The global venture capital market – investments in early-stage, small, or medium-sized companies, typically startups – is experiencing a period of global expansion. And Brazil stands out, leading this market in Latin America. Behind the millions of dollars, euros, or reais involved in fundraising rounds are stories of socioeconomic impact generated by these investments.
Some numbers to give perspective on the scenario. According to the Venture Pulse 2024 report by KPMG, in the second quarter of this year, the global venture capital market totaled $94.3 billion in investments, showing the highest increase compared to the previous five quarters. In Brazil, the amount reached $816.8 million, the highest since the first quarter of 2022.
The report indicates that startups focused on artificial intelligence, defense, and cybersecurity lead in receiving investments. However, data from other sources show other sectors standing out as well – particularly those with social impact. The Govtech Fund, managed by KPTL and Cedro Capital, is one of the notable examples.
The fund is aimed at startups with the potential to transform the delivery of public services offered by the government. Resources are invested in ventures providing technology for areas such as healthcare (hospital resource management, telemedicine), education (educational processes, access to quality education), and public safety (data monitoring and analysis tools), among others.
“The Govtech Fund was created with a clear mission: to invest in technology companies developing solutions to solve public problems, addressing infrastructure bottlenecks and bureaucracy. In a country like Brazil, where millions of citizens face daily challenges in accessing basic services, the role of these startups goes beyond financial returns. They represent hope for making public administration more agile, efficient, and transparent,” explain the managers of KPTL and Cedro Capital.
Stories from supported entrepreneurs highlight the social impact. Gustavo Maia, co-founder of Colab, 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 responsible for creating 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 were able to expand our operations to more cities, which represents a major win for citizens who can now participate more actively and collaboratively in public governance.”
Prosas, a platform for monitoring and selecting social impact initiatives such as cultural incentive programs, is another startup supported by the Govtech venture capital fund. Co-founder Thiago Alvim describes the investments received as “decisive” for improving management tools for public notices and partnerships in the nonprofit sector.
“More than the investment, the fund gave us privileged access to networks and knowledge about the public sector, accelerating the social transformation we strive for,” he states.
Cases like these highlight the convergence between the venture capital market and two major movements: ESG (environmental, social, and governance) and the Sustainable Development Goals (SDGs). This is because these investments are conditional upon policies promoting socio-environmental and governance criteria, directly aligned with one or more SDGs—ranging from poverty eradication to global climate action.
For the managers of the Govtech Fund, these factors should be considered as much as, if not more than, the invested figures and projected returns. “Venture capital can indeed generate positive impact in people’s lives, fostering not just financial growth but also a revolution in how public services serve citizens. Ultimately, this is one of the most enduring ways to measure the true value of venture capital in the country: not just in numbers, but in concrete transformations for social well-being and Brazil’s sustainable development,” they emphasize.
