Just five months after raising $90 million, Brazil’s Nuvemshop announced today it has raised $500 million in a round co-led by Insight Partners and Tiger Global Management.
The financing values Nuvemshop — which some say is Latin America’s answer to Shopify — at $3.1 billion, and brings the São Paulo-based startup’s total funding in the last 10 months to more than $620 million.
Sunley House Capital, VMG Partners, Alkeon and Owl Rock as well as existing backers Accel, Kaszek, Kevin Efrusy, Qualcomm Ventures LLC and ThornTree Capital also participated in the latest round.
Nuvemshop (also known as Tiendanube in Spanish-speaking countries) aims to give entrepreneurs a way to build and grow online businesses. The company’s platform serves more than 90,000 merchants across Brazil, Mexico and Argentina, ranging from direct-to-consumer (DTC) upstarts to more established brands such as PlayMobil, Billabong, Colombraro, Zaira Beauty, Osram, Lolja, Vitabe and StrappyCo. That’s up from 20,000 merchants at the start of 2020 and 80,000 at the time of its last raise in March.
Rather than selling their goods on existing marketplaces (such as Mercado Libre, the Brazilian equivalent of Amazon), many merchants and entrepreneurs are opting to start and grow their own online businesses, according to Nuvemshop co-founder and CEO Santiago Sosa.
“Most merchants have entered the internet by selling on marketplaces but we are hearing from newer generations of merchants and SMBs that they don’t want to be intermediated anymore,” he said. “They want to connect more directly with consumers and convey their own brand, image and voice.”
Virtually every KPI tripled in the company in 2020 as the world saw a massive transition to online, and Nuvemshop’s platform was home to 14 million transactions last year, according to Sosa.
Earlier this year Nuvemshop launched a beta version of its own payments solution platform for merchants that is designed to allow for “faster and more secure” purchases. It also reflects the Latin American consumers’ approach to paying for retail purchases over time. In fact, the company says that 70% of the credit card transactions on its platform happen via installments. The new product will be made broadly available to all merchants over the course of the next year.
Nuvemshop says that its logistics capabilities allow merchants to deliver directly to consumers via partnerships and integrations with what would otherwise be a highly fragmented network of carriers. The company plans to keep broadening its set of warehouse and carrier partners with the goal of driving down the click-to-delivery time in most regions — now typically five to six days — to one- or two-day delivery, which is now standard in the U.S.
“With 650 million consumers, Latin America is not only a huge market, but it is the fastest growing e-commerce market in the world,” said Matt Gatto, managing director at Insight Partners.
Accel Partner Ethan Choi believes the Latin American e-commerce market has the potential to be just as big as the U.S. market in the future.
“Given the rapid adoption of e-commerce, we believe Nuvemshop has the potential to be one of the most important companies in the region, he told TechCrunch. “Looking at Shopify’s $185 billion market cap gives you a sense of what’s possible if you’re the leading e-commerce player in a big market like the U.S.”
The new capital will go toward growth in Nuvemshop’s existing markets and support expansion into new countries such as Colombia, Chile and Perú. Nuvemshop will also work to expand its capabilities to serve larger merchants by expanding its sales and customer support staff, as well as continuing to invest in resources and support for its app partners and agencies. The company additionally plans to accelerate its payment and logistics capabilities, and will use the fresh capital in part toward some acquisitions.
The company currently has more than 600 employees, with offices in Brazil, Mexico and Argentina.