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Five hot startups in Brazil

Five hot startups in Brazil

Posted by PanamericanWorld on April 27, 2015

Put Brazil’s growing middle class and its increasing purchasing power together with vastly improved Internet access, and what you get is booming e-commerce in Latin America’s largest and most populous country, worth an estimated$12 billion annually.

According to e-commerce intelligence firm E-bit, of the 51.5 million unique consumers who bought items online in Brazil in 2014, 10 million were e-commerce virgins making their first online purchases. Also in 2014, online purchasing in Brazil grew by 24% compared with the previous year, with 103.4 million orders processed.

“The Brazil economy in the next 10 years will be one of the third or fourth largest economies in the world,” says Aaron Gershenberg, a managing partner at California-based SVB Capital. “If you’re going to look at some diversification in your portfolio, in the innovation economy Brazil is a very natural geography to have exposure to.”

Ranging from personal finance and e-commerce to agriculture and education sectors, here are 10 Brazilian startups to keep an eye on:

1. Nubank

This Sao Paulo-based digital financial services startup, which provides a digital credit card (currently a Platinum MasterCard) for smartphones and payment monitoring, is the first Brazilian company to secure investment from Silicon Valley VC Sequoia – namely, $14.3 million in Series A financing, which was reported in September.

Brazil’s single largest market is financial services, a market that is ripe for disruption given that, as Nubank CEO David Velez points out, half of the top 10 public companies are big banks. Velez founded the startup in 2013 after working as Sequoia’s partner in charge of Latin America – and yes, his connection to Sequoia made that investment possible.

Nubank is also poised to benefit from increased broadband penetration and a growing credit card market, which accounted for $121 billion in transactions in the first half of 2014, a 13.5 percent increase from the same period the year before, according to the Brazilian Association of Credit Card and Services Companies. Getting a credit card the traditional way is also arduous in Brazil, amounting to a weeks-long process that requires a lot of forms to be filled out and multiple visits to a bricks-and-mortar bank.

2. GuiaBolso

This personal financial management platform, whose name means “PocketGuide” in Portuguese, has been touted as Brazil’s Mint. Founded in 2012 and headquartered in Sao Paulo, GuiaBolso helps track and control expenses and automates the process of importing and categorizing financial transactions.

GuiaBolso was co-founded by Benjamin Gleason, a former managing director of Groupon Brazil who, like co-founder Thiago Alvarez, worked as an engagement manager at McKinsey. It is intended to help the 82 percent of Brazilianswho say they don’t know how to control their monthly budget, letting users set up their account and configure their monthly budgets in less than two minutes.

Their solution became the No. 5 most downloaded app in Brazil in August, a month after joining the App Store and with no marketing nor official launch announcement. Kaszek Ventures led a multimillion dollar Series A round in May, but the exact investment has not been disclosed.

3. Hotel Urbano

This online travel agency launched in 2011 – in time to capitalize on the tourist boom accompanying last summer’s World Cup in Brazil and the upcoming Summer Olympics, to be held in Rio de Janeiro in 2016 – and has rapidly grown, becoming what one tech publication called “one of the most successful startup cases in Brazil.”

The Rio-based Hotel Urbano, which provides information on tourist destinations in Brazil and the rest of Latin America, has received $75 million in four rounds from Insight Venture Partners and Tiger Global Management, most recently in March.

The tourism site, which has over 11 million fans on Facebook, is tapping into the fact that unlike the U.S. market, which is led by a few national brands, 85% of the 14,000 hotels operating in Brazil are individually owned, as co-founder Joao Ricardo Mendes told TechCrunch in March. (The other founder, and co-CEO, is Jose Eduardo Mendes.) Hotel Urbano’s revenues hit roughly $427.4 million by the end of last year, up from $38.5 million in 2011, and the number of employees jumped from five when it first started to more than 500.

4. Kanui

Another e-commerce site benefiting from Brazil’s global sporting events, Kanui is a Rocket Internet-incubated online sporting goods company that was rated the fastest-growing Latin American e-tailer less than two years after its 2011 launch. The Web-only retailer of action sports equipment and apparel saw sales increase an impressive 9,000 percentin 2012 to about $120 million.

The Sao Paulo-based Kanui was born after its founders, CEO Bruno Henriques and chief marketing officer Bruno Nardon Felici, noticed that larger online sporting goods merchants were not carrying inventory for all sports, leaving skateboarders and outdoor adventurers out in the cold, reports Internet Retailer. It adds that in addition to providing athletic gear in the run-up to two of the world’s biggest sporting events, Kanui uses social media to educate sports-minded consumers on how to use skateboards and surfboards, how to ride mountain bikes and how to dress for the sport.

5. Mobly

E-furniture retailer Mobly is another successful Rocket Internet startup, attracting up to $20 million from Latin American media conglomerate Cisneros Group in April 2013. Launched in 2011 in Jundiai Do Sul by Victor Noda, Marcelo Marques and Mario Fernandes, Mobly sells home furnishings, garden and leisure equipment and electrical items. Other investors include Kinnevik, J.P. Morgan Securities.

What the three founders did was fill in the gap between the online retail stores that were not prioritizing items like couches, beds or closets, and furniture stores, which were not paying much attention to their online presence, explains Emerging Markets Insight Magazine. That gap has proved profitable for Mobly, which made $50.4 million in 2013, twice as much as the previous year, and sells furniture worth $6.3 million per month.

E-commerce sales in Brazil grew by 20 percent in 2012, with home decorating being the fastest-growing category. Mobly has a catalogue of 45,000 products.

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