The big picture

Twenty years ago, Recife had a problem. The capital of the Brazilian state of Pernambuco was slowly, unexpectedly, becoming an IT powerhouse. Boosted by top-notch classes at the large federal university in Pernambuco, the state had the highest number of computer scientists per capita in the country. But every year, hundreds of those scientists left the region for high-paying opportunities in São Paulo or overseas. Recife had talent, but it couldn’t keep it. And that’s why the tech hub Porto Digital was founded in Recife.

Unlike the unplanned sprawl of Silicon Valley, Porto Digital is very much a planned initiative. The local government, university, and businesses met in 2000 to create an independent entity, the Núcleo de Gestão do Porto Digital (NGPD), to run the hub. It’s responsible for attracting companies to the area, partnering with universities to bring in qualified students, connecting companies with local supply chains, and even pitching startups to investors.

Porto Digital has turned the coastal city in Brazil’s impoverished northeast into a thriving hub for the IT and artificial intelligence industries, generating $430 million in revenue a year as of 2019. The NGPD transformed abandoned buildings and historic landmarks, turning them into offices, coworking spaces, and coffee shops. Companies housed in the hub benefit from a 60% reduction in local and federal taxes through fiscal incentives and can count on free meeting rooms and laboratories at their disposal.

Big Stat: 11,659

The number of people, from over 300 companies, who are eligible to vote for Porto Digital’s advisory board in a general assembly. The board is made up of a mix of people from government, businesses, academia, and NGOs.

View from the ground

The level of support provided by Porto Digital was crucial for founders like Laís Xavier. The Recife native studied at the local university, before launching her edtech firm Mídias Educativas in the city. She said the hub offers assistance in various ways to companies like hers. “[We] have a team setting up the overall advocacy strategy, another one monitoring your software quality, and someone else working on candidates’ academic qualifications,” said Xavier.

But no matter how well-managed the hub’s resources, it can only do so much. Pierre Lucena, president of Porto Digital, admits that it’s hard to compete with the richer cities to the south — or provide a safety net for more vulnerable entrepreneurs. “[In that scenario], becoming an entrepreneur ends up as a privilege of the Brazilian middle class,” Lucena said.

Xavier, who often traveled south during the pandemic to seek more funding, put it more bluntly: “In São Paulo, people are willing to invest more money, and they expect less in exchange.”

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Neighborhood spotlight: Porto Digital

Recife’s future lies in its past. The old town now hosts Porto Digital, with the colonial-era harbor and the local newspaper’s 19th-century headquarters among the 80,000 square meters repaired and renovated into offices, co-working spaces, and, of course, coffee shops. 

Xavier said that concentration is part of the advantages of the area: Fellow entrepreneurs and mentors are always at walking distance, and seasoned business owners can meet new founders by chance.

The big name: Tempest

Tempest, the largest cybersecurity company in Brazil, which sold a majority stake to aerospace conglomerate Embraer last year, is the quintessential Porto Digital success story. Its founders received business training and tax breaks, hired staff from local universities, and even used the hub’s fame to build their brand in the early stages.