Investing in Emerging Markets in Latin America: Opportunities in Brazil and the Healthcare Sector

Combatting mental health stigma through digital technology, growing awareness and entrepreneurship-by-necessity mindset

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As an angel and a VC, I’m driven by curiosity and passion for advancing innovative ideas that tackle pressing issues in essential sectors such as healthcare, focusing on often-overlooked emerging markets. I’m always on the lookout for new markets with untapped (or under-tapped) potential, broadening my scope beyond the usual industry and regional suspects to spot unique opportunities for growth. Surveying the current global landscape, two fields I feel are primed for daring new companies to present compelling digital solutions to pressing problems: the Latin American markets and the mental & behavioral health sector.

Latin America’s Current Tech Boom

Latin America is experiencing explosive growth in its tech ecosystem, and Brazil in particular is a becoming a hotspot for tech innovation. Major industries across a number of traditional sectors are undergoing revolutionary changes occasioned by tech: for example, fintech companies like Nubank, EBANX, Stone, and PagSeguro have already transformed the financial services industry and changed people’s relationship with money. Going forward, Brazil’s unicorns will likely expand beyond the industries that have nurtured them thus far, spurring accelerated transformation of major sectors such as infrastructure and healthcare.

Growing Opportunity in Healthcare

This latter industry is especially primed for productive disruption by knowledgeable and creative tech startups. Brazil represents the largest healthcare market in Latin America and the Caribbean. As an emerging economy, health spending in Brazil still lags behind that in developed countries; however, regionally speaking, it is one of the highest in relation to its gross domestic product. In 2017, Brazil’s health spending accounted for 9.5% of the country’s GDP, or ~$1.282 per capita in 2018.

Thus, I’m particularly excited about opportunities in the healthcare industry, and can’t wait to see the first unicorn emerge in the next couple of years. I anticipate change in this industry following a similar trend to that of financial services: tech startups will unbundle stacks and offer different slices better than incumbents (or government, for that matter), and then, once validated, will start bundling them back.

Digital Mental Healthcare as an Emergent Sector

The healthcare industry is replete with opportunities for innovation, of which I believe the digital behavioral and mental healthcare space is one of the most promising. In Brazil, mental healthcare services have notoriously low adoption rates for a range of historical and cultural reasons:

  1. Mental healthcare is currently centralized in psychiatric institutions, and coverage of community-based mental health services is still very low. Services are unequally distributed across the country’s many regions (although some reforms addressing this issue have been carried since 1990). At present, the number of psychiatrists per capita stands at roughly 5 per 100,000 inhabitants in the Southeast region; the situation in the Northeast region is even more dire, with less than 1 psychiatrist per 100,000 inhabitants.
  2. There is not yet a high degree of integration between primary care and mental health teams working at the Psychosocial Community Centers (CAPS) level. Doctors handle the majority of patient concerns, foreclosing the possibility of allowing a psychologist or psychiatrist to make informed healthcare decisions with patients.
  3. Anxiety disorders and depression are highly stigmatized. People suffering from anxiety and depression often face cultural stigma around these conditions; in Brazilian culture, mental health issues are often considered shameful to discuss openly, and are therefore underplayed and under-recognized.
  4. A fast-paced, demanding work culture takes a toll on workers’ mental health — and poses its own barriers to accessing care. In high-stress/high-intensity environments, such as workplaces, employers do not recognize the need to take time off to prioritize mental health. The impact of mental health on productivity and performance is not yet fully quantifiable, making employers reticent to adopt broader systemic changes in this area.
  5. Mental healthcare is prohibitively expensive. Who can afford access to mental health services? Traditional mental health therapy solutions are cost-prohibitive for most Brazilians, currently available only to the highest-earning 20% of Brazilian society. Only ~25% of the population has health insurance, and even then, it’s very difficult to get an access. This results in mental healthcare only being accessible to a few at the top of the country’s income scale: in practice, only about 1m — 2m people (or roughly 0.5%-1% of the population) have ever done any kind of psychotherapy.

Brazil has a population of over 211 million people, making it the sixth most populous country in the world. Around 68% of the Brazilian population is between the ages of 15–64, a target age range for both anxiety disorders and depression, while access to public health support for treatment remains low. These combined factors produce deeply concerning results: suicide is the second leading cause of death among Brazilians ages 15–29. This statistic is both shocking and entirely preventable: accessible mental health resources such as chatbot guided ‘conversations’, meditations, breathing exercises, mood tracking, and multiple therapy options have been shown to improve mental health outcomes dramatically.

So what are some of the adoption drivers?

  1. With over 4.8k tech startups, including 10+ public ones and 17+ unicorns, . Many companies are run by highly educated, visionary CEOs who understand the importance of hiring, retaining, and nurturing great talent — and also understand the detrimental effect of anxiety, depression and burnout on organizational performance. With the tech sector booming and people being front and center, workaholic culture and its deleterious effects on mental health will increasingly be in the spotlight.
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  1. There is a demonstrated , and innovation in spurred by the COVID-19 pandemic promises to address these interconnected problems. In Brazil, adolescents whose mothers had fewer years of schooling had a higher prevalence of depressive and anxiety disorders. Thus, I anticipate that the incorporation of EdTech in the Brazilian public school sector will have a positive impact on the population’s overall mental health, especially in rural areas.
  2. Growing awareness of mental health conditions and the importance of prioritizing mental health will lead to heightened public awareness of these issues. These topics are gaining the attention of researchers and increasing institutional support: several important in the adult population, including population-based studies, have recently come out of Brazil, featuring data from the Brazilian National Health Survey, the Sao Paulo Megacity Mental Health Survey, the Study of Cardiovascular Risks in Adolescents on children and adolescents.
  3. More than two thirds of Brazilians have access to smartphones and the internet, which exceeds the global average. Nubank capitalized on the massive mobile phone adoption rate and reliable cellular phone service to reach underserved populations in rural areas. This tactic can be replicated in digital healthcare as well.
  4. Generationally, millennials and Gen Z are breaking down historic stigma and silence around mental health issues, openly discussing the importance of mental health and demanding high-quality, accessible solutions in this area. This is also the same category of people who are the most impacted by mental health disorders — another factor pointing to increased interest in digital mental health services.

Going forward

All of this creates a perfect storm for digital behavioral health upstarts. These are hard problems to solve, but the opportunity for tech-enabled startups to improve the quality of life for 99% of the population is enormous, and there are a wide variety of ‘free-riding’ opportunities available. Prolonged physical isolation occasioned by the pandemic exposed the pressing challenge of mental health issues, boosted awareness of the importance of mental healthcare, and accelerated the development of adjacent industries that can speed up time to market for mental health companies.

Vitalk’s awesome team. Image credits:

I believe that the most successful teams will possess a deep understanding of local dynamics and the nuances of local healthcare infrastructure, and be driven by a passion for the cause. That’s why I’m thrilled to have recently joined the advisory board at , a fast-growing digital behavioral health company based in Brazil that makes psychotherapy 5X more affordable than traditional solution, and just as effective. Vitalk is exemplary of the kind of venture I’m most excited about right now, and is emblematic of some key trends I see animating the market in the next few years. I’m inspired by Vitalk’s mission to make mental healthcare accessible, affordable, and de-stigmatized, and am looking forward to helping their team dramatically improve the lives of majority of population in Brazil and LatAm at large.

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Stanford GSB alum, early stage VC in consumer and SaaS, angel investor in ClassPass and Vinebox