INSUBCONTINENT EXCLUSIVE:
E-commerce now accounts for 14% of all retail sales, and its growth has led to a rise in the fortunes of startups that build tools to enable
businesses to sell online
In the latest development, a company called VTEX — which originally got its start in Latin America helping companies like Walmart expand
their business to new markets with an end-to-end e-commerce service covering things like order and inventory management, front-end customer
experience and customer service — has raised $140 million in funding, money it will be using to continue taking its business deeper into
more international markets.
The investment is being led by SoftBank, specifically via its Latin American fund, with participation also from
Gávea Investimentos and Constellation Asset Management
Previous investors include Riverwood and Naspers; Riverwood continues to be a backer, the company said.
Mariano Gomide, the CEO who
co-founded VTEX with Geraldo Thomaz, said the valuation is not being disclosed, but he confirmed that the founders and founding team
continue to hold more than 50% of the company
In addition to Walmart, VTEX customers include Levi&s, Sony, L&Oréal and Motorola
Annually, it processes some $2.4 billion in gross merchandise value across some 2,500 stores, growing 43% per year in the last five
years.
VTEX is in that category of tech businesses that has been around for some time — it was founded in 1999 — but has largely been
able to operate and grow off its own balance sheet
Before now, it had raised less than $13 million, according to PitchBook data.
This is one of the big rounds to come out of the relatively
new SoftBank Innovation Fund, an effort dedicated to investing in tech companies focused on Latin America
The fund was announced earlier this year at $2 billion and has since expanded to $5 billion
Other Latin American companies that SoftBank has backed include online delivery business Rappi, lending platform Creditas and property tech
startup QuintoAndar.
The common theme among many SoftBank investments is a focus on e-commerce in its many forms (whether that transactions
for loans or to get a pizza delivered), and VTEX is positioned as a platform player that enables a lot of that to happen in the wider
marketplace, providing not just the tools to build a front end, but to manage the inventory, ordering and customer relations at the back
end.
&VTEX has three attributes that we believe will fuel the company success: a strong team culture, a best-in-class product and
entrepreneurs with profitability mindset,& said Paulo Passoni, managing investment partner at SoftBank Latin America fund, in a statement
&Brands and retailers want reliability and the ability to test their own innovations
VTEX offers both, filling a gap in the market
With VTEX, companies get access to a proven, cloud-native platform with the flexibility to test add-ons in the same data layer.&
Although
VTEX has been expanding into markets like the U.S
(where it acquired UniteU earlier this year), the company still makes some 80% of its revenues annually in Latin America, Gomide said in an
interview.
There, it has been a key partner to retailers and brands interested in expanding into the region, providing integrations to
localise storefronts, a platform to help brands manage customer and marketplace relations, and analytics, competing against the likes of
SAP, Oracle, Adobe and Salesforce (but not, he said in answer to my question, Commercetools, which builds Shopify -style API tools for mid
and large-sized enterprises and itself raised $145 million last month).
E-commerce, as we&ve pointed out, is a business of economies of
Case in point: While VTEX processes some $2.5 billion in transactions annually, it makes a relatively small return on that — $69 million,
This, plus the benefit of analytics on a wider set of big data (another economy of scale play), are two of the big reasons VTEX is now
doubling down on growth in newer markets like Europe and North America
The company now has 122 integrations with localised payment methods.
&At the end of the day, e-commerce software is a combination of
If you don&t have access to thousands of global cases you can&t imbue the software with knowledge,& Gomide said
&Companies that have been focused on one specific region are now realising that trade is a global thing
China has proven that, so a lot of companies are now coming to us because their existing providers of e-commerce tools can&t ‘do
international.& & There are very few companies that can serve that global approach and that is why we are betting on being a global commerce
platform, not just one focused on Latin America.&
