VCs and seed capital funds are still recovering from the recent bad omen. Even so, people like Reid Hoffman preach that startups can right the economy by providing jobs and innovation at a very low cost. In his article “It’s the Startups, Stupid”, Hoffman mentions that small business loans have been proven successful in developing countries, referring to kiva.org for its business model that connects funders and entrepreneurs.

In regard to micro-lending, it is not widely known that Brazil - as a developing country and part of the BRIC - has government agencies that strive to make entrepreneurship blossom. I could mention several of them, but FINEP is one that hits the bull’s eye. Funded by the Science and Technology Ministry and active for more than 4 decades, FINEP destinates hundreds of millions of dollars every year to support tech startups, innovative products, and investment funds.

A recent project from FINEP is called Prime. It will give away US$ 50,000 to hundreds of startups – tax free and no return needed. The conditions are simple:

• the company must be no more than two years old.
• 1/3 of the money will fund 2 founders,
• 1/3 will pay a part-time controller, and
• 1/3 can be split with marketing, financial, HR, and management consulting.

One of the main reasons startups fail is that the founders can’t work full-time on their products, since they need to work somewhere else to pay the bills. With Prime, that will be a little easier for 12 months.

Despite of that, there are cool Brazilian startups that have the potential to grow beyond our borders. But we still need this kind of government support, because the seed capital industry is not mature. Existing seed funds are all becoming VC funds to bite a larger piece of the cake, and the seed capital industry is left a little behind. Angels are still trying to form groups, but we have a long way to go.

Our initiative at Incubadora de Idéias tries to address this need. If you’re either an angel, seed fund or entrepreneur, get in touch.