Venture capital in Brazil: a comparative analysis of contracting and governance practices
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2025-11-14
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Souza, Sergio Mittlaender Leme de
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The Brazilian venture capital (VC) market has experienced remarkable growth in recent years. While contracting and corporate governance practices developed in the United States (U.S.) have shaped VC transactions worldwide, the practices adopted in Brazil remain largely underexplored in legal scholarship. This thesis addresses this gap by conducting a comprehensive analysis that reviews the U.S. legal and contractual frameworks governing VC investments and empirically examines their adaptation in the Brazilian context through a unique dataset of venture capital financing contracts. The findings reveal a legal dualism characterized by the convergence of offshore VC financing rounds and the divergence of local ones. Offshore transactions, predominantly organized through Cayman Islands and Delaware holding structures, closely replicate U.S. contractual templates with minimal adaptation, reflecting convergence toward global VC standards. By contrast, transactions governed by Brazilian law exhibit significant local adaptations. A notable illustration of this phenomenon is what this thesis terms the “convertible debt puzzle”, reflecting the widespread use of convertible notes to replicate equity-like control rights that, under the U.S. model, would typically be embedded in convertible preferred shares. The thesis further investigates the potential institutional determinants underlying this dualism, including the relative rigidity of Brazilian corporate law, the uncertain boundaries of limited liability, regulatory constraints imposed by the Brazilian Securities and Exchange Commission (CVM), and the tax incentives associated with offshore structures. By demonstrating how global VC templates are not merely transplanted but selectively adapted to local legal and institutional environments, the thesis contributes to comparative corporate law and venture capital studies by revealing a distinctive equilibrium between convergence and divergence in Brazil’s venture capital ecosystem.