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The new wave of Brazilian SaaS innovators

The new wave of Brazilian SaaS innovators
From TechCrunch - August 8, 2017

The SaaS market in Brazil is booming. It mirrors the rapid adoption of SaaS as the dominant cloud computing type in a global public cloud services market thats forecast to reach more than $122 billion in 2017, per research firm IDC. Earlier this year, we embarked on an inaugural survey of more than 400 executives of Brazil-based SaaS companies, the largest research project of its kind in the region.

Here is just one founding story of a Brazilian SaaS startup called RD Station thats indicative of the growth and fast-changing landscape of the SaaS market in Latin Americas largest country as new VC and corporate venture investment in Brazil continues to rise:

Eric Santos launched his first SaaS startup in 2011 alongside co-founders Andr Siqueira, Bruno Ghisi, Pedro Bachiega and Guilherme Lopes. They set up a small office in Florianpolis, the capital of southern Brazils Santa Catarina state. The team entered a crowded space of marketing automation with a nimble, but strikingly simple SaaS platform. It featured a landing-page creator, a metrics dashboard and an email marketing platform. But they understood the challenges of the Brazilian marketer and gained initial traction through a blog and community meetups.

Business growth was slow in the beginning, but steady. It took the small team about two and a half years to reach the R$1 million (about US$300,000) in annual recurring revenues (ARR). To help accelerate its growth, the early-stage startup raised a Series A round in 2013.

Fast-forward to 2017: RD Station has expanded exponentially. It now offers a full-featured marketing automation platform. Its annual conference attracts 10,000 marketers to Florianpolis. Today, theyve grown from a small, bootstrapped startup with just five founders to 450 employees and more than 9,000 customers in just six years. With this kind of growth, it attracted local investors such as DGF, Astella and Redpoint eventures. More recently, international VCs TPG Growth and Endeavor Catalyst have invested. The companys total funding today is north of US$30 million and RD Station is growing more than 150 percent year-over-year, an impressive number as only one-third of Brazilian SaaS startups achieve this kind of growth at this stage, per our research study.

A familiar tale for SaaS founders in Brazil

Many Brazilian SaaS entrepreneurs share a similar story. The local market is growing at an accelerated pace. Every other week, were seeing new local and foreign VCs investing. Brazil is the fifth-largest internet and mobile economy in the world, and one of the primary international markets for juggernauts such as Google and Facebook. Like the evolution of the internet in the U.S., businesses in Brazil are increasingly online and seeking SaaS solutions.

According to Manoel Lemos, a managing director of VC firm Redpoint eventures, SaaS is now a sizable opportunity for Brazilian startups. Lemos is seeing a trend of more experienced, high-quality entrepreneurs, leaving companies such as Salesforce and LinkedIn in Brazil to start their first businesses. While Brazil is still only scratching the surface to breed global SaaS players of the likes of Salesforce or Zendesk, companies like RD Station are scaling quickly across Brazil and starting to set their sights on global markets.

Enter Brazils first robust SaaS market landscape

In May 2017, with support from Signal Hill and Redpoint eventures, we surveyed 597 Brazil-based SaaS founders (49 percent CEOs) to launch the inaugural version of our survey, called The Brazil SaaS Landscape 2017. It is important to note that the Brazil SaaS market is relatively new. Out of the companies polled in the survey, 71 percent were founded after 2010. In this research, we analyzed data about funding, employee strength, revenues, retention rates and growth rates of SaaS startups in Brazil. Here are some of the most interesting things we learned.

So Paulo is the SaaS capital of Brazil, followed by Santa Catarina and Minas Gerais

Almost 50 percent of SaaS startups are based in So Paulo, and 41 percent of total startups that surpassed R$1 million in ARR are based there. Santa Catarina takes second place for fast-paced growth. According to Diego Wagner, founder of Meetime, an inside-sales platform, Santa Catarinas SaaS community is growing fast thanks to startup founders and employees giving back to the community with workshops, angel investments and mentoring.

Brazilian SaaS startups are mostly bootstrapped, but VC investment is growing

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