In one decade of existence, the Finep program, created as a link between managers and investors, has capitalized 32 funds.
It was the year 2000, the month of May, and the internet bubble, inflated by the unfounded optimism of entrepreneurs and investors alike, had just burst. It was within this context that Research and Projects Financing (Finep) and the Inter-American Development Bank (IDB) created the Inovar program, which celebrated its first decade in an event held in Rio de Janeiro in November.
The plan was to create a meeting point for fund managers who, at that time, were starting to explore the world of venture capital and private equity and investors who could potentially supply them with the resources they needed. In calls for proposals, managers present their projects to a commission of investors organized by Finep, and those selected are submitted to a due diligence process, so that they can receive capital contributions. In 2001, the commission had four investors, one of which was a pension fund. Now the project has 17 Inovar investors (11 of which are pension funds) plus 110 angel investors. Finep also participates in the commission as a potential investor.
Over its first decade, the program held 16 calls for proposals, 192 proposals have been presented and 32 funds have been capitalized. The Finep initiative includes the Inovar Award, dedicated to honoring the funds that comply with operational, team and governance criteria. Portfolios managed by CRP, BRZ Investments and Stratus were the winners this year in the three respective categories.
Inovar also holds forums for entrepreneurs and managers to select innovative companies and guide them in the assembly of their business plans. In the 10 years of the program, over 3,000 companies have registered, 276 have qualified and 67 have received investments.
According to Patrícia Freitas, superintendent of investments at Finep, one of the challenges of the venture capital industry in Brazil today is to contain the hemorrhaging of venture capital. “We see a lot fewer managers dedicated to this segment than we would like”, she says. Contrary to private equity, which aims to capitalize already developed companies that are not yet capable of raising funds on the stock market, venture capital is an investment in small-sized companies and start-ups that present good perspectives for long term returns.