For those who haven’t yet heard of FormaFina, think of it as the Fab of South America. The e-commerce startup, which sells curated, limited-run collections of decor products in Argentina and Brazil, has raised a seed round of $1.4 million to anchor itself in the Brazilian market.
FormaFina’s investors include Redpoint eVentures — a Silicon Valley fund dedicated solely to Brazilian startups — IG Angels, El Paso Advisors, Start Capital, 500 Startups, and Plug&Play. Several angel investors also participated in the round, including baby.com.br co-founder In Hsieh and Hans Hickler, formerly the head of DHL US.
With its limited-stock campaigns, FormaFina is capitalizing on exclusivity as a growing status symbol among the new rich of Argentina and Brazil, particularly women. This is in contrast to luxury goods like Gucci and Hermes handbags, which are instantly recognizable and pricey but relatively ubiquitous. The site typically runs 10-15 campaigns at once, each lasting 7-10 days with about 10 products per campaign.
FormaFina’s goods are significantly cheaper than offline alternatives that are subject to sky-high real estate and import taxes, but that’s not something they play up, said CEO and founder Nima Pourshasb.
Hickler helped set FormaFina up with a courier service with big discounts on standard rates, which keeps costs low. Items range in price from $20 to $5,000, with an average ticket price of $200. Gross margins are at 30 percent now, but Pourshasb said he thinks they can increase that to 40-50 percent by the end of the year.
FormaFina is aiming to make a dent in the South American curated e-commerce space while it is still relatively unpopulated. In addition to attending trade shows and reading design blogs, the site’s curators are looking to similar sites abroad for cues.
“They look at what other curators around the world are doing, and they review what Fab does. We have a lot of respect for what they’re doing. They look at Fancy very closely,” Pourshasb said.
While One Kings Lane and Fab don’t ship to South America, Fancy has expanded its shipping capabilities worldwide. Fancy’s site is also available in 33 languages — Portuguese and Spanish being two — with an option to request the addition of others. Although that makes it a viable competitor to FormaFina, the latter has the advantage of being South American first.
That said, Pourshasb said that he has always thought of FormaFina as a global company.
“We’re interested in starting with Latin America and going into Colombia and Mexico,” he said. “There’s a huge demand in those markets. Our plan would be to look into going into one other market, not before Q2 of 2014.”
They are aware of the risks of expanding too quickly, though, as many have said Fab has done. Logistics of international shipping can be tricky, Pourshasb explained, and managing different markets at one time can prove distracting.
FormaFina plans to have an iOS app out for Q1 of next year to accommodate the 20% of users who are shopping on mobile.