A tale about tech entrepreneurship in Brazil - Part I
How is tech entrepreneurship scenario in Brazil?
Entrepreneurship scenario is always challenging. Each country has its own particularities. Some entrepreneurs thrive, but most don't. If you ever wondered how does it work somewhere else this is your chance to hear about tech entrepreneurship in Brazil.
Why am I writing my history?
Today is February, 2nd, 2016. And as it is, although I have two companies, I consider myself unemployed.
So, this is a tale (or a series) about technology entrepreneurship in Brazil and about my learnings.
For Brazilians reading this, please tell your history at comments, It will enrich this post. I also would love to hear about entrepreneurship at other countries!
Most of this text is based in my experience and point of view. I try to talk about it lightly and laugh of past situations, but these are serious topics.
Brazil isn't entrepreneur friendly.
I know a lot of entrepreneurs that faced the same challenges that I did and rose above it. I can only wonder how well would they do with the right support! For them I have the uttermost respect and admiration.
So let me walk you to our begin and our firsts choices and learnings.
June, 23rd of 2012 was a Saturday. Also, it was the 100 birthday of Alan Turing. Me and my boyfriend woke up to discover an impressive Doodle we obsessed about. We played sometimes and shared it with lots of friends.
We liked it so much, we thought doing it a game with more puzzles to solve.
It was never released – even though it was developed almost entirely twice. But this post is not about this situation, we'll get to it in the future. The important thing is, that's how we decided to start a business.
Alan Turing Google Doodle
We had some money saved, but we discussed and decided to have enough money to survive a year without making one single Real (Brazilian currency). So we started saving it to begin our company. Eighth months later we quitted our jobs. We were thrilled and excited and ready to conquer the world with our non-existent company!
We had no formal company yet, so we started our registering process. Pretty normal right? Not here. Our timing was terrible.
It may sound weird to you, but Brazil is a very bureaucratic country.
Usually it takes three months to register a company here. It took us eight months. We were a two-people-home-based-software-services-enterprise and our registering process ended up being accessed for environmental impact.
If you have any curiosity about how the environmental impact assessment is done here, you're asking to the wrong person. In my city, Florianópolis, it was: The application was sent to the local government department responsible for the analysis, we paid a fee and waited some months for the process to move to other department. So it may come as a surprise that Florianópolis, is the 2nd best city to endeavoring in Brazil.
A view of Florianópolis
As this delay is a very common reality, most people / companies take on projects anyway. To make the firm survive, clients and entrepreneurs agree that the client will hire the service with a special discount, but they won't receive the “Nota Fiscal” (aka Bill or Invoice, from now on I'll just call it “NF”).
For many Brazilians it's called informal economy and it's very usual: A somewhat necessary work-around a problem. Making it work in Brazil takes flexibility and adaptation. Also, it was (and still is) Tax Evasion. And we were not ready to compromise.
During this eight months, we only took jobs from our former employer. And as we trusted them, we agreed that we would deliver the whole outsourcing software project and when the application was finished in all the governmental spheres we would send the bill and receive our payment.
One lesson I learned through out time is that I should have done the same arrangement with other companies. We always worked with signed contracts, and now I know I could easily charge them later. We certainly had clients that delayed the payment (with no previous notice), but we always got paid.
So, the first mistake: Leaving my job before having the company formalized, therefore facing an eight month period without income.
I could say I should have prepared myself better, that my planing went wrong. Well, we did studied and planned, really. But some things you learn by doing it. I truly believe that endeavoring requires studying, planning and doing. The first two, by themselves, won't do.
Same beginning scenario?
Is it possible to start your enterprise as a second activity? If it is, do it.
If it's not, formalize it before quitting your job.
Start with MEI.
Oh, wait. What is MEI?
You see, as we were a society we started one limited company ME – Microempresa (freely translated to “Micro Enterprise”). We consulted an accountant firm, they were the specialists, we heard. But there's a much simpler legal form a company can exist. Me and my partner could have started a MEI – Micro Empreendedor Individual (free translation: micro individual entrepreneur). There are limitations of activities and monthly revenue, but for a newly started company I highly recommend each partner to register a MEI and formalize their financial and Intellectual Property arrangement with a contract.
What is ME and MEI?
"MEI - Micro Empreendedor Individual" (freely translation: “Micro Individual Entrepreneur). It is one of the legal forms of a company in Brazil. It is commonly used by self-employed professionals or freelancers.
ME - Microempresa (freely translation to “Micro Enterprise”). The revenue limit R$ 360.000,00 annually and the enterprise is allowed to have partners.
Both types of enterprise may use the "Simples" or "Super Simples" tax regime. MEI have some Governmental protection and lower taxes.
Registering a MEI is way faster and it does not require you to hire an accountant firm, which lowers your expenses. Did I know about MEI? Yes, but there was no specified activity concerning design, programming, software or the like in the list. By the time I started, I was far less flexible and thought it would be wrong to do some workaround this.
So, how was people doing it? They were declaring activities like “data lists and other information edition”. After all a data base is a set of data lists, right? A software is a way to edit them.
Don't be shocked. You see, one's got admire we Brazilians. We really try so hard to make things happen. This professionals were so right the Government did not complain about it at all. In fact, as in 2015, It included these activities at MEI's list.
Why I think they were right working around a law? They had good will. They simply wanted to do their work and pay their taxes. The law failed to include all possible freelance activities and when passing to the real world it had to be changed.
By that time, with my present knowledge, I'd start again as a MEI. I'm pretty sure I'd face different problems and learn with them. I'd have accepted this work around.
There's no formula. Each choice will lead to other hits and misses. Cause life is unpredictable. You must start your adventure and watch as it unravels.
Hey, help me satisfy my curiosity!
Do you see similarities between this happenings at Brazil and the ones at your country? Please tell us your country and answer at the comments!
© 2016 Amanda B Meira