Financing the favelas: a shanty town in São Paulo. Photo: Getty
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Start-up finance and the Brazilian favelas

The country has embraced e-commerce since a series of tax reforms in the Noughties, despite stifling bureaucracy.

Parked under a tree in a cul-de-sac off the gleaming Avenida Brigadeiro Faria Lima in São Paulo, the strip that is home to Google’s new Brazilian headquarters, Deocleciano Tolentino sets out his wares, popping open the boot of his car to reveal a spread of cheeses, salamis, nuts, home-made jam and bottles of honey and cachaça. The epitome of a microempreendedor (micro-entrepreneur), Tolentino is one of a generation of Brazilians whose small businesses in the informal economy were regularised in a programme of tax reforms that began in 2003.

Twenty yards down the road stands a building whose beanbag-lined hallways and ping-pong table mark it out as an archetypal start-up HQ. Mansão Startup (“the start-up mansion”) was co-founded in September 2012 by Florian Hagenbuch of the online print-on-demand service Printi.

Hagenbuch, a 27-year-old German brought up in Brazil, left his job as a financial analyst in New York to set up in business in São Paulo in 2012. Printi was one of a wave of Latin American start-ups in the early-2010s which brought an influx of young, foreign would-be entrepreneurs into Argentina, Chile, Mexico and Brazil in particular. Hagenbuch is predictably upbeat about the opportunities for businesses like his, particularly given the enthusiasm with which Brazil has embraced e-commerce.

Yet it is not easy to infuse an emerging economy with start-up culture. Brazil’s formidable bureaucracy can make sorting even basic documentation expensive, time-consuming and unpredictable. As Hagenbuch says, “In places like London, you just start work. Here, it takes around six months to get going legally.” Most daunting of all is the labour legislation. “No matter how careful you are, if there’s a problem, people can sue,” he says. “The risks are huge and you are personally liable.”

Start-Up Brasil, the federal programme launched last year, shows how fragile new firms can be. A fifth of the 62 companies chosen in the second round of selections in December 2013 have already dropped out. The reported reasons include demands for 20 per cent of a company’s equity in return for investment.

Such statistics explain why some micro-entrepreneurs are “bootstrapping” – rejecting outside finance. Since Bruna Figueiredo launched her jewellery firm in 2010, she has held back from seeking external investment. She is targeting what is often referred to as Brazil’s “new middle class” but might be more accurately described as a growing, newly solvent, formally employed working class. “Our customers come from all walks of life,” she says. “Some of them are living in semi-favelas: we can tell from the addresses.” Her jewellery starts at R$200 (£53) for tiny, wafer-thin religious pendants in 18-carat gold – “We have all the saints, even the really obscure ones” – and goes up to R$5,000 (£1,300) for diamond bracelets and earrings. “They can pay in instalments, and it’s e-commerce,” says Figueiredo. “People don’t need to feel intimidated by a fancy storefront.”

Unexpectedly, the biggest-name foreign start-up in recent months is MoneyGuru, modelled on Britain’s MoneySuperMarket and backed by George Mountbatten, the Marquess of Milford Haven.

Hagenbuch confirms that despite the rise of a new, richer working class in Brazil, the tech scene is still dominated by people with wealth. “Creating a start-up has become a real career alternative,” he says. “They used to dream of being bankers.” 

This article first appeared in the 10 April 2014 issue of the New Statesman, Tech Issue

Photo: Getty Images
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The barbecue that shows that Jeremy Corbyn is inevitable

Labour's been a long time dying, says Neal Lawson.

Just sometimes you spot something small and throw away which crystalizes something much bigger and really profound.  It happened recently about the future of the Labour Party, tucked away in the letters page of the Guardian. Steven Pound the MP for Ealing North shared his concerns about the influx of new, presumably Corbyn voting, members. 

The worry was this – only two of the 43 invited new members could be bothered to turn up for a barbecue and social. There it was, in a tiny chicken nugget, all you needed to know about why the Labour Party is a vehicle out of time and place and so ripe for the Corbyn Surge.

Let’s unpick the BBQ, the new members and their seeming reluctance to show up. The first thing that’s screams at anyone vaguely normal is why on earth would you want to go to a BBQ being organized by the Labour Party – when presumably you could go to a real one, with real friends.  There is a give away – it’s a “barbecue and social” – ie a barbecue where you have to be social – where you have to told to be social as if that weren’t a given. Does the Labour Party or anyone have BBQs that are unsocial?  When you decode it, what it means is come and pretend that Labour is ‘with it’ – that being a member is a deep cultural and social experience – when everyone knows it isn’t.

The Labour Party has been a front for years – a front for a technocratic and managerial elite who like to tell everyone what’s good for them and that they must suck up almost as many right wing ideas and polices as the Tories are offering to be in office.  And the party, in desperation and with nothing else on offer, had to go along with it. 

 Of course people get bored of being used and eventually despise knowing that all the party was doing was slowing the rate at which the poor got poorer and the planet burnt – that meetings were meaningless because all the real decisions were being made elsewhere. But the elite still needed the legitimacy of plastic members and their leaflets wouldn’t deliver themselves.  So the foot soldiers had to be given something – so why not a BBQ – that will show Labour has changed – that the party has deep roots and bags of fun. But it’s a scam. A Quorn sausage when only meat will do. Because we all know that really the elite want to read out the minutes and the matters arising from the last BBQ, to be Minister for burgers and the secretary of state for baked potato’s.

But its stopped working. What the Ealing 41 refusniks tell us is that they didn’t previously join Labour because there was no point.  Modestly humanized neo-liberalism, even with a BBQ and social, is not enough. A party still rooted in the culture of the last century – the factory - with no democracy and little connection to the governing norms of the 21st century – that of Facebook – was not attractive to them.

The surge around Jeremy Corbyn changed all that – Labour became interesting for the fist time despite everything about it – its elitism, its awful compromises, its lack of hope or belief in the best in people – only the worst (I’m really resisting German sausage jokes here).

The Pound letter ends with the chilling warning that maybe all these people had joined for was to get Jeremy Corbyn elected in the hope for something better. As if that’s wasn’t good enough – surely they understand there are more BBQs to be organized?   Cant they join and pretend with us  – vote for the status quo and eat their meat?

 But this is the 21st century. People join and swarm, in a none David Cameron unpejorative way.  Bubbles and waves appear so fast.  Foot free but progressively minded, agile and connected is the way millions of people now are. 400,000 of them have joined Labour since the last election. They will swarm  elsewhere quickly if Corbyn doesn’t win or over time if he fails to understand the nature of these new times.  The party of the past is dead regardless of who becomes Labour's leader.  But these wave of hope and action mean we can still change the world – just without making a meal of it. 

Neal Lawson is chair of the pressure group Compass and author of the book All Consuming.