Tag: Dila Capital

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Social commerce startup Elenas secures $20M to help more LatAm women sell online

Elenas estimates that 11 million women in Latin America sell consumer items via catalogs and door-to-door sales methods. It is digitizing that process so they can more easily sell from home.

Founder and CEO Zach Oschin started the Colombia-based social commerce company in 2018 (and participated in our Latin American Startup Battlefield that year) to move the traditional independent sales process online.

Here’s how it works: Entrepreneurs can browse a portfolio of hundreds of thousands of wholesale products in areas like beauty, personal care, home goods and electronics, decide what they want to sell, how much they want to mark up the price and then promote the products on social channels like WhatsApp and Facebook.

Elenas also takes care of the product sourcing, delivery and payment collection. In the past year, more than 100,000 women in Colombia and Mexico have sold over 2 million orders and earned millions of dollars on the platform.

To accelerate that trajectory, Elenas raised $2 million in seed funding in 2020 and another $6 million in Series A capital in 2021. Now the company is back with an even bigger Series B round of $20 million. This gives the company more than $28 million in total funding to date.

Social commerce startup Elenas raises $6M and plans for international expansion

While Oschin didn’t go into detail on Elenas’ valuation, he did say it was an increase from the previous round. He also said the company grew revenue over 5x between the rounds.

DILA Capital leads this new investment and is joined by FJ Labs, Endeavor Catalyst, the Inter-American Development Bank’s IDB Lab, Broadhaven Ventures, Mercado Libre, Grupo Bolivar and Leo Capital.

“Elenas is revolutionizing the direct-sales industry by giving millions of people across the region the opportunity to sell thousands of products through their digital catalog,” said Alejandro Diez Barroso, managing partner at DILA Capital, in a written statement. “We are convinced that we are backing the right team in the right market and at the right time.”

Being a country with three times the population of Colombia, Mexico is poised to be the company’s largest market in the next year, and it has already “achieved a profitable and sustainable growth model” there, Oschin said.

Since launching there in 2021, Elenas was able to scale up 30%, which means Mexico accounts for more than a third of its business in just one year, which he said took two-and-a-half years to achieve in Colombia.

This is while other e-commerce companies haven’t fared as well, Oschin said. For example, he notes that by starting with lower ticket items like with grocery delivery, some companies were not able to reach the right margin profile or build out infrastructure to the level needed to reach profitability.

“There was a massive boom of social commerce companies heavily funded in 2021, but that also meant the rise of social commerce models that were highly unprofitable,” Oschin added. “Some achieve unicorn status, and we are now seeing some of those models pulling back, shut down or laying off staff.”

He went on to explain that Elenas bucked this trend by focusing on nonperishable items, like lifestyle products, home goods, fashion and accessories, from the beginning, which yielded more healthy profit margins and higher ticket prices.

Not having to build its own infrastructure was another way. That model enabled the company to scale across Colombia and Mexico and deliver to 600 towns, including rural areas where that had not been previously accomplished.

In addition to growing revenue 5x between the Series A and Series B rounds, the company more than doubled its employee headcount to 230 people.

Up next, Elenas will continue to expand its seller network in both markets with focus on scaling it up significantly over the next year so that it can invest in better products and experiences for both sellers and providers.

It will also infuse some capital into engineering and product to build out additional core features, for example, seller business management tools like customer relationship management, product recommendations and financial services.

“We want to expand into financial services that power their businesses,” Oschin said. “Fifty percent of our sellers have never had a bank account before, so this is an underbanked population, and when running a business, having financial services is important. Our partnership with Grupo Bolivar will be working on that.”

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Social commerce startup Elenas secures $20M to help more LatAm women sell online by Christine Hall originally published on TechCrunch

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Fairplay closes $35M in equity, debt to provide revenue-based financing to entrepreneurs

Mexican revenue-based investment startup Fairplay secured $35 million in Series A funding to invest in the online marketing campaigns of direct-to-consumer e-commerce brands and marketplace sellers in Latin America.

The investment round consists of $15 million in equity, co-led by Dila Capital and Kayyak Ventures, and participation from SpeedInvest and Elevar Equity, and $20 million in debt led by Architect Capital. Existing investors in the round also included QED Investors, Nazca and several individual investors, including Kavak CEO Carlos García, Jüsto CEO Ricardo Weder and ZeBrands CEO Carlos Salinas. In total, the company has raised $40 million.

Fairplay co-founder and CEO Manolo Atala started the company with Andrew Devlyn in 2019. He told TechCrunch that small business owners often have to choose between putting money into their inventory, logistics or marketing campaigns, and a wrong choice could have significant impact on the company’s growth. Those who do invest in marketing usually put a majority of their spend into channels like Google or Facebook, he added.

Traditional loan options are often long and complex processes that could tie a business owner to aggressive guarantees, Atala said. Looking to make the choice easier for entrepreneurs reliably earning sales, Fairplay provides a sales advance as funding in exchange for a flat fee and a steady revenue share of earnings until the capital is paid back. Rather than give the money to the client, the company pays the client’s providers directly.

Aside from leveraging the debt, the new funding will go toward growing Fairplay’s headcount. Atala expected to double its 38 employees in the next few months.

The company is working with a wide range of clients — for example, small companies selling $15,000 per month up to large DTC companies selling $10 million per month. The average investment Fairplay makes is about $85,000, Atala said.

“Most of the money goes to inventory because the cycle from when you order to when you start selling a product is around 45 to 60 days,” he said. “By providing this capital, we are helping e-commerce companies shorten the cycle to avoid cash flow constraints.”

The Mexican e-commerce market is poised to reach $45 million in 2022, and Atala says Fairplay is also seeing that growth. The company’s third quarter of 2021 was the best in its history, growing 250% in originations over the second quarter and more than 200% in revenue. He was expecting two-digital growth in the fourth quarter and a five-fold growth in 2022.

QED Investors partner Mike Packer, who is on Fairplay’s board, says the company is in the middle of a “megatrend” that is affecting e-commerce infrastructure in Latin America. He saw Fairplay’s early traction two years ago and has been watching Atala and Devlyn build out their team with a talented pool of people, create the product and test their hypothesis.

“We are seeing a current explosion that has been pulled forward five-plus years into one year of growth,” Packer said. “All of the commerce and transactions moved online, while growth was happening, the infrastructure was lacking. We see massive opportunity to enable businesses to run more smoothly, and Fairplay is in the middle of that.”

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Quinio jumps into world of e-commerce aggregators with $20M seed

A new company is entering the crowded e-commerce aggregator space to acquire and scale high-performing Latin American brands selling on MercadoLibre, Shopify or Amazon.

Quinio, a Mexico-based company, announced today it secured $20 million in a debt-and-equity round that will be used to add more than 30 brands to its portfolio.

The company was founded last year by Juan Gavito, Iker Garay and Gavito’s brother, Santiago Gavito. CEO Juan Gavito, who was previously in digital advertising, and Garay have backgrounds in private equity and venture capital, while Santiago Gavito was scaling startups.

“Iker introduced us to Thrasio’s business model and we got excited,” Juan Gavito told TechCrunch. “We thought this is the way to capture value, so we started working on everything from creating the pipeline, team, tools and understanding the specifics of doing the acquisition.”

Quinio isn’t focused on any certain categories, but is going after medium-sized brands that bring in between $100,000 and $20 million in annual revenue. After acquisition, the Quinio team focuses on increasing sales, operations efficiency and optimizing cost structures.

The company will kick off the new year with 10 brands representing $10 million revenue run rate. That has enabled Quinio to realize double-digit growth each month so far. And although the company is initially looking at acquiring 30 brands, Gavito estimates there are 100,000 sellers across Latin America that fit its strategy among a market worth $105 billion.

The seed round was led by Cometa, which was joined by AlleyCorp, DILA Capital, Western Technology Investment, GBM Ventures, Bridge Partners and a group of entrepreneurs, including Adalberto Flores, founder and CEO of Kueski.

Juan Gavito expects to use over 80% of the new capital on acquiring companies, with a plan of one per month. The company will also expand its staff — at 33 people today — to over 100 by the end of next year as it begins looking for brands outside of Mexico in Chile, Colombia, Brazil and Argentina.

With the new funding, Quinio joins a long list of aggregators, also known as e-commerce roll-ups, around the world that have also attracted investor attention to purchase marketplace companies.

For example, Beijing-based Nebula Brands took in $50 million this week. Before them was Gravitiq, focused on healthcare brands, and Heyday’s $555 million Series C. The big name in aggregators, Thrasio, announced $1 billion in October, while Perch grabbed a large investment of $775 million in May.

Juan Gavito says the e-commerce aggregator model has proved to be very successful in Latin America, with a few initial players launching operations between January and August of this year, all in Mexico.

He notes this is due to the region being one of the fastest growing e-commerce markets in the world, citing a gross merchandise value growth of over 60% in 2020, to $105 billion, which represents double the growth rate initially expected before the global pandemic hit. E-commerce is expected to grow another 30% this year, Juan Gavito said.

One of the ways Quinio is differentiating itself is by acquiring companies with locally sourced products, with plans to have more than 60% of its portfolio this way.

“This is a key differential in terms of lead times and working capital requirements, especially considering the problems that the current Asia supply chain is facing,” Juan Gavito said. “There are just a few players in such a large market, so there is opportunity for all of us to have successful companies and business models. For example, in the U.S., there are more than 20, and many are successful.”

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Kushki, an Ecuador-based fintech, raises $86M to build financial infrastructure in Latam

Just about every week there’s a blockbuster round coming out of South America, but in next door Central America, which mostly is less affluent, things have been more hush hush. However, Kushki, a Quito, Ecuador-based fintech, is bringing attention to the region with today’s announcement of a $86 million Series B and a $600 million valuation.

“We never thought that we would return home [from the U.S.] and build a company that was more valuable in Ecuador than we had built in the U.S.,” said Aron Schwarzkopf, CEO and co-founder of Kushki.

Schwarzkopf and his business partner, Sebastián Castro, had previously built and sold a fintech called Leaf in the U.S. in 2014. The two are originally from Ecuador but moved to Boston for college, where they met watching soccer.

Unlike many other fintechs in Latam that are out to help the unbanked, Kushki works behind the scenes building the tech infrastructure that companies like Nubank use to transfer money. Some of the functionalities they build enable both local and cross-border payment players in credit and debit cards, bank transfers, digital cash, mobile wallets, and other alternative payment methods.

“We realized there was a gigantic opportunity to democratize and create infrastructure to move money,” Schwarzkopf told TechCrunch.

The company, which was founded in 2017, already has operations in Mexico, Colombia, Ecuador, Peru, and Chile. The Series B will be used to accelerate growth and expand to Brazil and nine other markets in Central America.

Generally, expanding to Brazil is an expensive proposition, and therefore not a path that all companies can take, even though it can be an extremely profitable move if done right. Some of the challenges include the need to translate everything into Portuguese followed by the varying financial regulations.

That’s why Kushki’s approach has to be somewhat custom in each country.

“We focus on going into the markets and we basically rebuild an entire infrastructure, so we put everything into one API,” said Schwarzkopf.

Products similar to Kushki have been successful in other regions around the world, such as in India with Pine Labs, Africa with Flutterwave, and Checkout.com that now has 15 international offices.

To build all this infrastructure, Kushki, which means “cash” in a native Andes dialect, has raised a total of $100 million from SoftBank, an undisclosed global growth equity firm, as well as previous investors including DILA Capital, Kaszek Ventures, Clocktower Ventures, and Magma Partners.

“From now until 2060, people will need servers and ways to move money, and we knew that the existing payment infrastructure couldn’t support that,” said Schwarzkopf.