Olook.com.br - Stylishly Cutting out the Fashion Middle Man

For any major retailer house brands are usually the highest margin products.  Across retail, but especially online, the growth of house brands is looking increasingly pure play, and upmarket.  Businesses like Warby Parker and ShoeDazzle in the US and Oppa in Brazil have shown that cutting out standalone brands and classic retailers can upend big markets and create profitable businesses.  Olook.com.br is aiming to do the same in the hyper-competitive women's fashion space.

Very serious about delivering shoes

I visited the company's offices in Sao Paulo recently to meet co-founder and co-CEO Peter Ostroke.  Together with his counterpart, Andre Beisert, and backed by Monashees Capital, Peter co-founded the company about a year ago selling shoes, handbags and jewelry.  Since then they have grown the company's product offering and signed several branding deals with leading Brazilian designers. These include Didi Wagner, a TV show host, and Andre Lima, a high-end dress designer.  The company also recently had Ms. Lima's designs featured in a runway show at Sao Paulo Fashion Week, LatAm's largest.  

Peter with the design studio

The company does all of its design in-house and aims to give users a unique experience by creating personalized "vitrines" or showrooms based on the information they give the site about their tastes and styles.  This allows the firm to offered tailored content and to offer in-season styles at reasonable prices. The company's shoes are priced from around 69 to 199 reais, often much cheaper than stores online or at the mall.  

Ideas for the next designs

Putting together a full supply chain and creating a brand while operating a retail business are obviously not easy tasks.  But for those that can pull it off, the result can be a high margin business with significant barriers to entry. Good luck to Peter, Andre and team.

Centralfit.com.br - Suplementos Online - In the News

Centralfit.com.br was mentioned in StartupBlog!  Use Chrome to translate the article in Portuguese.

A summary in English:

Centralfit.com.br is a leading online retailer of nutritional supplements which launched last year.  The company is focused on the fast-growing market segment that includes vitamins, athletic performance enhancers, energy supplements, weight control products and fitness tools.  The site sells all brands but is also the official store of Brazil's largest nutritional supplements company, IntegralMedica.  

The team has a diverse group of founders, both American and Brazilian.  Rafael Reboucas, the CEO left his job at construction mega-company, Andrade Gutierrez.  The other two founders, Felipe Mansano and yours truly, were formerly investment bankers with Goldman Sachs.  Felipe is also COO of Tiger-backed Belezanaweb.com.br.  

Centralfit.com.br Homepage

Who's Investing in Brazil - Updating the List

Dear reader - it's been too long since I have posted on the growing and exciting community of Brazilian startups and venture capital.  To make it up to you, I've substantially updated the list of the VC firms that are active in Brazil.

It almost seems that venture capital firms are sprouting as fast as startups so it's a rapidly evolving list - please forgive me (or hit the comments) if I've forgotten anyone.

Foreign-based firms

Accel Ventures - among the top US investors by some rankings, the team led by Kevin Efrusy (of Facebook investment fame) has made investments in Elo7 and Kekanto

Atomico - one of the few traditional foreign VCs that has established an office in Brazil.  Founded by Skype co-founder Niklas Zennström, the firm made its first Brazilian investment in Restorando in February.

Benchmark - investors in PeixeUrbano

Bessemer Ventures - The world's oldest venture capital firm recently brought on Brian Feinstein to lead the firms efforts in Brazil

Felicis Ventures - Silicon Valley based fund with just over $100mm AUM.  Invested in baby.com.br

Flybridge Capital - A new entrant on the Brazilian scene, Flybridge recently invested in MadeiraMadeira, an online construction products company

General Catalyst - Boston-based VC that has invested in Viajanet and gaming company Vostu

Index Ventures - London based fund.  Invested in Grupo Xango and Privalia (Spanish but largest market is Brazil)

Initial Capital - early stage investor, writing checks between $US 100-300k.  Based in Israel, Daniel Carneiro leads the firm's Brazil's efforts.  Brazilian investments include Glambox.

Insight Venture Partners - Large Silicon Valley based firm - investments include Elo7, Kabum! and HotelUrbano

Intel Capital - the VC arm of the American chip giant is headed by David Thomas.  They have been active in recent months investing in (among others) two healthcare startups (Minha Vida & Pixeon) and two fashion startups (Fashion.me & Coquelux)

Lakestar - I blogged about them here.  They are an incubator/VC which has invested in Gourmeo.com.br (among others) and have an office in Sao Paulo

Sequoia Capital - Rumored to be opening an office in Brazil headed by David Velez

Social+Capital Partnership - Silicon Valley based fund created by Ex-Facebook VP, Chamath Palihapitiya  - invested in Baby.com.br 

Tiger Global - one of the most active foreign investors in Brazil.  At my last count they have over 10 investments (most not disclosed).  Disclosed investments include: baby.com.br, netshoes.com.br and Netmovies

Thrive Capital - NYC-based firm headed by Josh Kushner.  Recent investments include Baby.com.br

Venrock - investors in medical products company, Advance Medical

Brazil-based firms

Astella Investimentos - Relatively longstanding Brazilian fund which has several investments in the internet backend, education and healthcare space.

Arpex Capital - Backed by some of Brazil's wealthiest individuals, Arpex doesn't disclose its investments.  However, one of their partners, Ted Rogers, writes an interesting blog here.  

DGF Investimentos - DGF is a private equity and growth fund that has been in the market since 2001.  Patrick Arippol was brought on a few years ago to lead their early stage investing platform.  They have not announced many early-stage investment recently but you can view their portfolio here.   

DLM Invista - DLM is a newly raised venture fund focused on B2B software.  Founded by former senior executives at Datasul (an ERP software company which merged with Totvs), the firm has invested in Chaordic and Sofit.

Ideiasnet - Ideiasnet is one of the oldest VC investors in Brazil. They are unique because they are a publicly traded conglomerate that makes investments in startups.  They have made news recently by selling stakes in a number portfolio companies, including Spring Wireless and Softcorp.  In addition, they recently sold a 5.1% stake of themselves to Liberty Media, the American media conglomerate.  Their investments include Bolsa de Mulher and MoIP.

Kaszek Ventures - Despite its lack of a website, Kaszek is also one of the most active investors in Brazil and Latin America.  It was founded by Hernan Kazah and Nicolas Szekasy, co-founder and early executive of MercadoLibre, respectively.  They are based in Buenos Aires but spend much of their time (and money) in Brazil.  Their investments include Viva Real, GetNinjas and Kekanto.  

Monashees -  Almost certainly the most well-known Brazilian VC, the firm was co-founded by former General Atlantic Latin America head, Eric Acher. Their investments include oLook (headed by an American/Brazilian team of Peter Ostroske and Andre Beisert) and several companies I have written about on this blog, including Oppa and Baby.  Here's their full portfolio. 

Redpoint eVentures - a joint Brazil-focused $130mm fund between BV Capital and Redpoint Ventures, two large US/European VC funds.  They have a dedicated team in Brazil headed by Yann de Vries and Anderson Thees.  Their investments include Shoes 4 You and Viajanet.  They have a slick new website that's worth checking out as well.

Warehouse Investimentos - I recently visited their offices in Sao Paulo - it's an impressively converted (and very cool) former warehouse that could be an archetype for "industrial chic."  Their announced investments include food delivery service, ifood and two sustainability focused startups.  

Camiseteria.com - Crowdsourced Fashion Design

Crowdsourcing is not a new buzzword - think: Quora, Top Coder, Crowdspring- but it is unique in e-commerce in Brazil. When I was in Rio de Janeiro recently I paid a visit to the 6-year old company's art-clad offices. The founder and CEO, Fabio Seixas, told me the top shirt designers were invited to decorate their walls.

Camiseteria's business model relies on designers to submit ideas for t-shirts. Then, its customers vote to select the designs the company will actually manufacture and sell. The designer gets paid 1,300 reais if the shirt is selected. Since inception, the site has received 35,000 t-shirt designs and, so far, has only selected around 800 - so they are pretty choosy. The company is currently selling 5000-6000 shirts per month, with big jumps happening during the holidays. The shirts's cost ranges from 33-69 reais and they keep around 200 in stock at any one time.

They are in good company with similar business models in the US - Threadless, CafePress, Spreadshirt. Best of luck to Fabio and his team.

Examples of the office art work

Camiseteria team

Example of their stock

P.S. The last few weeks have been busy for Brazil VCs.  I recently saw a tweet from a NYC entrepreneur that said "Opening a VC office in Brazil is the new opening a VC office in New York."  Here's the latest: 

1) US media giant, Liberty Media, acquired a 5% stake in Ideiasnet.  

2) Intel Capital announced that it had made two investments in Brazil (Coquelux, Fashion.me) and expanded its Sao Paulo team to four people.  

3) BV Capital and Redpoint announced they had formed a joint fund to invest in Brazil.

Aiming to be IKEA Brazil - Oppa.com.br

Among the most dreaded experiences of any NYC young professional is a trip to IKEA Brooklyn.  Inevitably, the products you find in the showroom are not in the warehouse, the employees are uniformly unhelpful and it is an enormous hassle to get everything back to your Manhattan apartment.  But you endure it because it is the cheapest option around.

Recently-launched, Oppa – one of the most exciting businesses in Brazilian e-commerce – aims to improve on their model.  I recently chatted with Founder/CEO, Max Reichel, who told me that they aim to be the IKEA Brazil. Using all internally-designed and branded furniture, the company exclusively sells its products online (that's the key difference; no dreaded showroom).

The model works especially well in Brazil where furniture is astronomically expensive due to high import taxes.  The company cuts out the expensive stores and passes on the savings.  As an added incentive, the shipping is free and customers can pay in 10 installments - longer than is common in most other Brazilian e-commerce businesses (6 is the norm).

Max told me his challenge has been to convince customers to buy big ticket items online without first touching the fabric and seeing the design.  To overcome these concerns and build buzz, the company is planning to use pop-up stores. His first was in a ritzy area of Sao Paulo at the Audi Showroom on Rua Colombia and they are expecting to launch another soon.




1st Pop Up Store



Check out the slick site - oppa.com.br

P.S. MT Performance, a premium content and advertising network, just received a big investment to fund their expansion in Brazil.  Check out the press release here

21212 - Building Companies in Paradise

It should not surprise us that the French, Greeks and Italians riotously defend their 35 hour work weeks and 40 days of annual, paid vacation.  Professional motivation can be hard to muster when surrounded by endlessly idyllic landscapes and perfect climates. Similarly, cariocas, as residents of Rio de Janeiro are called, could be excused for shirking the office.  Instead, I found entrepreneurs hard at work creating new technology leaders.

How motivated would you be?

I paid a visit to the offices of 21212, an incubator working to link New York and Rio that I have written about before. A logo’d floormat greeted me as I stepped onto their office’s 1950’s hexagon floor tiles – newly painted white, like everything in the open room. 21212 was founded by American Ben White and Brazilian Marcelo Sales this year to help entrepreneurs build great ideas into big businesses. They recently selected their first class; an article in The Next Web covered the announcement.

Ben told me they liked the model that General Assembly, a reasonably famous tech hub in NYC, has used and were seeking to recreate parts of the experience. Sharing its design with other incubators, the room’s wide tables supported team clusters while the shared marketing, design and technical specialists flitted from table to table. The whiteboard walls were filled with lists like “The 6 Parts of a Pitch” “Pitching in 30 seconds or 8 minutes”. A heavy focus of the program is how to effectively talk to investors so Marcelo suggested that the entrepreneurs “practice” pitch me. Below is a summary of the ‘oportunidades’ in these young, promising businesses.

Simpply

Reselling is big business in Brazil. Companies like Avon and Natura sell $R 26billion of product every year there. Simpply aims to help these micro-entrepreneurs to work less and earn more. Because many resellers work with multiple companies (e.g. Natura and Avon), its platform allows resellers to combine and manage their customer accounts, inventory and social media outreach. It makes money through a freemium subscription model. They are currently testing the product with 30 customers and expect to launch in January.

Helpin

Micro entrepreneurs drive a big portion of any developing economy. Helpin is focused on creating demand for small service providers like plumbers and painters. It resembles the recently-IPO’d Angie’s List with its reviews and local-focused search. However, they provide the service for free to the searching public. The founders’ goal is to make money through highlighted service providers and by offering bidding and payment services directly through the site. In that model, the customer submits a project and then local service providers can offer bids for the project. They are planning to launch in January.

Igluu

In the US, groceries have been one of the most difficult large markets to move online. Webvan spectacularly failed in 2001 and Fresh Direct’s challenges in NYC are daunting. Igluu aims to simplify the online grocery experience. The current version of their site allows a customer to shop for items and assemble a shopping basket. The site then compares the prices at several online grocery chains and tells them where they could purchase the complete basket the cheapest. This technology recently won them an RBS Innovation award. Their latest project (and biggest potential revenue driver) is to work with famous chefs to create complete meals for each night of the week. The customer selects the meal and the ingredients are automatically added to the cart. The groceries arrive once a week with all of the fresh ingredients for that week’s meals.  Check out the Austin-based Food on the Table doing something similar.

Bloompa

75% of online customers abandon their shopping cart. Bloompa can dramatically improve purchase conversion and drive significant new traffic. It works by surprising the customer at the shopping cart with a price discount (of, say, 5%) if they “Like” the product on Facebook or send a Tweet. Customers are more likely to complete the purchase and, so far, the company is finding that each new “Like” drives 6 new visits. Bloompa’s application allows sites to test different messages and helps them to measure the effectiveness of different discount levels, among other things. They make money by charging each time someone shares the product on social media.

VitalCred

Square is a billion dollar company – VitalCred aims to be its equivalent in Brazil. The company is mobile payments processor that currently allows small businesses to take credit cards online and with an automated phone system. Their existing 5000 clients use their cell phones and computers to collect payments (i.e. no swipe machine). What is most exciting about the company is that it is rolling out a smartphone swipe device in January that works similarly to Square. With cell phone penetration at 110% of the population, there is the potential for this to be a huge market.

Craques.com

Soccer players are Brazil’s most entertaining export. Craques aims to improve the process of discovering and recruiting them. The site, which is linked to Facebook, allows players to showcase their statistics, videos and awards. Through a freemium model, managers can search the database and identify potential talent. This can be big business – check out the success beRecruited

ResolveAi

Uber is on a tear (see their geographic expansion and fundraising). ResolveAi is bringing similar technology to Brazil. The company is currently focused on Rio (with advanced talks ongoing in Sao Paulo) and has 5,000 taxis in its fleet (about 15% of the market). Unlike Uber, ResolveAi works with both regular, yellow taxis and luxury, black cars. A customer orders a cab online and through a GPS system the site directs the nearest free cab to their location (which you can monitor on a map). The site makes R$1 from each ride and the customer pays as they normally would in the cab.

If you have more interest in these companies the 21212 Demo Day is coming up on March 16th in Rio de Janeiro.  Endeavor is partnering with them on the event and they are expecting a broad group of international and Brazilian investors. There will be several presentations designed to give a background on the tech landscape in Brazil -- including from Julio Vasconcellos, co-founder of Peixe Urbano.
21212 is currently recruiting their 2nd class. Check out the application here if you have more interest. Big thanks to Marcelo and Ben for the tour.

P.S.  Want to win an iPad or iPhone?  Check out the pre-launch site of umporvez.com.br and the Twitter account https://twitter.com/umporvez

Who is Talking about Brazil in London? Recap of the NOAH Conference

It was a grand setting for a tech conference - a classical facade topped with a busty bronze lady, an outdoor cocktail patio on the bank of the Thames, a vaulted open space with color-changing uplighting, effusive plant arrangements, and a seemingly countless number of cocktail waiters.  Europe's leading VCs and entrepreneurs converged in London last week for the city's premier annual tech event, the NOAH Conference.  Organized by NOAH Advisors, a boutique internet-focused advisory firm and especially its founder Marco Rodzynek, the gathering drew approximately 1,500 attendees to hear from Europe's leading tech lights.

Germany and Spain were the stars of the show.  It seems Europe's startup center is quickly converging on Berlin.  The low costs, university talent and strong venture capital community have fostered a wave of new companies.  London probably retains its place as the technology center but the Germans are catching up quickly.  I was also surprised to see the strong presence of Spain, especially Barcelona.  We heard from industry leading firms like Softonic (by far the market leader in LatAm), Budgetplaces, Trovit and Privalia - all based in Barcelona.

Brazil was a top theme for many firms.  Examples worth highlighting:  Most of the $80mm in annual revenue for fashion flash sales site, Privalia, comes from Brazil.  Criteo, a online display advertising firm that claims to have "search like" click through rates, recently opened an office in Sao Paulo.  Just Eat, launched its Brazil site, Just Delivery, in September.  Homeaway, a home rental site, recently opened their first Brazilian office in Rio. The largest market, by far, for Israeli translation company, Babylon, is English to Portuguese translation in Brazil.  It's clear - Brazil is a huge portion of many overseas companies' success.

Interestingly, we also learned that Facebook is reducing its "growth" team in Brazil.  They believe they have won the market and are now focused on their new growth markets in Japan and Russia.

A big congrats goes out to Marco for a conference that was, by several accounts, a success.

 P.S. I mentioned Benjamin White and 21212 in a recent post.  They recently picked their first class of startups.  Check out a great article by Anna Heim in The Next Web to see all about the progress of this Rio/New York incubator.