The day the Earth stood still… The day the Earth stood still…!!!

No, you won’t go “crazy beauty” if you suddenly start singing Raul Seixas’ hits. Hold my hand and stay calm, because today’s topic will slow down the rotation of the planet, and “maybe” align stars.

Straight out: “New space”, do you know what it is? Maybe, maybe, you’ve already come across the term somewhere. But let’s go.

New Space is the New Space Economy. Which translates into some awesome little rockets tearing through the indigo sky, bringing out more and more “gosh” , “fantastic” and “wow” all over the world.

Not to mention the importance of satellite images for border security and good environmental management, regardless of the biome. New forms of energy and new materials also come into play, especially regarding the flow to satellites.

Aerial view of farmland and forest.

In this stratosphere, there is the world’s GDP. Because billionaires are, in fact, the most visible face of this new space economy: Jeff Bezos (Amazon), founder of Blue Origin; Elon Musk (SpaceX); Richard Branson (Virgin Galactic). All of them taking their rockets out of the garage on the weekend to take a ride to the closest natural satellite to our planet, the Moon.

Space jokes aside, the fact is that the aerospace industry is not just about rockets. It involves a wide ecosystem, from airplanes, helicopters, satellites, communication and navigation systems to the latest trend in the sector: the production of air taxis and (surprise!) flying cars!

Yes, the signs of the future already existing in the market allow us to glimpse a world in which we will have at our disposal, for example, flying cars – the so-called eVTOLs. Who?!? eVTOL, which means electric vertical takeoff and landing vehicle. Hello, Jetsons!

We will very soon be taking this contraption from home to work, from work to home. Just to reinforce our fantasies, EVE, an urban air mobility company created by Embraer, has already announced that it plans to test flights of its eVTOLs by 2026.

This, without mentioning the delivery. Because drones at your doorstep are already a (near) reality. Flying pizza is coming. And, with an impressive cash flow.

“The ability of satellites to read our territory, for example, from satellite images with multispectral sensors, from optical to infrared capture, is something revolutionary”, explains Renato Ramalho, CEO of KPTL.

Revolutionary and very profitable. A report by the Aerospace Industries Association (AIA), in partnership with S&P Global Market Intelligence, says that the sector generated over US$955 billion in sales in 2023, an increase of 7.1% compared to the previous year. Brazil’s GDP cannot grow 5% per year. Just look…

Brazil, show your face

Everything is very good, everything is fine, but what about us? Are we sitting in the pilot’s chair or in a worn-out armchair at the back of the plane?

To answer this question, we need to go back in time a little. Get comfortable on the next star bus and, if you can, take the window seat.

Because the first step is to understand that we have a true aerospace hub that qualifies us for a relevant participation in this new era of the industry – and this has to do, of course, with Embraer and the aerospace hub of São José dos Campos (SP), an hour and a half from São Paulo (SP).

Next, let’s take the “DeLorean”, the car from the movie “Back to the Future”, and go back to 1940. In that decade, the Aeronautics Technology Center (CTA) was created, an agency linked to the Ministry of Aeronautics. From this “ground zero”, in 1950, the CTA set up its engineering school, the Aeronautics Technology Institute, the famous ITA. The objective, obviously, was to train aeronautical engineers. But there was room for more. There was room for a company. As well as there was room for the National Institute for Space Research (INPE) and the relevant climate forecasts.

INPE control room.

So, from then until 1969 it was just a short step. With the arising of Embraer that year, Brazil turned the corner. And it didn’t take long for the company to become a world power in the aerospace industry.

Because of all this, the Paraíba Valley region – which includes the cities of Taubaté, São José dos Campos, and others – crystallized. “A continental country like ours, much less integrated at that time, needed means for both civil and military aviation to develop. The competencies established by the then Ministry of Aeronautics, via CTA, the essential arrangement of political support, investments and government purchases, and innovation with the newly created Embraer were a case of success of the much-cited triple helix: government, academia, and industry acting synergistically”, recalls Moura.

There are many examples of technological and business creativity that have led Embraer to international prominence, says the former president of AEB. Huge challenges have also forced it to reinvent itself: exploring new market niches, risky partnerships to develop innovative and highly competitive products, privatization, just to name a few milestones in the history of our leading exporter of technological products.

Another important point is that the demands generated by Embraer led to the creation of different companies in this ecosystem. “Akaer was born acting as an engineering services provider for Embraer. Today, it has projects in several countries. Another remarkable example was Embraer’s investment in Tempest, a cybersecurity company that, after achieving international prominence, ended up having its control taken over by the investor. This is how, today, we can say that Brazil has a true aerospace hub centered around Embraer and coveted by competitors”, explains Moura. Akaer is one of the largest Brazilian companies in the development of aeronautical projects.

Aerospace startups

The formation of an ecosystem based on Embraer and the São José dos Campos technology hub has led to the emergence of several companies over the years. Many startups were born from former employees of companies in the sector and graduate programs in the area. As a result, the aerospace industry is now spread across different regions, and is no longer concentrated exclusively in the Paraíba Valley.

And many, many, of the sector’s startups have developed some technological resource that is used in aerospace equipment. “Others have moved into services, such as credit and other needs of agribusiness,” says Moura. “It is clear that the most successful cases are those that do not depend essentially on government demands or a single client”, he says.

Agrotools, a KPTL investment, for example, uses every bit of aerospace information. Previously, explains the CEO of KPTL, a bank used information from credit bureaus, revenue, productivity history, or tabular information to approve financing for a rural producer. “What Agrotools did radically changed the way credit is analyzed. Using georeferenced images of a territory, the company created more than 1,300 layers of information, which obviously provide security to any financial institution when it comes to granting financing,” explains Ramalho.

Agrotools control room, integrating mapping, data, and location intelligence.

In this sense, supporting the training of these new startups, developing entrepreneurship and management skills, is essential. Space Wise, for example, operates in this scenario, creating projects and events to prepare entrepreneurs.

For Moura, the space (no pun intended, I swear!) for Brazil in this market involves defining niches in which the country can be competitive. Prominent economic sectors, such as agribusiness, mining, oil and gas, as well as other promising ones (renewable energy and AI hubs).

“Autonomous aircraft, low-carbon aircraft, satellite remote sensing, asset analysis with AI applied to imaging, the insurance market, communication systems for remote locations, and assets are some of the areas where innovation is in high demand”, he says.

“Our aerospace DNA can be strengthened as we improve this entrepreneurial vision, starting in elementary school and, more strongly, starting in high school. The playful aspect of aviation and space, as well as robotics, can be well channeled to improve our attraction of talents”, explains Moura.

Innovation DNA

It is precisely in this area that the Institute of Technological Research (IPT) operates, an organization linked to the government of the State of São Paulo. The institution serves 3,000 companies per year, many of which with solutions and activities in the aerospace sector. “IPT has a unit in São José dos Campos, which houses the Lightweight Structures Laboratory, a center with significant synergy with Embraer and other companies in the sector,” says Anderson Correia, president of IPT. “Examples of this include the development of lightweight materials, which are essential for aviation (weight reduction helps make aircraft more efficient) and for satellites, which are also becoming increasingly lighter and more efficient,” he says.

One of the bottlenecks for companies, he says, is certification, since the aerospace sector is highly regulated. In this sense, organizations like IPT can help develop the necessary tests and trials, supporting the preparation of documentation that involves certification with ANAC and international organizations. “Being certified makes it easier to attract investment. No one wants to invest in companies that do not have the technical feasibility to operate in Brazil or other markets.”

For him, Brazil has the vocation and technological capacity to develop an internationally recognized “DNA” of innovation, especially in some segments.

As you can see from beyond the cockpit, the sky is clear. Which doesn’t mean there aren’t challenges along the way.

As Carlos Moura says, there is still a strong lack of private investment in startups and products that have already gone through the valley of death. “Improving the mapping of what exists and what is promising to become a business is, without a doubt, a necessary step,” he says.

The former president of AEB recalls that “Brazil, despite current difficulties, has been identified as a potential beneficiary of crises in the geopolitical scenario. We have to strengthen our competitiveness, both in areas where we have already positioned ourselves as world-class players, and in promising areas such as the green economy and, certainly, by adding aerospace products and services. We have done this in the past, with Embraer, and we can do it again from now on.”

In other words, we already know the launch pad. All that’s left is to warm up the turbine and take off. After all, rockets don’t go in reverse.

“The universe is a harmony of opposites.”

Pitágoras

3 Questions for…

Alexandre de Barros

Member of the Audit Committee of the Board of Directors of Banco Itaú, Advisory Board member of Space Wise and Aeronautical Infrastructure Engineer from the Aeronautical Technological Institute (ITA), with an MBA from New York University and a Specialization in Risk Management from INSEAD.

(Photo: Courtesy)

1) Brazil has a tradition of developing cutting-edge technology in the aerospace sector. How do you evaluate the evolution of this sector in the country in recent years, especially from the point of view of innovation and business?

The sector has developed significantly in recent times. The global advance of the aerospace industry has had a direct impact on Brazil, attracting both entrepreneurs and investors, both public and private. The presence of a leading industry like Embraer fosters the development of an entire ecosystem in the country. In addition, strong sectors, such as agribusiness, generate demand for the aerospace sector. One example is high-capacity drones and low-orbit satellite coverage.

2) The Brazilian venture capital ecosystem has made great strides in some areas, such as finance and technology. What is your assessment of the role of VC in the aerospace industry?

The attraction of private venture capital still needs to be further developed in the country. Sectors such as fintechs require little capital in the initial phases, when compared to the aerospace sector – where there is also a culture of valuation. However, the sector has been developing fast, including with the entry of VCs with international experience. Another important point is that entrepreneurs, often coming from the academic field, are now presenting more robust business plans.

3) The aerospace sector requires cutting-edge technology and science, which reinforces the importance of bringing academia closer to the market. In your experience, what are the main challenges in bringing scientists and investors closer together?

This is one of the biggest challenges faced by Brazil. In general, the regulatory environment for universities and research funding entities places many barriers on the use of private capital in projects that originate in academia or in the remuneration of researchers. With a few exceptions, there is no incentive for researchers to seek funds, unlike, for example, in the United States, where this is encouraged. Some specific initiatives, such as institutes established by some colleges, endowment funds, and collaboration contracts, solve part of the problem. But the country needs a new legal framework that allows researchers to undertake and universities to benefit from startups, projects and patents.