Keys to innovative investments in Brazil: interview with Marcelo Bastos, RJCP Equity CEO

Marcelo-Bastos-RJCP-EquityRJCP Equity is a company based in Rio de Janeiro, Brazil, which was created in a turbulent for investment time. The world was just starting to recover from the 2008/09 global recession, but  Marcelo Bastos and his partners decided back then to invest in companies with some level of innovation through the equity firm.

The reason of the creation of the firm, according to Bastos, was to bring a “larger upside” for the business investments. In an exclusive interview to IntelligentHQ, Bastos revealed that an IPO was not possible when the business started to acquire equity later. Considering this, RJCP Equity had chosen a round of acquisitions with the company’s own capital. On the other hand, the liquidity long observed at Brazil’s stock exchange Bovespa made the company’s shares and stocks listed without any precedent.

In the interview, the director-president of RJCP, Marcelo Bastos, tells more about his investment decisions in a market where so far he has attracted over 1,200 investors through a “close relationship” and “constant exposition of data”.

IntelligentHQ – Why RJCP has decided to invest in the segment of innovation?

Marcelo Bastos – Innovation was chosen as a subject of investment by RJCP Equity because it can bring a larger stake for our investments, making RJCP Equity a product of investments as attractive as the successful innovations in which we participate. The environment of innovation that we met was surprising.

IntelligentHQ – What sorts of innovation are being created mostly in Brazil?

Bastos – We have examined and we are negotiating investments in Brazilian technologies of oil refining, web apps, online games, cryptography data, and other diverse activities. We have realized that three major sectors have offered great opportunity to apply innovations. One is energy, particularly the search for energy efficiency as well as alternative energy sources.

Two: Internet. The use of internet as a tool of consumption of products and services in Brazil have generated market for apps, systems, business formats and innovative forms of online operation. Third is agribusiness. The professionalization of agribusiness and the huge volume of global capital to the sector of commodities designed to exports in Brazil have created an environment for the use of innovation that contribute to productivity, mechanization in the field, and bigger environmental sustainability in those activities.

IntelligentHQ – Which are the companies that RJCP have invested in?

Bastos – Our first investment contract was in a company (Agylix) that will apply in Brazil an American technology to convert plastic waste into petroleum.  The second (contract) was with a company (Building Energy) based in Chicago. It was done to implement an integrated system to control energy efficiency at commercial buildings.

IntelligentHQ – Is Brazil a dynamic market for innovation? What does the country need to take off?

Bastos – On the institutional side, we have met an organized environment to stimulate innovation. Accelerators, incubators, “angel investors” and other structures focused on the development and distribution of innovation that nowadays are very common in many parts of Brazil.

We think that Brazil just needs more time to make these structures work and produce results, so Brazil can be recognized as an important global hotbed of innovation and a technology supplier.

IntelligentHQ – What are the big risks and difficulties of investing in innovation?

Bastos – The great risks lie on the uncertainty about the future of innovations. What’s the scope and the success of the usage? What’s the return of the invested capital? Will we need more capital?

Our method to mitigate these risks are the study of the project, the selection and evaluation of partners (fundamental) and diversification. The biggest difficulty is the distrust of the entrepreneurs with investors in general. RJCP Equity prefers to be a minority shareholder in all companies in which participates without any daily interference. Though, frequently the negotiations bump up on the investor who provides minimal resources. Therefore, the negotiation process takes more time than expected previously.