The Startups law concerns complementary law 182 sanctioned by then-President Jair Bolsonaro in 2021. The law came to mark a new era for Brazilian Startups, in addition to fostering the growth of growing technology companies.
As you well know, startups are companies in a growth model focused on providing technology-based services and a lean team model, creating solutions for the various processes of people’s day-to-day lives.
Concepts and rules from the Startups Law
The legal framework for startups from the Startups Law (Supplementary Law 182 ) further delimited the startup concept in Brazil.
To narrow down the concept, it is understood that a startup is characterized by:
- Have CNPJ with less than 10 years of existence
- Have gross revenues of less than BRL 16 million in the previous year
- Be part of the Inova Simples special regime
In addition, what already characterized a company as a startup was the lean and interdisciplinary model that brought people together in favor of developing solutions for any existing pain in the fields of finance, administration or agribusiness.
From Startups to Scaleups
These two terms represent the journey of a startup model company. Scaleup is a “matured” version of Startup
ScaleUp is therefore a company that scaled the first years of existence, surviving the obstacles of Brazilian entrepreneurship as well as the competition.
According to a report by startup accelerator Startup Farm , 74% of these companies close their activities after five years, and 18% close before completing two years of existence.
Despite the number of closures of activities being high, the number of Startups has grown in Brazil, as stated by ABStartups (Associação Brasileira de Startups), which since its creation in 2011 until 2019 has seen a growth of more than 27% over the last few years. 20 years.
It was understood that the growth in the number of startups in Brazil indicated the need to create a favorable legal environment for these startups to have better conditions to pierce the growth bubble.
Brazilian startup ecosystem
Currently, Brazil has startups that operate in the most diverse segments of the market, however most are divided into areas such as:
- Civil construction (41.57%),
- Retail (20.83%)
- Consumer goods (9.87%).
Of these companies, it is estimated that the majority (40.45%) have between 25 and 49 employees.
According to data from ABStartups, Brazilian Startups are responsible for 50% of new jobs generated in the country, despite representing only 1% of Brazilian companies.
The target workforce for this company model are people involved in technology, AI (Artificial Intelligence), Software, Business, among other areas.
Startups have contributed more and more to the Brazilian GDP (Gross Domestic Product).
Research presented by the Harvard Business Review proved that from 2016 to 2019, the leap in contribution was from 0.006% to 0.032% of GDP, that is, a growth of 0.028% .
What is the advantage of complementary law 182 – Startups Law?
When we talk about laws, we immediately think of regulations that create rules about what can and cannot be done, so that institutions are covered. But that’s not all.
We separate here some legal aspects that are advantages for Brazilian startups.
Strengthening the relationship between Startups and the government
The startup law, which is considered the Legal Framework for Startups , had a great contribution to the growth of many technological initiatives, since one of the aspects of the law provides for a closer relationship between these technology companies and the needs of the public sector.
From the start-ups law, the Brazilian government began to establish partnerships with startups to provide solutions for existing weaknesses in the administration of states and municipalities.
With contracts of 1.6 million (maximum ceiling), the government then began to allow contracts of up to 12 months with the possibility of contract renewal.
This initiative led many entrepreneurs to get involved in the creation of solutions for pain of the most diverse kinds within the economic and administrative scenario.
Regulatory SandBox: the famous “sandbox” for Startups
As its name suggests, Sandbox (from the English sandbox), brings the allusion of test environment , that is, space for beginners to test their products in the competitive environment of corporations.
For this, this modality allows for a more simplified bureaucratic regime that opens space for more startups to test their services and products in front of the public.
The role of investors and growth accelerators are essential for the visibility and growth of startups.
The startups law provides for rules for corporate participation for investors to make their financial decisions regarding contributions to startups, thus protecting the companies that receive such contributions.
Among the various investment modalities, for example, the angel investor has the possibility to apply financial contributions to the startup, without the need for labor involvement or corporate obligation with the company.
However, the company now has access to profits and all development information to measure the company’s performance.
The insertion of laws for the growth of the startup ecosystem is essential for the evolution of the sector, reducing risks and, consequently, the closure of activities.
Startups today aim to become unicorns , which is the term given to Startups that create innovative solutions capable of reaching international proportions with billionaire income.
Expanding the business and reaching great proportions is a sign that indicates the success of a technological solution.
If your company is currently on an expansion stage, planning internationalization , stay on top of our content.