Independent innovation network Onovolab is driving a multimillion-dollar expansion of its co-creation centers across Brazil while attracting a flurry of corporate clients interested in tapping into external hubs for new technology projects.
The initiative launched in the city of São Carlos (144 miles from São Paulo) just over a year ago to act as a broker between traditional businesses and ventures with high-growth potential as well as a thriving academic community: the city’s universities produce one PhD for every 180 people, while the national average is one doctor per 5,423 inhabitants. The idea is that organizations can benefit from that mix for their own co-innovation initiatives.
This year, Onovolab’s founders Anderson Criativo and Leandro Palmieri will be driving a $25 million plan to replicate the business model that started in a five-acre derelict textiles factory in 19 additional locations across the country, near to centers of academic excellence and entrepreneurial potential.
“What put Brazil on the map was winning the 1958 World Cup and inventing a cool new move, the drible, which no one else could do at the time, so we hacked soccer. Now we need to hack innovation and do things independently, as we can’t wait for our government to invest and do something along the lines of what has been done in South Korea around here,” Criativo says.
The expansion push will start in the cities of Ribeirão Preto and Bauru in the state of São Paulo, followed by Rio Verde in the center of Brazil and the northeastern capitals of João Pessoa and Recife. A São Paulo city hub with capacity for 400 people will be launched in the first half of 2019 to provide a city base for countryside startups and bring ventures, academia and companies together, while attracting firms seeking innovation resource outside large urban centers.
The countrywide expansion, according to the entrepreneurs, will be mainly funded by high-net-worth individuals from real estate, agribusiness, construction and other sectors, who are based in São Paulo and are interested in diversifying their investment portfolio. A new fund geared at fueling the growth plans, Onovolab Ventures, is also being set up.
“The business appeals to traditional investors due to a few factors: we are giving new meaning to a previously abandoned place, large companies like the concept, there is a huge potential for job creation and fostering innovation ecosystems for the long-term,” Criativo says.
“[Such traditional investors] can sniff out good opportunities: it’s pretty much successful business people in their 60s backing entrepreneurs in their 40s to create a future for entrepreneurs in their 20s. But new economy VCs are keeping a close eye on what we are doing too,” he adds.
“Our initial hypothesis used the rationale of a shopping mall. With lots of interesting things going on in one place, you attract a flow of visitors and business that goes beyond the innovation community alone and investors get that,” he points out, adding that the center has held 170 events in its short life, on themes focused on innovation but also arts and entertainment.
“When you bring an innovation campus to a small city, it ends up accelerating its economy, the local real estate and other businesses that are not necessarily linked to us. Onovolab is also a city accelerator and that’s why places that are removed away from the big urban centers are great for us.”
Purity in the purpose
In addition to money from individual backers, the center generates revenue through projects carried out on behalf of large firms such as pharmaceuticals multinational Roche and Brazilian financial services company Elo, as well as sponsors like consumer credit reporting agency Experian and Amazon Web Services. Most of these organizations have also set up a physical space and team at the São Carlos center, where other 40 firms are based.
“Onovolab is an opportunity for us to access the Brazilian innovation ecosystem in an integrated way: we understood that we could learn a lot and deliver great projects by working with academics, entrepreneurs and startups as well as other large companies,” says Estefani Bello, innovation manager at Roche. According to the executive, the company is now preparing market launches of projects that have been carried out in São Carlos around personalized medicine.
One of Brazil’s main debit and credit card issuers, Elo is an early backer of the Onovolab initiative. According to Hamilton Berteli, IT director at the company, the innovation center has delivered nine projects and is working on another two on a co-creation basis, with Elo staff on site. Additionally, the partners have organized two hackathons that involved over 100 people – including Wanda Hoffmann, the dean of University of São Carlos, who acted as one of the judges – and led to ideas that have been incubated by Elo and are about to turn into market offerings.
“In São Carlos we have been able to use technologies developed nationally to develop commercial projects that allow us to sophisticate our capabilities around understanding consumer journeys,” Berteli highlights, adding that Onovolab’s goal of developing local innovation ecosystems is among the factors that led the company to invest.
“Their motivation to add value to the community where they are based, coupled with the fact they are independent also stood out, as it helps to develop a less corporatist environment with more purity in terms of purpose,” he adds.
Criativo and Palmieri are now pressing ahead with a $2 million renovation of additional warehouses in the old São Carlos factory to make room for tenants – the entrepreneurs expect some 100 companies will be occupying the space by June. One of them is Movile, owner of Brazilian unicorn iFood, who is expanding its presence in the center by boosting the size of its São Carlos team from 20 to 150 people.
Movile expects to fill the new office, which also comprises of an area dedicated to projects with the local technology community, in the next 8 months through new hires in São Carlos. According to Luciana Carvalho, chief people officer at the company, there are plans to expand the area if needed.
“We are excited about Onovolab and São Carlos, as we know the city and the local ecosystem have an ability to create new talents and foster technology-based innovation. There is a great deal of intellectual potential in the city and we plan to keep on growing our team there to accelerate our business objectives,” Carvalho says.
Keeping it real
As the innovation network expands, Criativo and Palmieri want to remain true to the essence of the business, which they got off the ground with barely any resources of their own.
“We have said back in 2017 that we would be the country’s largest innovation hub within 36 months. It was not a throwaway statement because we are making it all happen, but it has been a very challenging journey,” says Palmieri.
“At one stage, we didn’t even have enough cash to buy food for our families, got credit blacklisted and had to cope with the enormous pressure of driving such a large project in a city that was new to us back then [the entrepreneurs moved from São Paulo to São Carlos to start the project],” the entrepreneur recalls.
Like Criativo, Palmieri has been known in the innovation scene in Brazil for nearly two decades, having developed various communities and local editions of international events such as The Next Web. According to the entrepreneur, one of the main goals of Onovolab is to use the duo’s experience and challenges faced along the way to create a safety net for other founders.
“Differently to people running innovation ecosystems on behalf of large companies, if it all fails the worst case scenario for them would be to lose their job. If we were to fail, we would lose everything just like any entrepreneur who has no guarantees,” says Palmieri.
“We have a lot of empathy towards founders because we experience the entrepreneur life everyday ourselves and that’s what will keep us connected to the community. There is no Plan B for us.”