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Startups and venture capital in Brazil: the Startup Law, convertible instruments, investor shielding and equity crowdfunding

Last verified: 2026-10-27 · Status: Stable

Brazil's Startup Law (Lei Complementar nº 182 of 2021) defines startups as innovative companies with up to R$16 million of revenue and up to 10 years of CNPJ, and recognizes convertible loans and debentures, options, participation accounts and other instruments that keep the investor off the cap table as investment that does not make the investor a partner. Investors using those instruments are shielded from the company's debts, including veil piercing in tax and labor cases, unless there is fraud. Small companies can also raise up to R$15 million per offer through CVM regulated crowdfunding platforms without registering the offer.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026 (the rate was R$5.5007 on 26 October and R$5.0377 on 23 October, so conversions move with the market). Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Maximum prior year gross revenue to qualify as a startup	16000000 BRLLei Complementar nº 182 art. 4 § 1 I, as of 2026-10-27 · in force
Maximum time since CNPJ registration to qualify as a startup	10 yearsLei Complementar nº 182 art. 4 § 1 II, as of 2026-10-27 · in force
Maximum payment per Public Contract for Innovative Solution	1600000 BRLLei Complementar nº 182 art. 14 § 2, as of 2026-10-27 · in force
Maximum exempt equity crowdfunding offer	15000000 BRLResolução CVM nº 88 art. 3 I, as of 2026-10-27 · in force
Maximum issuer revenue for equity crowdfunding	40000000 BRLResolução CVM nº 88 art. 2 VII, as of 2026-10-27 · in force
Annual limit per retail investor in crowdfunding offers	20000 BRLResolução CVM nº 88 art. 4, as of 2026-10-27 · in force

The rule

1. Who qualifies as a startup. Businesses or companies that are new or recently operating and innovate in their business model, products or services. For the special treatment, the entity (sole entrepreneur, company, cooperative or simple partnership) must have gross revenue of up to R$16,000,000 in the prior calendar year (or R$1,333,334 times the months of activity if under 12 months), up to 10 years of CNPJ registration, and either a declaration of an innovative business model in its articles or enrollment in the Inova Simples regime.
Cost to do it: No registration fee in the law; qualification depends on the articles and revenue.
Example: A company founded in 2019 with R$12,000,000 of revenue in 2025 and an innovation clause in its articles qualifies in 2026; at R$17,000,000 it does not. / Revenue cap about US$3.0 million.Lei Complementar nº 182 (Startup Law), Art. 4 caput and § 1 items I to III, 2021-06-01 official text · verified 2026-10-27

2. Investment instruments that do not count as capital. A startup may take money that results or not in equity. Contributions through an option to subscribe shares or quotas, an option to buy them from the partners, a convertible debenture, a convertible loan, a sociedade em conta de participação, an angel investment contract or any other instrument where the investor does not formally join the cap table are not part of share capital, and the investor becomes a quotaholder or shareholder only on formal conversion. Amounts received are booked according to the accounting nature of each instrument.Lei Complementar nº 182, Art. 5 caput and §§ 1 to 3, 2021-06-01 official text · verified 2026-10-27

3. Investor shield. An investor using those instruments is not a partner or shareholder, has no management or voting rights unless agreed, and is not liable for any debt of the company, including in judicial reorganization. Veil piercing rules of the Civil Code (art. 50), the CLT (art. 855-A) and the National Tax Code (arts. 124, 134 and 135) do not extend to that investor, except in cases of willful misconduct, fraud or simulation involving the investor.
Cost to do it: No cost; the benefit is ring fencing of the investor's other assets before conversion.Lei Complementar nº 182, Art. 8 items I and II and sole paragraph, 2021-06-01 official text · verified 2026-10-27

4. Regulatory sandboxes. Sector regulators may, alone or jointly, run sandbox programs that suspend rules under their competence for selected companies, setting selection criteria, duration and scope of the suspension and the rules covered.Lei Complementar nº 182, Arts. 2 item II and 11, 2021-06-01 official text · verified 2026-10-27

5. Selling innovation to the state. The administration may hire companies to test innovative solutions through a special tender that can describe only the problem and expected results, published at least 30 days before proposals, with a committee of at least three judges. The resulting Public Contract for Innovative Solution (CPSI) lasts up to 12 months, extendable once by up to 12 months, and pays at most R$1,600,000 per contract.
Cost to do it: Bid preparation; no fee in the law.
Example: A health tech wins a CPSI from a state health department for a 12 month pilot at R$1,200,000; the cap would allow up to R$1,600,000. / Cap about US$299,900; the pilot about US$224,900.Lei Complementar nº 182, Arts. 13 and 14 caput and § 2, 2021-06-01 official text · verified 2026-10-27

6. Equity crowdfunding. Offers by small companies through a CVM registered platform are automatically exempt from offer registration if the target is up to R$15,000,000, the raising period is up to 180 days, investors get at least 5 days to withdraw, and the funds are not used to buy minority stakes in other companies or to lend to them. A small company here is one incorporated in Brazil, not registered as a CVM issuer, with gross revenue of up to R$40,000,000 in the prior fiscal year.
Cost to do it: Platform fees are negotiated; no CVM registration of the offer.
Example: A startup with R$8,000,000 of revenue raises R$5,000,000 over 90 days on a platform: within the R$15,000,000 and R$40,000,000 limits. / Offer cap about US$2.81 million; issuer revenue cap about US$7.50 million.Resolução CVM nº 88 of 27 April 2022, as amended by Resoluções CVM nº 158/22 and 226/25, Arts. 2 item VII and 3, 2022-04-27 official text · verified 2026-10-27

7. Crowdfunding investor limits. Each retail investor may put at most R$20,000 a year into exempt crowdfunding offers. The limit does not apply to lead investors or qualified investors, and investors with gross annual income or financial investments above R$200,000 may invest up to 10 percent of the larger of the two each year.
Example: An investor with R$500,000 of financial investments may put up to R$50,000 a year into crowdfunding offers. / Base limit about US$3,749 a year; the investor in the example about US$9,373.Resolução CVM nº 88, Art. 4, 2022-04-27 official text · verified 2026-10-27

Instrument	Counterparty	Investor is a partner before conversion?
Option to subscribe shares or quotas	The company	No
Option to buy shares or quotas	The partners	No
Convertible debenture	The company (Lei nº 6.404)	No
Convertible loan (mútuo conversível)	The company	No
Sociedade em conta de participação	The company	No
Angel investment contract	The company (LC nº 123)	No
Other instruments without formal entry into the cap table	The company or partners	No

Investment instruments recognized by the Startup Law (LC nº 182 art. 5 § 1)

Worked example

A US seed fund puts R$2,000,000 (about US$374,900) into a São Paulo startup through a convertible loan that converts at the next priced round. Until conversion, the fund is not a quotaholder, has no vote unless the contract grants it, and cannot be reached by the startup's tax or labor creditors through veil piercing (LC nº 182 arts. 5 and 8). On conversion it becomes a quotaholder: from then on the ordinary rules apply, including registration of the foreign investment with the Central Bank and a CNPJ for the foreign investor (see Foreign direct investment reporting).

Step by step

1. Check eligibility: revenue up to R$16,000,000, CNPJ up to 10 years old, innovation clause in the articles or Inova Simples.
2. Pick the instrument: convertible loan or option for speed; convertible debenture if the startup is an S.A.; sociedade em conta de participação for project based deals.
3. Draft governance rights carefully: rights to information are fine, but management or voting rights before conversion weaken the shield (art. 8 I refers to the contract).
4. For a foreign investor, plan the FX inflow and the reporting to the Central Bank, and the CNPJ needed at conversion.
5. For a retail round, use a CVM registered crowdfunding platform and respect the R$15,000,000 offer and investor limits.
6. For public sector clients, watch for CPSI tenders (up to R$1,600,000 per contract).

Common traps

Taking control before conversion. The shield does not apply in cases of fraud or simulation involving the investor (LC nº 182 art. 8 sole paragraph), and de facto management can be argued as such.
Using crowdfunding money to buy minority stakes or lend to other companies; it breaks the registration exemption (Resolução CVM nº 88 art. 3 VI).
Outgrowing the definition. Above R$16,000,000 of revenue or after 10 years of CNPJ, the special startup treatment no longer applies.
Forgetting that conversion is a foreign direct investment. After conversion, Central Bank reporting and beneficial ownership duties start (see Start here).

Sources

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