There
comes a point when those who do business in Brazil think they have seen
everything: inflation, the most diverse currency crises, recessions typical of
wartime but in periods of peace. This is all with an historical backdrop of a
gigantic state, an octopus with tentacles that pretends to want to help but
only gets in the way. We are now in 2020 and facing a crisis that no one
imagined they would find. A crisis that combines global aspects and is
exacerbated by our political mishaps and lack of leadership. The result is an
economic plunge that certainly frightens everyone - and makes the mission of
our industry, today and in the future, even more important than it already was.
I
have no doubt that having Private Equity and Venture Capital investors as
partners helps Brazilian companies to better weather and get through this
storm. Our industry is formed by experienced people, with masters and doctor
degrees in the Real Brazil. Even though we have gone through so many crises, we
have helped to boost companies and given our investors a return and whilst leaving
our mark on the Brazilian economy. For the entrepreneur, this experience is
worth a lot. We know that every crisis passes, and that it is essential to
avoid panic and focus on what is under their own control - the personnel, the
cashflow, the customers. At this time, this combination of governance,
experience and long-term capital that shares risks and gives access to best
practices is worth even more than in normal times.
We
have talked about the actions taken by each of us to help our partners and the
teams of the invested companies, and this only proves the strength, resilience
and importance of the Private Equity and Venture Capital managers. But I would
like to take this opportunity to talk about the future.
The
reaction to the crisis will accelerate some phenomena that were already
happening. One of them is the exhaustion of the fiscal capacity of our state.
In a move necessary to alleviate the suffering of families, our debt will
increase even more. At that time, ideas that we thought were discarded, such as
the miraculous printing of money and other false solutions, are beginning to
reappear. Not much is said about the only certainty we actually have: that the
Brazilian economy depends on private capital to recover.
The
global Private Equity and Venture Capital industry has over two trillion
dollars to invest. You would expect our government to be doing its best to
attract this long-term capital - to revitalize our infrastructure, buy
state-owned companies, make our startups take off and attract quality partners
to established companies. We don't need much. Clear rules, legal certainty:
that's the basics. But unfortunately, we have been treated as agents of evil by
the government, which has not yet understood how important we can be.
No
doubt you have been following this rather inglorious journey for the past year.
ABVCAP goes out of its way to convince the government to untie the knots that
hold back long-term investments in Brazil. It is frustrating at times, but I do
not lose hope. It's a fair fight, and we'll keep fighting. We have been trying
to bring to Brazilian society the message of the importance of our companies in
the daily lives of citizens and in the capital markets. An importance that is
not clear to many in the country.
Maybe
we really need a crisis of this magnitude to realize the obvious. Our industry
is mature, we have more than two decades of history and foreign and Brazilian
funds with topnotch teams, ready to multiply their investments at a time when
long-term capital is more important than it ever was. We can attract many more
investments than we have done so far. The ecosystem exists and is consolidated and
proven. Incomprehensible how it can be ignored or even antagonized by those who
should understand it the most.
The
Private Equity and Venture Capital industry is helping Brazilian companies
survive this difficult time - and as with other crises in the past - will also
help the country grow again.