BADESUL’s policies to support innovation in Rio Grande do Sul
ADESUL is a development agency focused exclusively on Rio Grande do Sul, with the mission of socially and economically developing the state. It supports local entrepreneurs with access to credit, consultancy, venture capital investing and other financial resources. With a wide range of services, BADESUL supports startups and innovative companies at their individual product stage, helping them to develop and reach their innovative potential.
As the president of BADESUL and leading one of the most important teams behind the investment scene in Rio Grande do Sul, Jeanette Lontra knows a thing or two about innovation. In the last ten years, BEDESUL committed R$55 million (approximately US$11 million) to venture capital investment in startups in Rio Grande do Sul, supported over 150 companies with non-returnable resources, and invested – directly and indirectly – in fifteen startups (and counting) from the state.
Traditionally, BADESUL focuses on three sectors: the agribusiness sector, the public sector, and business. It brings a technology layer into these sectors, encouraging startup creation and fomenting innovative solutions to rather traditional industries. "We are in a very propitious moment for innovation in our state,” says Jeanette. “It's a reflection of our government. Our governor is a great supporter of innovation. That radiates to our entire state, from entrepreneurs to people in agribusiness. And it spreads to universities: they have a strong role in this innovation cluster as well. It's not only young people that want to work with innovation, but traditional companies are interested too. Even in the countryside, in smaller municipalities, we see innovation happening. It's truly a great moment."
By investing in share capital (pre-seed, seed capital and Series A), credit opportunities (through BADESUL Inovacred and Badesul Startups) and economic subsidy programs for micro, small and medium-sized companies, a partnership with BADESUL can change the lives of entrepreneurs in many stages of their growth. Its non-returnable resource programs, Tecnova and Centelha, also benefited more than 150 companies in partnership with FAPERGS, SEBRAE-RS and Reginp. But entrepreneurs have to be ready for that support. "Before looking for these resources, they must define their projects and have specific deliverables, such as an existing customer relationship or a scalable solution,” says Jeanette. “Knowledge is crucial.” The more entrepreneurs know about their market, the more likely they are to secure investment.
Badesul is a great inductor of innovative development. We aim to be a model for development agencies in Brazil. We want to see Rio Grande do Sul as a reference.
Jeanette's advice is to know who your customer is and to relentlessly test and validate your product. "You have to be obstinate. You cannot give up at the first challenge – and we know there will be plenty. Where can you see growth? This is an extremely precious point for startups: based on growth, you can look for other forms of financing, more traditional ones."
Bridging tradition with innovation is one of BADESUL's main strengths as an investor. The agency not only finances renewable energy projects for small cities and agribusiness players but also helped to implement the first crowdfunding action in the public sector for investors and entrepreneurs in Brazil. "Our motto is to use the market tools to try and leverage resources for startups in Rio Grande do Sul,” says Jeanette. “Once approved by the Securities Commission, we raised resources for two companies in the state: one startup working with precision fruit growing, and a rubber startup with nanotechnology and graphene for high-pressure and temperature sealants. BADESUL put in forty percent of the funds, and we helped crowdfund the remaining sixty percent in two days." BADESUL is now preparing other crowdfunding actions to elevate the technology and empower more startups to raise their funds in partnership with BADESUL.
There is no objective solution; a lot of details are subjective. But if a startup is not scalable, doesn't know their customer, and doesn't have a market, it won't move.
For entrepreneurs considering the state as a place for their startup, Jeanette isn't short on praise. "Rio Grande do Sul is located in the center of Mercosur. The same distance we have from São Paulo, we have from Buenos Aires. Geographically, we are in a favorable location, our state is multicultural. And we have an outstanding workforce here. With high cultural and educational standards, Rio Grande do Sul favors the work and installation of a startup or innovation company here."
"With innovation, we can elevate society in so many ways," she says. "We want to deliver the resources, but in the long term, our goal is to develop the state. Innovation is the means to impact society: to make it culturally and socially better. It means growth in many ways, including improved quality of life in our cities and population."
Jeanette's most important tips for startups:
- Have a tested and validated solution. No matter how brilliant the idea is, it still needs to be tested and validated. Go from the problem to the solution, never the other way around.
- Know your customer. The customer is the center of the process. It's crucial to find out if there are customers, and who they are and what they need.
- Have a (global) market. Entrepreneurs should be ambitious and look for solutions that start locally but have an opportunity to grow globally. Scalability is key to securing funding.
- Look for an investor with values. An investor should bring you, in addition to money, the power of their network. They should encourage your company's growth. Make sure your values are aligned, and your journey will be a pleasant one!
- Appreciate the differences between your team. Whether an investor, team member or cofounder, look to complement your skills, adding a wider range of problem-solving approaches.