Leading Brazilian bank Banco Votorantim and Microsoft Corp have teamed up to invest in financial technology start-ups, as the latter adds a new specialty to its venture capital portfolio in Brazil, Reuters reported.
The partnership was revealed by executives on Monday in an interview. It marks how Brazilian banking system is looking to ride the rising wave of fintech start-ups.
"We're looking for startups that have passed the validation and product development stage and need capital to scale up and gain traction in the market," said Gabriel Ferreira, head of strategy, planning and retail lending at Banco Votorantim.
According to Reuters, Votorantim will invest an initial 3 million reais ($930,000) in the BR Startups fund, expecting to fund about a half dozen young companies with investments ranging from 250,000 to 1.5 million reais.
Franklin Luzes, chief operating officer of Microsoft Participações – the Brazilian investment arm of Microsoft, said that these young companies are likely to fall in a "valley of death" between early seed capital and the larger rounds led by traditional venture capital firms. He said that Microsoft created BR Startups in 2014 to fill that niche and the fund has now grown to 17 million reais, backing about 70 startups and steering six to acquisitions.
“In March 2014, Microsoft Participações joined strategic partners such as Qualcomm and the Agency for development of the State of Rio de Janeiro (AgeRio) to launch an investment fund focusing on the development of young technology - based companies: the Brazil Accelerator Start-ups Fund (FIP)”, the website reads.
Luzes said that the accelerator fund has focused on partnerships with "anchor investors" this year such as Banco Votorantim to focus on investing in their areas of expertise. In July Monsanto Co announced an investment in the startup fund to accelerate innovation in Brazilian agriculture by sharing knowledge and industry experience with Brazilian startups.
