The global venture capital market – investments in early-stage, small or medium-sized companies, usually startups – is experiencing a period of expansion worldwide. Brazil stands out, leading this market in Latin America. Behind the millions of dollars, euros, or reais involved in funding rounds are stories of socioeconomic impact generated by such investments.
Here are the numbers to give a sense of the scenario. According to Venture Pulse 2024, a survey by KPMG, in the second quarter of this year, the global venture capital market totaled $94.3 billion in investments, the highest increase in the last five quarters. In Brazil, the amount reached $816.8 million, the highest since the first quarter of 2022.
According to the survey, startups focused on artificial intelligence, defense, and cybersecurity lead in receiving investments. But data from other sources show other segments also standing out – especially those delivering social impact. The Govtech Fund, managed by KPTL and Cedro Capital, is one that has been prominent.
The fund is aimed at startups with the potential to transform the delivery of public services by the government. Resources are invested in ventures that provide technology for areas like healthcare (hospital resource management, telemedicine), education (educational processes, access to quality schooling), and public safety (data monitoring and analysis tools), among others.
The Govtech Fund was created with a clear mission: to invest in tech companies that develop solutions to solve public issues, addressing infrastructure bottlenecks and bureaucracy. In a country like Brazil, where millions of citizens face daily struggles to access basic services, the role of these startups goes beyond financial returns. They represent hope for making public administration more agile, efficient, and transparent,” explain KPTL and Cedro Capital managers.
Testimonies from funded entrepreneurs highlight the social impact. One of the partners and founders of Colab, Gustavo Maia, explains that the Govtech Fund helped the company refine its strategic vision, ‘helping us improve our solutions and better understand the needs of the public sector.’
Colab is the startup behind the digital version of participatory budgeting, now used by the government of Piauí and several municipalities in Brazil. ‘With the fund’s support,’ says the entrepreneur, ‘we expanded our presence in more cities, and this is a big win for citizens who can participate more actively and collaboratively in public governance.’
Prosas, a platform for monitoring and selecting social impact initiatives, such as cultural incentive grants, is another startup supported by the Govtech venture capital fund. Co-founder Thiago Alvim describes the investments as ‘decisive’ for improving grant management tools and partnerships for the nonprofit sector.
‘More than the funding, the fund gave us privileged access to networks and knowledge about the public sector, accelerating the social transformation we seek,’ he states.
Such cases indicate the convergence of the venture capital market with two major trends: ESG (environmental, social, and governance) and the Sustainable Development Goals (SDGs). This is because these investments are granted under policies promoting socio-environmental and governance criteria, directly aligned with one or more SDGs, which range from eradicating poverty to global climate action.
For the managers of the Govtech Fund, these criteria should be considered as much as—if not more than—the invested sums and expected returns. ‘Venture capital can indeed generate a positive impact on people’s lives, promoting not only financial growth but also a revolution in how public services serve citizens. Ultimately, this is one of the most lasting ways to measure the true value of venture capital in the country: not just in figures, but in concrete transformations for social well-being and Brazil’s sustainable development,’ they emphasize.
