Unicorn from Minas Gerais, Hotmart receives R$735 million in funding

RIO DE JANEIRO, BRAZIL – Hotmart, a startup known for online courses, announced on Tuesday, March 30, that it has received a new capital injection of R$735 million (US$130 million) in its Series C funding round led by the American fund TCV, investor of companies like Netflix and Airbnb. The manager Alkeon Capital also participated in the transaction, which was completed in record time of two weeks.

Although it does not disclose valuation, Hotmart claims that it had already surpassed the US$1 billion mark in market value since March 2020, when it raised investment to be able to buy American startup Teachable and enter the United States. The company, then, is part of the select group of Brazilian unicorns.

Founded in 2011 by entrepreneurs João Pedro Resende and Mateus Bicalho, Hotmart was born from a perception among friends that Brazilians would eventually pay to consume online content. The thesis may seem banal in 2021, but it sounded almost utopian ten years ago, before the widespread use of platforms like Netflix, the improvement of broadband infrastructure, and the almost universal access to smartphones in the country.

“We bet that people would need to be paid to keep creating good things on the internet,” says Resende.

In the beginning, Hotmart allowed content creators to sell text files, spreadsheets and presentations over the internet. In the platform’s first month on the air, the company earned a paltry R$182. The business’s turning points only began around 2013, when online video consumption gained space in the country.

Since then, producing and consuming online courses has become easier and more enjoyable. For the startup, this has converted into growth. Today, it has more than US$1 billion in platform sales and more than 50 million users in 185 countries.

Its success in the online course market has caught the attention of investors interested in participating in the so-called “economy of passion”. Here, instead of celebrities sponsored by big brands, the stars are ordinary people who monetize their skills in online courses: it can be with tips to make money on the stock market, music lessons or methods to keep fit during quarantine.

The global online learning market is expected to grow from US$101 billion in 2019 to US$370 billion in 2026, according to Statista.

“One of the largest platforms for digital businesses on the market, Hotmart is essential for creators around the world to be successful, living off their passions and sharing knowledge with consumers. We are very excited to work with them to enable entrepreneurs around the world to realize their dreams,” says Neil Tolaney, partner at TCV.

For the startup, TCV’s entry is an opportunity to continue working side by side with investors who have in-depth knowledge of tech market giants like Netflix, Spotify, Facebook and Linkedin.

“We are very pleased with the contributions from our current investors, including Koolen & Partners, General Atlantic, GIC and Accomplice. Since we started, we have had the opportunity to learn from global partners’ experience and supporters. This new transaction with TCV further strengthens our shareholder base,” says Resende.

Expansion, technology and M&As

With the investment, Hotmart intends to continue investing in growth strategies and business expansion. The timing is favorable: with the pandemic driving the consumption of online courses and unemployment forcing people to seek alternatives to make money online, the company has seen the total transacted on its platform more than double compared to 2019.

To continue this high growth rate, the startup will invest part of the investment round in the platform’s technological development. In the long term, the company’s goal is to be a digital space that can meet all the demands of content creators alone, from freelancers to large digital course schools.

Another portion of the funds from the round will be employed in the company’s mergers and acquisitions (M&As) strategy, which in 2020 bought three companies: Wollo, Klickpages and Teachable. The company uses M&As as a way to bring new tools to the platform and accelerate its entry into new markets.

Despite this, Resende says there is no closed acquisition goal for the year. “I don’t want to make the purchase for the purchase’s sake. We need to find companies that make sense,” says the founder.

The third front for using the capital raised will be international expansion. More than entering new markets, the Brazilian startup wants to consolidate where it already operates. Today, Hotmart maintains its headquarters in Amsterdam, in the Netherlands, and has 11 other offices spread throughout Brazil, the United States, Spain, Mexico, Colombia and France.

To strengthen its presence in these regions, the company invests heavily in market education. Last year alone, there were more than 250 hours of live content to help entrepreneurs.

“Passion economy is a new term. Our work is to show the local market that it is possible to charge for digital content made with more sophistication and depth,” says Resende.

Source: Exame