Pedro Marton Fereira made a life-changing decision in November 2015. He was about to launch a health tech start-up in his hometown of São Paulo, Brazil’s business capital, when he met Gabriel Sant’Ana, an old friend from his time studying at the Federal University of Santa Catarina (UFSC).

Mr Sant’Ana, who is the executive director of Santa Catarina’s technology association (Acate), convinced Mr Marton to set up his company in Florianópolis. It turned out to be one of the best decisions Mr Marton ever made. 

After moving to ‘Floripa’, as it is known locally, Mr Marton joined an incubator, raised capital from angel investors and developed relations with Albert Einstein Israelite hospital, one of the largest in Latin America and now a customer of his.

“[Floripa] is a smaller ecosystem than São Paulo, but it’s more connected,” says Mr Marton, who is the CEO of epHealth, a platform for clinical trials and public health workers. He says the city’s relatively small, but supportive, tech community helped the growth of epHealth, which has a research and development office there and is now headquartered in London.

For years, students and entrepreneurs have upped sticks from Brazil’s polluted megacities and moved to Floripa, which is the capital of the state of Santa Catarina. Connected to the mainland by a suspension bridge, the city is home to 500,000 people and lies on a 33-mile long island with lush rainforests, hiking trails, lagoons and beaches popular among surfers. 

While venture capital investment in Floripa is lower than in larger cities like Rio de Janeiro and Curitiba, according to PitchBook data, it punches above its weight. A 2021 Acate survey showed the city has a greater concentration of tech companies — 7.4 per thousand inhabitants — than any other capital in Brazil’s 26 states. 

However, founders and ecosystem experts say that start-ups still need to conduct business and raise later-stage funding in larger Brazilian cities. Florianópolis has also become a victim of its own success. Despite a steady stream of talent from local universities such as UFSC, the local market for tech talent has become increasingly competitive. The influx of people has also pushed up property prices and heightened existing mobility issues on the island.

Early beginnings

Floripa’s tech ecosystem dates back to the 1960s with the establishment of UFSC, its laboratories and research groups. In 1986, Brazil’s first technology-based incubator, Celta, was created in Floripa, followed by a number of other incubators and technology parks which are now dotted across the city.  

A critical juncture came in 2003, when Floripa’s city council decided to reduce the local municipal service tax (ISS) rate they charge tech companies from 5% to 2%. This led many other tech firms to move to the city from elsewhere, including São Paulo, where the ISS rate is still 5%. 

Topázio Neto, mayor of Florianopolis, tells fDi that this initiative has enabled the tech industry to greatly improve the city’s economy and services sector. Tech is the largest contributor to local taxes, he says, helping to lift living standards, promote real estate development and diversify the city away from seasonal tourism. 

A number of exits — when an entrepreneur sells their business in part or whole — prove their focus on tech is paying off. Major firms that have entered Floripa through acquisitions include e-commerce giant Mercado Libre and Brazilian software company Totvs, which in 2021 bought marketing start-up RD Station for $370m. 

More start-up ecosystem stories: 

• Piedmont’s hopes for start-ups to future-proof its economy
• Salt Lake City becomes new tech paradise
• UK Midlands universities to boost spin-outs with investment vehicle

Today a network of innovation hubs, including Sapiens Park, home to major Brazilian companies such as software developer Softplan, has made the island city a magnet for tech start-ups and talent. As Floripa’s tech ecosystem has matured, it has also attracted even more experienced entrepreneurs, says Marcos Mueller, CEO of Darwin Startups, an accelerator and venture capital firm. 

Among them is Raony Bourscheidt Rosseti, a former finance executive and CEO of Melver, a financial education start-up he founded in 2021. “After years of living in large cities like São Paulo and New York, my wife and I decided to move to a city closer to nature, reminiscent of our childhood,” he says, adding that as a kayaker, he was “captivated” by the Lagoa da Conceição, an emerald lagoon near the city.

Talent shortage

Entrepreneurs tell fDi Floripa is also unique in how the public and private sector work together to support them. “They’ve done a great job at integrating different actors running the community,” says Arnobio Morelix, a senior advisor to the Global Entrepreneurship Network and the CEO of Sirius Education, an AI-focused remote university, who has participated in Floripa’s annual start-up summit. 

Local universities and the draw of Floripa’s unique lifestyle has created a vibrant pool of technical talent. The city has “very talented professionals in engineering, data, design and product that are more accessible and less expensive than hiring staff in São Paulo”, says Daniel Ferretti, the chief marketing officer of fintech Franq, who moved to Floripa in 2019 to co-found the company. Santa Catarina state, with Floripa at its heart, is now home to the third largest (9%) share of start-ups among Brazilian states, behind only São Paulo and Mina Gerais.

Despite a strong pool of technical talent in the city, retention has become increasingly difficult, particularly as engineers can earn more by working remotely for companies paying in US dollars rather than Brazilian reals. Floripa’s city hall has a tech inclusion and talent programme to address this issue by encouraging more people to join the sector.

Alexandre Souza, innovation manager at Sebrae, a local start-up support organisation, says that Floripa start-ups could also use more angel investors, a problem faced across the region. “Our biggest problem is that the vast majority of start-ups here are business-to-business and our market is relatively small,” he adds.

The influx of new residents have also pushed up living costs and worsened traffic and other mobility issues in the island city. “The city’s infrastructure, especially in the summer, falls short of the level reached by the economic ecosystem,” says André Krummenauer, CEO of Involves, a locally based retail tech start-up. Despite these challenges, the appeal of Florianopolis remains thanks to its beautiful setting and maturing tech ecosystem.  

“The nature [in Floripa] is really aligned with people that work with technology and marketing,” says Mr Marton of epHealth. “It inspires people to be more creative and decompress [from] the daily stress of business.”

Do you want more FDI stories delivered directly to your inbox? Subscribe to our newsletters.

This article first appeared in the April/May 2024 print edition of fDi Intelligence.