In his latest Going Global dispatch, Dan Herman shares a clear rationale for Canada and Canadians to prioritize engagement with Latin America’s biggest market
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Amidst Canada’s efforts to diversify its trade away from overreliance on the US, events like the recent WebSummit Rio serve as great springboards to discover a new market, in this case Brazil.
With a market of over 220 million, a growing middle class, and strong consumer and industrial demand in segments related to agriculture, healthcare and consumer retail, not to mention direct flights from Toronto to both São Paulo and Rio, Brazil should be a priority market for Canadian startups and SMEs. And with a trade agreement currently being negotiated between Canada and the Mercosur trade bloc (Argentina, Bolivia, Brazil, Paraguay, Uruguay), with hopes that it will be signed by the end of 2026, now is the time to engage on the ground in the region’s largest market.
Rio, best known for its iconic beaches and flip flops, is Brazil’s second largest consumer and tech market. São Paulo is Latin America’s startup ecosystem heavyweight - hosting 15 unicorns and playing a clear national and regional leadership role in fintech and e-commerce - Rio has used Web Summit as a catalyst for its startup ecosystem since the event’s arrival in 2023.
Now centred around the deep tech and AI research being done at the Federal University of Rio de Janeiro, as well as the supercomputing infrastructure installed by private (see Petrobras) and public (see Brazil’s $4 billion national AI strategy) actors, Rio is carving out an AI-niche focused on energy and oceans related applications. The alignment of these latter emerging strengths with clusters and capabilities in Canada is well worth noting.*For more on where Canada and Brazil line up see this quick video note from my recent trip to Sao Paulo.*
Moreover, while we often look at a big, growing market like Brazil as one where we can sell, my recent visits across the country have highlighted that there’s also a lot we can learn from Brazil’s broader innovation ecosystem.
Two examples stand out for me:
1. A publicly (i.e. government) enabled fintech ecosystem
While fintech solutions are flourishing everywhere, Brazil’s fintech ecosystem stands out because of its exportable successes (see Nubank, the world’s largest and fastest growing digital bank) and because of the role that the country’s Central Bank has played. This latter actor has been at the core of Brazil’s financial innovation, most prominently tied to the development of PIX, an instant and free peer-to-peer payment system launched in 2020. PIX dramatically lowers the cost of transactions for both merchants and customers by removing traditional transaction intermediaries (i.e. bye bye credit card or debit fees).
Moreover, with over 170 million users and 8 billion monthly transactions, the PIX system has served as a catalyst for innovation in related AI, blockchain and cyber applications. Alongside the launch and development of open banking applications since 2020 and the creation of an official digital currency (DREX), Brazil’s Central Bank is a true fintech pioneer worthy of study.
2. A new model of post-secondary learning
On my most recent visit to São Paolo, the exceptionally helpful team at the Canadian consulate introduced me to Inteli, a private, non-profit university that was recently ranked as the most innovative college in Latin America. Inteli was founded by two successful Brazilian entrepreneurs who sought to replace what they viewed as outdated educational models with one focused on developing both technology expertise and business leadership.
The result is a model that eschews lectures and instead has students work from day 1 on industry-sponsored projects. In so doing, the role of faculty is transformed into that of technology and business mentors, and students graduate their four-year degree with a CV of 16 real-world, industry-relevant projects. I couldn’t help but think it’s the University of Waterloo’s engineering co-op program on steroids!
Suffice to say, examples like these are part of why I’ve become a very big fan of Brazil’s technology and innovation ecosystem. This isn’t to ignore the quite substantial challenges that exist across the country, those exist for sure. However, the relative scale of opportunity and capability that exists in Brazil is, in my mind, a clear rationale for Canada and Canadians to prioritize engagement with Latin America’s biggest market.
