Brazil” reveals, launched by the Brazilian Association of Startups (Abstartups).
The analysis exposes how the high tax burden and the absence of specific public policies undermine the potential of this type of investment, considered crucial to turning ideas into high impact businesses.
According to the survey, in 2022 Brazil registered only 7,963 angel investors, which landed approximately R $ 984 million in startups. Less than 1% of what is injected by the United States. In the same period, Americans moved about $ 22.3 billion, with 368,000 investors.
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“The study clearly highlights that it is a vital gear to strengthen Brazil’s innovation and competitiveness, but it still bumps into regulatory, tax and legal barriers that reduce its attractiveness against other types of financial application,” says Claudia Schulz, CEO of Abstartups.
In the international comparison, Brazil is left behind
According to the study, while countries such as the United Kingdom, France, Germany and Israel offer tax deductions ranging from 20% to 50% of the amount invested, as well as exemption from capital gain income tax, Brazil does not grant any specific incentive.
“Today in our country we continue to penalize those who decide to take risks to support startups that can generate jobs, technology and solutions to the great challenges of society,” says the CEO.
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In Brazil, according to Abstartups, the gains of angel investors are taxed with rates between 15% and 22.5%, equivalent to fixed income-free fixed income applications.
“What is missing is precisely the combination of tax incentives, greater legal certainty and targeted public policies. Without this, our ecosystem will follow limited, with capital concentrated in a few companies and regions. The challenge is in aligning state, investors and society around the same purpose: transforming Brazil into fertile ground for startups,” says Claudia.
New look
Abstartups suggests the adoption of measures that can change this scenario, such as:
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- Partial or total exemption from Investment Investment Tax on startups at an early stage.
- Deduction of part of the amount invested in the IR calculation base.
- Creation of a structured incentive program, inspired by success models such as Enterprise Investment Scheme (EIS) of the UK and Yozma, which turned Israel into a global reference in innovation.
For ABSTARTUS CEO, creating appropriate conditions is critical to attracting more investors and diversifying the ecosystem.
“If we want a more innovative and competitive country globally, we need to recognize that each real invested in a nascent business is also an investment in employment, income and sustainable development,” says Claudia.
She also points out that the entity has acted to reduce these barriers.
“And here comes the role of Abstartups: articulate, give visibility and press for structural changes, while continuing connecting startups to investors and creating programs that expand the entrepreneurial capital base in the country. Our goal is for the angel to stop except and become a solid pillar of the Brazilian innovation economy,” concludes Claudia.
