The Brazilian government has created a proposal for a legal framework for startups. The plan, announced on Tuesday (20), aims to foster development and boost investments for technology-based businesses, and make it easier for these companies to bid for government contracts and supply their offerings to public sector organizations.
In a statement sent to the Congress, Brazil’s economy minister Paulo Guedes and science and technology minister Marcos Pontes presented the plan, which included the government’s definition of a startup: formally established and tax-paying tech-based companies with a history of up to six years since foundation and up to 16 million reais (US$ 2,8 million) of annual revenue.
The proposals aim to create a more legally secure environment for entrepreneurs and potential investors. It recognizes the role of angel investors and determines that, for example, such backers should not become partners in the companies they support. On the other hand, angels would not held responsible for any company debt, including cases of bankruptcy.
The introduction of a regulatory sandbox environment to allow public sector bodies to relax rules and regulations in order to buy from startups is also part of the plan, which has yet to be voted by the Congress. A cap of 1,6 million reais (US$ 284,000) will be applicable for individual government projects to be awarded to startups under a new type of contract, specific for innovative solutions.
According to the Brazilian government, the objective is to promote innovation in the startup ecosystem through the purchasing power of the public sector. While welcoming the proposed measures, industry players say there is still work to be done, in areas such as tax relief for angel investors, as well as labor-related measures such as equity-based pay.