205 business in expansion – BizNews Brasil :: News of Mergers and Acquisitions of companies
An unprecedented ranking by EXAME, BTG Pactual and PwC Brasil reveals the 205 emerging companies in Brazil that managed to expand revenues the most over the last year — and their lessons for all entrepreneurs
One of the most obvious signs of Brazilians’ desire to own their own business is the size of the ABF Franchising Expo, a fair in São Paulo self-titled as “the largest in the world in the franchise market”. After two years of being held online because of the pandemic, the meeting had its 30th anniversary.The edition in face-to-face format in June this year.
The excitement over three days of exhibition at Expo Center Norte, in the capital of São Paulo, is at odds with the climate of uncertainty with the Brazilian economy. More than 65,000 visitors ventured indoors in search of business ideas — the same frequency as the 2019 edition, the last in person before Covid-19. A record 457 franchising brands set up booths at the fair. Of these, almost 200 were there for the first time.
Greater interest forced the Brazilian Franchising Association (ABF) to add another 1,000 square meters to the exhibitor pavilion, reaching 32,000 square meters in total. “Without a doubt, this was the fair of the sector’s recovery after two challenging years”, said André Friedheim, president of ABF. “And it is very important to note that interest remains on both sides: franchise chains with aggressive growth plans and entrepreneurs eager for novelty and profitable businesses.”
Behind the good numbers at the ABF fair is a broader phenomenon: Brazil has never been as entrepreneurial as it is now. In the first four months of 2022, Brazilians opened 1.3 million CNPJs. The amount is 30% of all businesses founded last year, a period with record creation of companies in Brazil (if it continues at this pace, 2022 will have another record breaking). To a large extent, this avalanche comes after regulatory changes to facilitate the registration of new CNPJs.
Nowadays, an entrepreneur takes, on average, one day and 16 hours to register a company in Brazil, according to the federal government. Virtually 100% of the paperwork to become a business owner can be completed online. It’s quite an achievement in a Brazil that, until recently, dumped the burden of bureaucracy on entrepreneurs. Five years ago, for example, the average time to open a company in the country was over three months, according to Doing Business, the World Bank’s ranking on the business environment.
The banner of free enterprise and a favorable business environment made part of EXAME’s 55th anniversary in reports and events dedicated to developing Brazilian capitalism. To celebrate the moment of entrepreneurship, in partnership with the bank BTG Pactual (from the same controlling group as EXAME) and with technical support from the audit and consultancy PwC Brasil, EXAME launches the ranking EXAM Expanding Business 2022a yearbook of the fastest growing businesses throughout 2021. “Small and medium-sized companies are the ones that employ the most in the country, they are the engine of GDP”, says Rogério Stallone, corporate credit partner at BTG Pactual and co-head of BTG Empresas. “We want to give visibility to these businesses, so that they serve as an example and motivation for others who follow the same path.”
The premiere of the special 205 companies with net operating revenue between 2 million and 300 million reais in 2021. The ranking of entrepreneurs began to be drawn in March of this year, with the opening of registrations. To participate in the project, decision makers in companies shared 2021 accounting documents.
The Statement of Income for the Year (DRE) and the company’s balance sheet were accepted — both documents needed to have the signature of an accounting professional. The documentation was analyzed by a technical team from PwC Brazil to certify the veracity of the information and compliance with the ranking regulations.
In a next step, the BTG, EXAME and PwC teams analyzed the profile of the registered companies, looking for sensitive points from the point of view of compliance. All this to form a list of companies listed according to the pace of business expansion in 2021. The higher the percentage growth of the company’s net operating income in 2021, compared to 2020, best placed she was in the ranking.
The set of 205 companies selected for the ranking was divided into five categories. Four of them consider the size of the business and try to reflect the nuances of the universe of small and medium-sized companies. The first of them covers the range of businesses with net operating revenue between 2 million and 5 million reais. At this level, it is common to see new-born companies that are still included in the Simples Nacional, a tax regime with easy rules for declaration. In the ranking, 38 companies are in this stage.
The next category of 5 million to 30 million reais, considers the companies’ acceleration phase. At this level, they are often called scale ups, business jargon with a tried-and-true money-making model. At this stage of life, they are in the mood to win as many customers as possible. Among the 75 companies in this category are names such as the digital marketing consultancy V4 Company, from São Leopoldo, Rio Grande do Sul, one of the nearly 200 newcomers at this year’s ABF fair. Founded in 2012, the company dedicated to technologies to optimize online sales campaigns tripled in size last year — revenue reached 25 million reais.
Subsequently, the ranking listed the businesses with the greatest expansion among the 30 million and 150 million reais in revenue, a more mature level and more with the face of the ‘M’ than the ‘P’ of the acronym PME. Of the total number of applicants, 59 are at this stage.
The next track, 150 million to 300 million reais, fits medium-sized companies already on the path to becoming large. There are 17 registered. Finally, the ranking brings the category of newbies, with CNPJs open from 2020 onwards, or with very little revenue that year. What unites these companies is the spectacular growth in 2021. The first place, DQR Tech, a São Paulo IT human resources consultancy, expanded revenue by 38,852% last year — there were 7.3 million reais in sales.
In addition to financial information, the ranking provides useful information to describe all the finalist growing businesses. On the following pages, in the tables with the financial information sent by the companies, the reporting team found the website, year of foundation, description of the company’s main activities and sector of activity – for this item, we used the same criteria as the yearbook BEST AND BIGGEST, also from EXAMEwhich in 2021 divided the companies into 18 large production chains: Agribusiness, Food and Beverages, Wholesale and Retail, Capital Goods and Electronics, Education and Health, Energy, Pharmaceuticals and Beauty, Real Estate, Mining, Fashion and Clothing, Paper and Pulp , Chemicals and Petrochemicals, Sanitation and Environment, Financial Services, Steel and Metallurgy, Technology and Media, Telecommunications and Transport and Logistics.
All classifieds have one thing in common: managed to grow in a macro scenario that was beyond challenging. In 2021, the covid-19 pandemic imposed severe restrictions on economic activity, with establishments closed and logistical difficulties, in addition to the public health crisis. Inflation reached more than 10%, the highest level in six years, which made products and services more expensive and led entrepreneurs from all sectors to seek alternatives to hold down prices.
Of the 205 companies in the ranking EXAM Expanding Business 2022only two grew below inflation last year. “In a period of adverse economy, seeing companies with an expressive performance demonstrates the entrepreneurial capacity of the Brazilian”, says Elisa Simão, partner at PwC Brasil. Despite the difficulties, Brazil continues to be an attractive environment for those who know how to take advantage of opportunities. “We have a giant market, with many problems to solve, thirsty for innovation and technology”, says Camilla Junqueira, general director of Endeavor, an entity that promotes entrepreneurship. “These are conditions that do not change with the pandemic or the increase in the interest rate and that make our market shine for entrepreneurs.”
A highlight of the first edition of the ranking EXAM Expanding Business 2022 is the national scope of the group. There are companies of 17 federation units, from the five regions of the country. With the largest GDP in Brazil, São Paulo is the state with the highest number of companies listed in the ranking — 47% of the total are from São Paulo.
Of the 15 fastest growing companies in the five categories, ten are from São Paulo. In second place, a surprise: Santa Catarina, the sixth largest economy in Brazil, hosts 27 companies in the ranking, 13% of the total. Most of them are startups or scale ups that were already consolidated before the pandemic because of the good business environment in the state. In addition to low taxes on the national average, he has a tradition of supporting entrepreneurship. The Santa Catarina Association of Technology Companies (Acate) is one of the main producers of business content in the country.
Then comes Minas Gerais: 10% of the companies in the ranking are in the state that has the third largest economy in Brazil, including companies that stand out for their accelerated expansion in 2021, such as opus, of modular constructions, the one that grew the most among those listed in the range of 30 million to 150 million reais. Last year, Opus had operating revenue of 130 million reais, five times above the 2020 level.
A close look at the businesses with the greatest expansion in each of the five categories reveals entrepreneurs skilled in managing the turmoil brought on by the pandemic. These are cases like the Unike Technologiesfocused on access systems via biometrics, which grew by more than 3,000% last year and ranked first in the BRL 5 million to BRL 30 million category.
Among the companies with net operating revenue of up to 5 million reais, the highlight was the e-commerce of pet products Woofwhose revenue jumped from 220,000 reais in 2020 to 2.2 million reais in 2021, an increase of almost 900%.
At the other end, in the highest revenue category, the first place went to FinPeca fintech that invests in the purchase of cattle and had revenue of more than 217 million reais in 2021, 162% above 2020. After the most critical period of the pandemic, the challenges continue.
After years of boom, the venture capital industry is experiencing a global downturn, reducing access to investments and the market value of startups. Now is the time to focus on revenue generation and business sustainability. Although the scenario is challenging, good opportunities will continue to exist for those who combine strategy and execution capacity. The achievements of the companies in this ranking, and the dreams of those who go to a franchise fair to own their own business, point the way to dealing with the challenges ahead.