Brazil has emerged as one of the leading startup ecosystems in Latin America, with over 13,000 businesses registered in 2021, according to the Brazilian Association of Startups (ABStartups). Fintechs, healthtechs, and retailtechs have gained significant popularity in the country. In 2020 and 2021, they propelled the nation's leadership in receiving venture capital, with billions of dollars invested, according to the Latin American Private Equity & Venture Capital Association.
With investments booming, it didn't take long for the mergers and acquisitions (M&A) market to become active in Brazil, with a growing number of deals involving startups. According to PwC Brazil, this sector has significantly increased the number of transactions in recent years, especially in the technology sector. Large M&A deals, such as StoneCo's acquisition of Linx for approximately R$ 6 billion in 2020, illustrate the exit potential for founders in Brazil. As the presence of foreign stakeholders in the country brings it closer to the internationalization of this ecosystem, it is necessary to understand the urgency of financial management practices aligned with investment standards.
According to Natalia Baranov, a specialist in M&A, Controllership and Tax Management, Planning and Financial Analysis, financial consulting can act as a game-changer for the success of a startup, especially in its initial phases. “Many new businesses often face common challenges, involving balancing sales operations, making decisions about new investments, and dealing with the inflow and outflow of clients and employees. However, the consultant's role is precisely to help them define long-term goals, establishing a clear path to achieve them efficiently and, above all, realistically,” she explains.
In addition to helping corporations survive, another mission of this type of service is to encourage them to prosper sustainably. When a founder seeks to solidify the brand's position and attract more significant capital, the first step is to find the ideal partner for strategic planning, resource management, and fundraising preparation, with the goal of ensuring that nothing affects the financial health of the venture.
Without the necessary support, C-level executives can easily lose sight of the value and control of the startup's expectations and limitations. With financial management, on the other hand, consultants can use methods to establish a fair negotiating basis with investors, as well as ensure compliance with the legal requirements for each business. Finally, guided on best practices, leaders can avoid penalties and ensure transparent investment operations, with the necessary tools to meet the expectations of both parties.
With over 20 years of market experience, Natalia has participated in acquisitions of companies that suffered losses exceeding R$ 1 million due to mismanagement under the leadership of the former CEO. Therefore, she observes that many startups, focused solely on growth, neglect the importance of this control and only discover critical points after negotiations, compromising results that could be achieved with the broader perspective of consulting and specialized reports, such as the Income Statement, Balance Sheet, and Cash Flow Statement.
“Startups often operate with limited resources. Therefore, effective financial management ensures that every real is invested in a way that maximizes capital, prioritizing expenses that truly add value to the company. Another function also involves preparing C-level executives for due diligence processes, helping them present finances in a transparent and attractive way to stakeholders, with brand valuation assessments and the preparation of compelling pitch decks. These details guarantee the growth of a startup that seeks not only profitable returns but, above all, responsibility towards resources, clients, and investors,” adds Baranov .
Financial consulting is a key differentiator for startups seeking to raise investment.
