BRAZIL Law and Practice Contributed by: Rodrigo Casarotti, Alexandre David, Ricardo Melaré and Gabriela Claro, /asbz
some cases, state agencies) act as cornerstone inves- tors in seed and venture funds. Access to domestic VC is cyclical. After a 2021 peak and a 2023 slowdown, investment began to recover from 2024 onwards, with investors focusing on unit economics and more mature models. Government programmes have eligibility criteria (eg, size, innova- tion profile, sector and governance), so they are not automatic sources of capital. Foreign VC firms are active across stages, and later seed, Series A and growth rounds often include international funds and corporate investors alongside domestic capital. 2.5 Venture Capital Documentation There is no official model documentation issued by Brazilian authorities or associations, but VC documen- tation follows well-developed market practice. Term sheets, quotaholders’/shareholders’ agreements, subscription agreements, convertible loans and equity or phantom option plans are relatively standardised, drawing on US and UK structures and adapted to Bra- zilian corporate, tax and FX rules. SAFE-inspired instruments are increasingly common but are typically localised – documented as Brazilian- law “SAFE style” agreements or as convertible loans using SAFE concepts – to ensure consistency with Brazilian law. For foreign investors, commercial terms will usually be familiar, even if legal wrappers reflect Brazilian specifics. 2.6 Change of Corporate Form or Migration Start-ups typically remain Limitadas at the operating level through early stages and convert into SAs when they need features that are impractical in a Limitada (eg, multiple share classes, capital markets alignment or IPO preparation). This is achieved through a reor- ganisation so the operating company becomes an SA. From Series A/B onwards, it is relatively common to implement an offshore holding company (often Dela- ware or Cayman) above the Brazilian operating com- pany, with all investors participating at the holding level. Drivers include investor familiarity with foreign company law, perceived legal certainty, standardised VC documentation and, in some cases, tax and exit planning.
In practice, this means that the “Brazilian tech story” is frequently a Brazilian operating business under an off- shore holding company, particularly once international investors and later-stage rounds enter the picture. 3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale In Brazil, venture-backed technology exits are more likely to occur via sale (trade sales or sponsor-to- sponsor deals, often combined with shareholder secondaries) than via IPO. Most meaningful liquidity events for founders and early investors arise earlier through M&A, while IPOs tend to occur later and in fewer cases. This has been reinforced by the prolonged closure of the domestic IPO window. Brazil’s B3 exchange has seen no new IPOs since 2021, with 2022–24 recording zero listings, amid macroeconomic and market head- winds. Dual-track processes have therefore been less common, and most companies and VC backers opt for a sale process as the primary liquidity route, keep- ing IPOs as a longer-term alternative. 3.2 Choice of Listing Listing venue is driven by size, investor base and geographic focus. Domestically oriented businesses have historically listed on B3, particularly where rev- enues and operations are concentrated in Brazil and the natural shareholder base is local. Larger or more international platforms – especially in financial servic- es and fintech – are more likely to consider a foreign exchange (often in the USA) to access deeper liquidity, specialised research coverage and a broader universe of technology-focused investors. As at the date of writing, there have been no new IPOs on B3 since 2021, with equity capital raising largely through follow-ons by listed issuers. Many technology companies therefore postpone listing and remain pri- vate longer or, if scale and governance justify, evaluate a foreign listing when conditions improve.
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