Getting money in the door: raising a first venture fund in Brazil

The access problem

Brazilian private capital is concentrated. The relationships that produce a first anchor commitment sit in a small number of institutions and a smaller number of families, and almost none of them respond to cold outreach. Emerging managers who raise successfully in Brazil generally do so on the back of a visible operating or investing track record in the sector they are raising against.

The practical implication is that the fundraise starts long before the regulamento is drafted. Publishing your thesis, showing your work, and being useful to founders and to the institutions that fund them is what converts a cold market into a warm one.

Who actually writes cheques in Brazil

The Brazilian LP base for a first fund is broader than most managers expect, but each segment has different diligence expectations and different timelines. Development finance institutions and innovation agencies bring credibility and process. Family capital moves faster but is relationship dependent. Institutional allocators run the heaviest diligence and are usually a fund two conversation.

• .BNDES has a long-standing programme of investment into Brazilian private capital funds.
• .Finep funds and co-invests in Brazilian innovation, including venture capital programmes.
• .IDB Invest and IFC invest in Latin American funds and suit regional mandates.
• .Family offices concentrated in São Paulo are a significant source of first fund capital.
• .Corporates invest both directly and as LPs where the thesis maps to their sector.

• BNDES
• Finep
• IDB Invest
• ABVCAP

Sizing the fund backwards from deployment

Work the fund size backwards, not forwards. Decide the cheque size the thesis requires, the number of positions needed for the portfolio to work, and the reserve ratio for follow-ons. That produces a deployable number. Then check whether the management fee on that number actually funds the team you need for a full fund life.

In Brazil the cost base includes items that a Delaware manager does not carry, notably the administrador fiduciário, the custodian and the reporting obligations that attach to a FIP. Model those before committing to a target size, because a fund that is too small to pay for its own administration is a governance problem, not just a commercial one.

• .Initial cheque size and target ownership defined by the thesis.
• .Number of positions required for the portfolio construction to work.
• .Reserve ratio for follow-ons stated explicitly to LPs.
• .Administrador, custodian and audit costs modelled across the full fund life.
• .Team cost tested against the management fee at the target size.

Choosing the vehicle

Brazilian private capital funds are governed by CVM Resolução 175. For venture strategies the standard wrapper is the Fundo de Investimento em Participações, with sub-classes including Capital Semente and Empresas Emergentes. Where the strategy is not purely equity participation, a Fundo de Investimento Multimercado is sometimes used instead.

The structural fact that most surprises managers arriving from other jurisdictions is the mandatory separation of roles. The administrador fiduciário and the gestor de recursos are distinct, separately registered parties. That separation is a real governance strength when explained properly to international LPs.

• CVM Resolução 175

Manager registration with the CVM

Managing third party securities portfolios in Brazil requires registration with the CVM as an administrador de carteiras de valores mobiliários, in the gestor de recursos category, under CVM Resolução 21. This is a personal and institutional process with its own documentation and compliance requirements.

Start it early. The registration path, the choice of administrador, and the drafting of the regulamento are interdependent, and running them sequentially adds months to a first close.

• CVM Resolução 21
• CVM: regulator homepage

Bringing in international LPs

Non-resident capital entering Brazilian markets is governed by Resolução CMN 4.373, which sets registration and local representation requirements on the investor side. Managers with a materially international LP base commonly run parallel structures so that domestic and non-resident investors each hold through the wrapper that suits them.

That decision has cost consequences. Two vehicles means two sets of administration and audit, so it should be made against a realistic view of how much offshore capital the fund will actually attract.

• Resolução CMN 4.373

Anbima and market expectations

Beyond the CVM regime, Anbima publishes codes of regulation and best practice that shape what Brazilian institutional LPs expect from a manager. Adherence is a market signal as much as a compliance question, and it is one of the cheapest credibility investments a first time manager can make.

• Anbima: Códigos de Regulação e Melhores Práticas