The month of March has been noteworthy. And not just because it is Women's Month. On the 5th, the Economic Affairs Committee (CAE) approved the complementary bill (PLP) 252/2023, which creates a new investment model to incentivize the growth of startups.
When it comes to nascent companies and development, the news is good. Today, in Brazil, there are approximately 20,000 active startups, and the expectation is that only 2,000 will survive. According to the Brazilian Micro and Small Business Support Service (Sebrae), 9 out of 10 such companies cease operations within their first few years.
It is no secret that the Brazilian entrepreneurial landscape is a veritable lion's den, and without incentives, these statistics are unlikely to change anytime soon. Therefore, even if progress is slow, we must celebrate every achievement, and this bill is certainly one of them. Brazil needs new policies to leverage the entrepreneurial potential we possess.
The bill approved by the CAE amends the Legal Framework for Startups (Complementary Law No. 182 of 2021) to create the Convertible Investment Agreement into Share Capital (CICC), inspired by the Simple Agreement for Future Equity (SAFE), a standard contract model used in the international market. The major gain lies in the fact that the invested amounts do not become part of the share capital applied to the startup. This means that the investor is exempt from operational risks, such as labor and tax debts.
But what is the difference between the CICC and the convertible loan for equity, the most commonly used method today? Well, due to its debt nature, the convertible loan sets a deadline for the repayment of the funds provided by the investor and allows for the conversion of the amounts into equity in the company. The new investment model proposed by the law does not have this characteristic.
The bill was authored by Senator Carlos Portinho (PL-RJ) and now proceeds to the Senate Plenary under an urgent regime. Subsequently, it will be sent for analysis by the Chamber of Deputies, before being directed for the President's sanction. According to Portinho, the new model provides greater legal security and tax transparency for both startups and investors. Thus, the proposal would create a favorable environment for the investment market in nascent companies, especially for those in the early stage.
These changes open new paths and opportunities for growth and may cause a positive domino effect in the ecosystem (so we hope). By facilitating and making the investment process more accessible and transparent, we attract more individuals to become angel investors. Currently, this number is still very low in the country: only 7,963, according to a survey conducted by Anjos do Brasil, and only 10% are women.
Looking at this market and strengthening its potential is to understand that it is a fundamental sector for the development and productivity of the entire modern economy.
