Economic Turmoil Propels SME Crowdfunding In Brazil

There may be one bright spot for Brazil’s financial services industry as political and economic turmoil rattle the nation.

Reports by Newsweek on Friday (July 1) said entrepreneurs are looking to online funding, crowdfunding and alternative lending to start their businesses as Brazil endures its worst economic recession in decades.

One company operating in this market is Kickante, whose founder, Candice Pascoal, said she was inspired by U.S. crowdfunding sites Indiegogo and Kickstarter but wanted to provide a solution geared more towards the Brazil market.

Reports said Brazil’s alternative SME funding space remains small compared to other markets, however. The majority of borrowers are small, too, focused on social or art projects, according to the publication.

But economic struggles and a lack of venture capital could mean small businesses are more likely to find support through online portals.

“Crowdfunding is both a credibility check for the startup and may open doors for future investors, as well as provides an opportunity to partly fund itself outside of private equity firms or banks,” said one entrepreneur to Newsweek.

Just last month, Brazil welcomed its newest online lending market entrant. Lendico revealed plans to launch its peer-to-peer small business lending platform in Brazil following a deal with Brazil bank Banco BMG.

“In the Brazilian markets, banks are demanding enormous interest rates from borrowers,” said Lendico Brazil CEO Marcelo Ciampolini last month.