Mexican startup buys online stores across Latin America and is now landing in Brazil

RIO DE JANEIRO, BRAZIL –  E-commerce was one of the segments that benefited the most from the pandemic. In Brazil alone, revenues from online stores grew 41% and totaled R$87.4 (US$16.1) billion. Several startups are looking to create their own e-commerces, or provide tools for those who are in the business.

Valoreo is among them, purchasing and leveraging online stores as its strategy. The Mexican startup is looking to serve entrepreneurs throughout Latin America – and is now landing in Brazil.

The announcement came along with an investment of undisclosed value from Kaszek Ventures. The fund was created by Mercado Libre’s co-founders Hernán Kazah and Nicolas Szekasy and has invested in more than 75 startups, including Creditas, Loggi, Kavak, Nubank, and Quinto Andar. Kazah was the lead investor in Valorea’s round, and has also joined the startup’s board of directors.

Kaszek’s entry complements a previous seed round by Valoreo of US$50 million. The funding was raised from funds like FJ Labs and angels like Florian Hagebuch and Mate Pencz, co-founders of Brazilian startup Loft.

“Kaszek Ventures is the leading venture capital fund in Latin America, with unparalleled experience in creating unicorns. The fund bears great strategic value, with the background of operating partners Hernán Kazah and Nicolás Szekasy as founders and respectively former CEO and former CFO of Mercado Libre. By far, the largest e-commerce platform in Brazil and Latin America,” said Alexander Gruell, co-founder of Valoreo.

The Mexican startup will use the funds to expand in countries such as Argentina, Brazil and Colombia; to acquire companies; and to increase the number of employees.

Valoreo has ambitious goals: to become not only the strongest e-commerce player in Latin America, but also the most profitable unicorn in the region. [Unicorns are startups that have a market value of at least US$1 billion.]

Although Valoreo’s business model is uncommon in Brazil, the startup has international benchmarks. The American startups Perch and Thrasio sell through Amazon and have raised US$133.8 million and US$1.7 billion from investors, respectively.

How does Valoreo work?

The company provides operational infrastructure for ventures in marketplaces such as Amazon and Mercado Libre. This operational infrastructure includes investment and even acquisition of the business by Valoreo. Then, knowledge and tools are provided for these digital brands to grow and be able to compete with larger companies.

“Not only do we have investors who bring capital to invest in the brands’ growth, but also people like Hernán [Kazah], who bring market knowledge. We have experts in areas like brand management, operations, logistics, and advertising. They also know the marketplace segment, and are ready to scale brands across Latin America,” co-founder Stefan Florea says.

“We are looking at companies that have at least R$2 million in revenues and R$500,000 in profits. We mainly like sectors such as beauty, baby, home and decor, personal care, sports and pets. But we always want to meet new entrepreneurs, brands, and products,” adds co-founder Martin Florea.

Co-founder Alexandre Gruell adds that the startup buys assets for two to four times its EBITDA. Then, it makes this metric grow between 50% to 100% in the following twelve months (disregarding the growth of e-commerce in general).

“We put together a value creation plan for each brand we acquire, with results materializing from the first month after acquisition. This plan is executed by our team, which brings out the best of each brand and creates synergy between the acquired companies, from our centralized and optimized structure.” On the consumer side, Valoreo argues that this greater competition allows for better products and more affordable prices.

Plans for 2021 and 2022

Valoreo does not disclose the number of companies acquired. It is now “expanding rapidly throughout Brazil.” “It is an attractive market with admirable entrepreneurs. Our brands sell on virtually all the marketplaces in the countries where we operate,” says Martin Florea.

Stefan Florea adds that Valoreo has “a strong pipeline of interesting brands in Brazil.” “We are increasing our team in São Paulo, and will soon open an office in the city.” Valoreo has 30 employees globally and hopes to reach 100 by the end of 2021.

This year, Valoreo also plans to buy “dozens of companies.” For Martin Florea, this would bring the startup closer to a unicorn valuation in 2022. “By the end of this month, we will reach the twelve-month revenue and EBITDA that we expected only for December.” Gruell adds that the company is currently profitable, considering the revenue over the past twelve months.

The founders

Valoreo was founded in late 2020 by 5 young entrepreneurs.

Martin Florea has worked in private equity. Stefan Florea had a career in investment banking, focused on the technology sector. Alexander Gruell is an economist, and has also worked in investment banking. Cedrik Hoffmann is a serial entrepreneur and financial expert, having worked with derivatives and mergers in acquisitions. Finally, Miguel Oehling is an economist and has made a career founding and strengthening dozens of startups at German venture builder Rocket Internet.

“The founders have known each other for years and we see a great deal of ambition from them to turn the company into something big and impressive. This reminds me of our beginnings at Mercado Libre. We are certain that Valoreo brings value by helping Latin American entrepreneurs continue to grow their brands at scale, creating more opportunities for them and more development for the ecosystem in the region,” Hernán Kazah said in a statement about the contribution and his joining Valoreo’s board of directors.

Source: Exame