COVID-19 and the new paradigm for startups

July 01, 2020

In recent years, many startups have moved to a growth at all cost strategy. As we have seen, this model worked well in some cases, but also proved to be very challenging in others. Out of the pandemic, though, a new improved form of startups is emerging. This new model is one that focuses on pragmatic and strategic growth; one that, after a sale, puts the customer first in all circumstances; one that is built on the values of sustainability and resilience, and, just like a camel (not a unicorn) is capable of crossing a long desert.

On top of having to operate startups amid extreme economic uncertainty (and sometimes also having to rethink the foundations to ensure the health of their business and of their employees), entrepreneurs are now also facing a rapidly changing consumer-behavior environment, in some cases capable of redefining the blueprints of entire industries. In the middle of this vast, public experiment, it has become clear that digital products and services are at the forefront of this transformation (Zoom has become the go-to example of the “demise” of our so beloved in person cafézinhos).

In light of all of this change, startups are once again under the spotlight of their fans, customers, and investors to act as stewards of transformation in their respective industries. Below I highlighted some of the Valor companies that have adapted to this new paradigm shift and that are presenting us with best-in-class problem solving solutions to help Brazilians navigate the crisis and beyond.


Tracking Brazil’s Economic Activity in Real Time:

Arquivei is a data platform and intelligence company that stores and analyzes e-tax invoices or NFEs (Nota Fiscal Electronica) through a SaaS model. The company is quickly becoming Brazil’s largest database for e-invoices, tracking a relevant percentage of the trade of products and services in Brazil in real-time (measured in GDP terms).

Apart from helping over 12k, small and medium-sized companies, as well as enterprise customers, better manage their invoices and stay compliant with legislation, Arquivei has quickly realized that it can act as an efficient channel for the distribution of loans to COVID-stricken SMBs.

Arquivei was also recently invited by the Minister of the Economy (Mr. Paulo Guedes) and McKinsey to create a real-time dashboard of the Brazilian economy aimed at facilitating the allocation of public resources by the government. The company is able to granularly pinpoint what sectors and what types of companies (public company, cooperative, private association, individual entrepreneurs, etc.) have been affected the most by the pandemic.

Measuring Adherence to Social Distancing

InLoco, founded in Brazil, is currently the leading indoor location platform worldwide with over 60 million mobile devices and XBs mapped. Through an innovative technology that allows indoor location tracking with high accuracy, the company is able to map smartphones with 1-3m of precision. Inloco recently launched Incognia – location technology that offers private location awareness for use in mobile applications and connected devices. Incognia is used by B2B and B2C companies for anonymized location insights, ID verification, authentication, and fraud detection.

InLoco’s solutions are being utilized by governmental agencies and over 20 states in Brazil to help monitor regions where social distancing is recommended and precisely measure the adoption of such practices. As a result, agencies are able to track contagion spikes, map movement of infected patients in contagion hotspots, and better understand the virus’ transmission patterns. The company is also creating awareness campaigns in partnership with the Ministry of Health designed for populations in critically affected regions.

Providing e-commerce Infrastructure for Small Businesses:

Olist helps small and medium-sized businesses build online storefronts by giving them the ability to place advertisements, process payments, fulfill orders, and manage inventory. In the midst of a sinking traditional brick and mortar economy, the company offers an online sales alternative, providing a broad range of distribution opportunities, that can serve as a silver lining for mom-and-pop shops and independent brands that are struggling with their doors shut due to the pandemic.

Olist is continuing to launch products, helping their customers: merchants, entrepreneurs, self-employed workers, and artisans adapt to this new reality. Olist Shops is an initiative to accelerate the process of opening an online shop to less than 3 minutes. With thousands of merchants in its customer base, Olist is well-positioned to provide crucial resources to support entrepreneurs and small businesses get through the current crisis.

Supporting Doctors in the Fight Against COVID-19: 

Sanar provides high-quality, affordable tools for healthcare professionals and students to advance their careers. The company uses a crowdsourced content generation process powered by a community of experts. This same content helps train nurses, nutritionists, psychologists, pharmacists, dentists, veterinarians, physiotherapists, and physicians in over 4,000 cities across Brazil.

After experiencing an increase in users as a result of COVID-19, Sanar saw that it could play an important role in helping those that are on the front lines of providing care. The company quickly launched an app designed for healthcare professionals to help guide them through the pandemic with real-time research, best practice procedures and tools, and hyperlocal information. It gave away its acclaimed YellowBook Pro, an app for prescriptions and procedure guidance, free of charge. Now the company is gearing up for its biggest challenge yet: providing training, in large scale, for doctors and health professionals working on the frontline.

We are still in the early innings of the pandemic, and the Brazil-specific fallout from the crisis remains to be seen. We have yet to see which behaviors will endure once our lives go back to normal, but as a VC investor, I am excited to keep investing in ambitious entrepreneurs that are on a mission to tackle very large problems like those mentioned above.