Sustainable credit key to innovation
By Milton Luiz de Melo Santos, CEO of Desenvolve SP, Development Agency of São Paulo The constant search for new production models that add value to products and services is a decisive condition for the increased competitiveness of Brazilian companies. The improvement of our economic matrix, however, depends on the increased investment in innovation. To achieve this goal, access to sustainable credit is essential. Only by making innovative projects a central focus is it possible to ensure the growth and development of companies in the long-term. Brazilian entrepreneurs understand this, but know little about the available channels for investment in innovation. Today, investment in innovation shouldn’t be restricted. There are many ways to find the financial resources required to get projects off the ground. Attracting venture capital investors, for example, is one of the ways to raise the money needed for innovation. Investors can be individual (an angel investor), large companies or private equity funds. There are also lines of credit, but this credit does not reach sustainable businesses on a significant scale. One of the premises for the financing of innovation is to offer a combination of long-term payment with low interest rates, which is usually not offered by retail banks. While a private credit search suits the needs of investment in innovation, the development agencies, financial institutions regulated by the Central Bank and controlled by state governments, appear as an important partner for innovative companies. Created to act as agents for economic growth, these institutions, for the most part, offer special credit lines with lower interest rates and longer repayment terms. Today, Brazil has 17 development agencies across the country. Desenvolve SP - Development Agency Of São Paulo, emphasised innovation as a strategy to encourage the sustainable economic growth of companies. The ‘São Paulo Inova’ programme, for example, offers options for businesses of all sizes, from start-ups to large enterprises. In addition, the institution utilises resources from the BNDES (Brazilian national bank for economical and social development) and Finep, a foundation that finances studies and projects, both of them state-owned financial institutions, to support technology companies in the country. Desenvolve SP also supports the transformation of academic research into products with high added value and innovative companies with economically viable projects. Recently, the institution has also launched a private equity fund called ‘Fundo Inovação Paulista’ and, in partnership with other Brazilian development institutions and Corporación Andina de Fomento (CAF), is investing more than 100 million reais (US$31.6 million) in innovative companies and start-ups in the areas of IT, nanotechnology, photonics and life sciences. Companies yearn for new investment channels for innovation. The evolution of development agencies and the strengthening of their roles in entrepreneurship and innovation make these financial institutions important sources for sustainable economic growth, increasing Brazil’s standing in the international arena. It is time for Brazil to stop being a country of commodity, and become a country of value-added, knowledge and innovation.
Photo: Desenvolve
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