saMBA

One of my favorite cities in the World is Rio de Janeiro. I love the city’s natural beauty, and its unique mix of gardens, hills, beaches and the sea. I’m also been a big fan of Brazil with its colorful Culture, Carnival, Samba, Futbol, Ronaldo (the original), Moqueca, and on, and on.

Now, I am also adding Edtech to that list. Brazil is one of the largest Education markets in the World with $250B+ spent and 65+ million students in its education system. The number is composed of 9 million pre-school students, 38 million elementary school students and over 11 million high-school students. The higher education sector has over 7 million students. Certainly, Brazil offers a massive market opportunity for the Edtech entrepreneur.

However, Brazil’s Education system has been lagging behind major economies like the US, China or India, and also smaller ones such as Korea, Singapore, or Finland. In the latest PISA rankings, Brazil is lost in the middle, ranked at #71 in Math, #67 in Science, and #58 in Reading. Over the past decade, Edtech startup activity has been light and local VC investments have largely gone into consumer tech, e-commerce and fintech. But things are changing…

With the shift from B.C. to A.D. (Before Corona to After Disease), Brazilian Edtech activity is gaining momentum. At least two breakout companies have captured big headlines recently, and we expect to see more soon.

Rio-based Descomplica, translated as simplify, was launched in 2011 by professor Marco Fisbhen who wanted to create byte-sized digital content to simplify explanations to entrance exam takers. At the beginning, the model was similar to Netflix with short-form video content and with a monthly subscription.

Today, Descomplica has over 5 million Monthly Active Users and is much more than a subscription service for entry exam takers. Since last year, the company expanded and launched its own digital college Faculdade Descomplica, which offers post-graduate courses in Accounting, Administration, Human Resources, and Education. In 2021, the company’s goal is to offer 20 new degrees and to expand into new markets.

Last week, Descomplica announced it raised an $84 million round led by Softbank and Invus Capital, with participation from the Chan Zuckerberg Initiative, Peninsula Participacoes, and Valor Capital.

Another Brazilian Edtech leader is Hotmart. The company launched in 2011 in Belo Horizonte and works as a digital content platform that connects producers and people interested in learning about a certain subject. The platform facilitates payments, hosting, security, and student services for online courses, in a model similar to Shopify. Hotmart was initially launched from the experience of one of its founders, João Pedro Resende, to promote blogs using SEO strategies. Soon enough, Hotmart evolved to a leading learning platform in Brazil.

The company initially raised capital from angel investors and managed to gain significant scale with little spent over many years. According to reports, Hotmart has now more than 10 million users and over 200 thousand online courses. Not surprisingly, General Atlantic and GIC led an undisclosed (but large) Series A round last year.

Brazil offers a unique market opportunity; on one hand, the country is a massive market with a large student base, but on the other hand, the Portuguese language creates a barrier and limits the TAM to Brazil and Portugal. Hotmart has pushed through that barrier and is already available in over 150 countries.

Last year, Hotmart acquired Teachable, a U.S.-based marketplace provider for teachers to sell their online courses and build their own classroom businesses. Early last year, Teachable was at a $25 million revenue run rate last year and was growing over 75%. The acquisition further helps Hotmart expand internationally, and specifically in the U.S.

While Brazil’s Carnival ended, the edtech Samba is just starting!