BNDES backs first LatAm VC fund focused on early-stage IoT projects

Brazilian development bank BNDES is backing a venture capital fund for early-stage investments and reportedly the first focused on internet of things (IoT) in Latin America.

The fund is managed by Indicator Capital and is co-anchored by BNDES and Qualcomm Ventures. In addition, it has five institutional investors: Banco do Brasil, Multilaser, Motorola/Lenovo and Telefônica Ventures.

The fund kicks off with 240mn reais (US$45.2mn) for VC investments and plans to invest in up to 30 startups, with 10mn reais on average, for the next 10 years. Seven investments are expected to be made by the end of this year.

“We already have two deals signed, though they’re not yet public. One with a startup focused on logistics and the other on public surveillance,” Derek Lundgren Bittar, co-founder of Indicator Capital, told BNamericas.

The fund is the result of a joint initiative between BNDES and Qualcomm Ventures, the investment arm of Qualcomm. In December 2019, Qualcomm Ventures launched a public call to select a manager to structure and operate the investment fund.

Together, BNDES and Qualcomm Ventures made an initial investment of 85mn reais. According to Bittar, BNDES comes with an investment cap of around 25% per project.

Indicator Capital’s initial goal was to launch a fund with at least 120mn reais, but the demand made it possible to close the fundraising for twice that amount.

With the funding, Indicator Capital became the largest Brazilian venture capital manager in Latin America specializing in IoT, said Bittar.

Although 100% focused on Brazilian startups, the fund’s ultimate goal is to make Brazil a benchmark for IoT innovation, he said.

The fund is aimed at startups developing services and products preferably aligned with Brazil’s national IoT plan, drawn up by BNDES and which targets the agriculture, health, industry 4.0, smart cities and mobility verticals.

According to the study that supported the national IoT plan, the impact of IoT on the Brazilian economy will be around US$200bn by 2025.

In a statement, Bruno Laskowsky, director of participations, capital markets and indirect credit at BNDES, said that the success of the fundraising shows “how the allocation of public funds can be enhanced by acting in partnership with private investors to foster strategic sectors for the country, such as the IoT ecosystem.”

Speaking during the launch, BNDES president Gustavo Montezano said the fund is "emblematic" of how the bank can support these companies.

“BNDES has been a pioneer in investments in seed capital funds for many decades, but our vision is that the bank will increasingly have to support this type of initiative with private partners,” Montezano said.

“For us, making direct investment in small companies is not viable. Those who operate with partners are the ones that should go the last mile and deal with companies and entrepreneurs.”

The BNDES head said the bank is open to new initiatives and similar partnerships with the private sector.