Read
the interview:
Magnamed
is one of Criatec's investments. How was this investment made?
Robert Binder: In 2007, BNDES launched a public notice
that mandated capital to create the first large seed capital fund in Latin
America: Criatec. Antera, which I founded in 2005 after finalizing my role as
Executive Director of ABVCAP for 4 years, joined up with the Innovation
Institute in Belo Horizonte and we won the mandate. The target at first was to make
50 investments through six regional offices in Brazil.
With the support of the Innovation Institute, and based
on initial strategy, we set up seven regional bases for Criatec and made 36
investments. In the first two years, there were 24 capital investments, and our
shareholders, BNDES and BNB, decided that instead of 50 investments, we would
make only 36 with some additional rounds for those doing well.
Among the companies that received more than one
contribution is Magnamed. In 2008, through Francisco Jardim, our regional
manager in São Paulo, we found this company at CIETEC (Innovation,
Entrepreneurship and Technology Center) at USP, looking to enter the pulmonary
ventilator market.
They had only one prototype at the time. In three
rounds, they received R$ 5 million of Criatec investments, not including Vox's
contribution in 2015. With these capital infusions a whole range of ventilators
has been created over the last 10 years and produced with national based technology.
A Magnamed ventilator has approximately 200 components and 85% of them are
produced today in Brazil.
Was Magnamed prepared for the high demand generated by
the coronavirus?
The company already exported to over 40 countries and
its production was approximately 250 ventilators per month. The increase in
orders from Italy had already made the company understand that it needed to
increase its production dramatically.
When there came the demand from the Ministry of
Health, a group of companies joined together to make it happen. Suzano advanced
money so that Magnamed could produce. Without any remuneration, other
companies, such as Klabin and Positivo, also joined the effort.
We are in the middle of the process to produce the
6,500 units and, if successful, we should produce much more. This story has
much more to be told. We delivered 600 ventilators in April, and we expect to
reach the capacity of 2,000 ventilators per month.
Was it possible to prepare for a crisis like this?
There was no way to predict this . No one was prepared
for Covid-19. As an investor, when you think about an investment, you try to foresee
everything that is possible, but the imponderable is imponderable.
And how the investor can contribute with the
entrepreneur beyond the financial investment,
especially at a time like this?
In seed capital that's a mantra. The investor is
"hands on", he is joined with the entrepreneur to do all he can to
help. You have to separate the roles, but the investor must be there to help in
everything the entrepreneur is doing. In the case of Magnamed, in the process
of 6,500 ventilators, we had a member of our team, Paulo Tomazela, who worked
entirely dedicated to the company to solve production problems.
What will the post-crisis look like for Magnamed?
The domestic market has large demand and this request
for 6,500 ventilators can be expanded. The recommendation of the World Health
Organization is that a ventilator should not exceed five years in use and the
average in Brazil is well above that, at approximately 17 years.
In addition, a company that already exports to over 40
countries shows that it is competitive. The trend is that the unit cost will
fall due to differentiated production levels.
There is also a typical trajectory in the investment
cycle that indicates that new growth capital investors could enter the company
and it will no longer be invested only by Venture Capital funds.
If Magnamed books the expected revenues of R$ 400
million this year, it could become highly interesting for a Private Equity
fund. Finally, there is another possibility which is to exit from the company through
the capital markets and the Stock Exchange.