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Nuvemshop, a Latin American answer to Shopify, raises $30 million
After several failed startup attempts and nine years spent building Nuvemshop into Latin America’s answer to Shopify, the four co-founders of the company have managed to raise $30 million in venture capital funding as they look to expand their business.
The new funding came from previous investor Kaszek Ventures and new lead investor Qualcomm, with participation from FJ Labs, IGNIA, Elevar Equity and Kevin Efrusy, from the longtime Accel Partners investor’s personal wealth.
It’s been a long road since Santiago Sosa, Alejandro Vazquez, Martin Palombo and Alejandro Alfonso first began working together in Buenos Aires. The quartet started on their entrepreneurial journey trying to develop a marketplace software product for Latin America, but when that didn’t take off, they turned their attention to a more basic problem — how to get small and medium-sized businesses selling online.
Now the company boasts 65,000 businesses that use its platform providing everything from billing and payment processing to logistics and shipping solutions transacting over $100 million per month in sales. Operating as Nuvemshop in Brazil and Tiendanube in the rest of the region, the company has offices in São Paulo, Buenos Aires and Mexico City, with plans to expand into Colombia and Peru in 2021.
Nuvemshop began as more of a consulting business and evolved into the suite of software tools that have managed to attract attention from investors like Qualcomm Ventures.
“Nuvemshop’s platform accelerates a company’s digital transformation and has enabled thousands of SMBs across Latin America to go digital by tapping into the company’s one-stop shop of seamlessly integrated solutions,” said Alexandre Villela, senior director of Qualcomm Technologies Inc. and managing director at Qualcomm Ventures Latin America. “We share their strong engineering focus and look forward to helping them scale their business with our investment.”
Nuvemshop raised its first money in 2015 from Kaszek Ventures (a $5 million investment), and, as the business picked up steam, raised $7 million more from local investors.
It makes money by charging a subscription fee that begins at $3 per month and a transaction fee that decreases as customers buy more expensive subscription packages.
Now that the company has an established footprint in the region, it’s going to focus on three new areas of growth, according to chief executive, Santiago Sosa.
Nuvemshop chief executive, Santiago Sosa. Image credit: Nuvemshop
The company plans to launch a payment processing and logistics gateway of its own. That marketplace will give customers access to more robust shipping solutions thanks to the power of bundling lower demand into a single delivery and ordering system. Nuvemshop also pitches its customers an app store for connecting them to new developer tools.
Finally, the company intends to offer a broader array of financial services. It already offers payment processing, but will look to develop additional services around lending based on revenue.
Like Shopify, Nuvemshop provides a necessary ballast to the big e-commerce aggregation sites like MercadoLibre and Amazon. “Everything they do they try to optimize for the buyer,” Sosa said. That places incredible pricing pressure on retailers and Nuvemshop offers a direct sales alternative, with lower fees, according to Sosa.
The pent-up demand that Sosa sees, is fairly astonishing.
“People are talking about e-commerce penetration going from [roughly] 10% over total retail sales to [roughly] 20%, as it has happened in other countries. We see it differently, as we envision a massive disruption around commerce in the next 15 years, and are pretty confident that [roughly] 90% of retail will be somehow tech-enabled,” said Sosa, in a statement.
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Millennial Media’s Paul Palmieri launches Tradeswell, a startup promising to fix e-commerce margins
A new startup called Tradeswell said it’s using artificial intelligence to help direct-to-consumer and e-commerce brands build healthier businesses.
The company is led by Paul Palmieri, who previously took mobile advertising company Millennial Media public and then sold it to TechCrunch’s corporate parent AOL (now Verizon Media). Afterwards, Palmieri founded Grit Capital Partners, but he told me he decided to join Tradeswell as a co-founder and CEO because he was so excited about the vision.
Palmieri said that just as Millennial helped independent app developers get smarter about advertising, Tradeswell gives upstart e-commerce companies the data they need to compete with “the big platform behemoths.”
It’s no secret that a number of direct-to-consumer companies have struggled to make a profit due to challenging unit economics. Palmieri suggested that one reason for this is the fragmentation of their tools and data.
“If you’re selling something like Campbell’s Soup, you want to figure out, how is your tomato soup business and your chicken soup business?” Palmieri said. “Today, brands are saying, ‘How’s my Amazon business? How’s my Shopify business? How’s my Shopify business on Instagram?’ ”
So rather than relying on those platforms for data, Palmieri suggested brands want an independent platform that they trust to bring everything together, “where it’s a combination of a Bloomberg terminal plus a trading platform.”
Tradeswell’s AI focuses in six key areas of an e-commerce business: marketing, retail, inventory, logistics, forecasting, lifetime value and financials. Palmieri suggested that in some cases (like ad-buying), Tradeswell will replace existing software, while in other cases it will integrate.
“Think of us as a neural AI layer, where [a brand] might have different platform relationships, which are the fingers, and we’re the AI brain,” he said. “We’re giving brands insights and forecasts: If you make this change, we anticipate XYZ will happen.”
In some cases, like the aforementioned advertising, Tradeswell can also support full automation, so that merchants don’t have to worry about “setting up and tearing down hundreds of campaigns.”
The key, Palmieri said, is that the platform has access to the business’ full financials, so it can optimize for net margins, rather than simply driving the most impressions or clicks or sales.
While Tradeswell is only coming out of stealth mode today, it’s already been working with more than 100 brands. For example, Steve Tracy of Red Monkey Foods and San Francisco Salt Company said in a statement that the startup’s “unique, comprehensive, algorithmic approach has helped us grow sales, identify commercialization opportunities and forecast far more accurately.”
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Greycroft, Lerer Hippeau and Audible back audio measurement startup Veritonic
Veritonic is announcing that it has raised $3.2 million in Series A funding led by Greycroft, with participation from Lerer Hippeau and Amazon-owned audiobook service Audible.
CEO Scott Simonelli, who founded the New York startup with COO Andrew Eisner and CTO Kevin Marshall, told me that his goal is to create a new category of “audio intelligence” — namely, measuring and predicting the effectiveness of any piece of audio content or advertising.
The company is focused on marketing initially, with its first product, Creative Measurement, analyzing any audio ad and showing marketers how it scores compared to similar content, as well as identifying which parts of the audio are most effective. And Veritonic is launching a new product, Competitive Intelligence, which helps businesses see how and where their competitors are spending on advertising and provides alerts when those competitors launch a new ad.
Simonelli said that until now, audio measurement has been limited to things like creating audience panels with a few hundred people, which simply doesn’t scale, given the enormous growth in the audio market.
Veritonic, on the other hand, has analyzed thousands of audio files, correlating the content with data about how people responded and using that analysis to predict how people will respond to new audio. Simonelli said the company can add more “fuel” by going out and gathering more human response data, but even without additional data, it can provide an instant prediction on an ad or campaign’s effectiveness.
Image Credits: Veritonic
Simonelli also noted that Veritonic has spent the past five years developing technology that’s specifically attuned to the challenges of measuring audio effectiveness — like the fact that audio is experienced over time and, even more than other media, needs to be memorable.
“We can look at a sonic profile and predict and evaluate how somebody is going to respond,” he said.
The ultimate goal, he added, is to create the “benchmark for audio advertising,” which means working with a variety of players in the industry. For example, he said that when you look at other audio investments in Greycroft’s portfolio (such as podcast network Wondery or podcast analytics company Podsights): “Veritonic makes every one of those audio investments more valuable.”
Veritonic’s made pretty good progress on that goal already, with partners including Pandora, SiriusXM and NPR, and brand clients like Pepsi, Visa and Subway. It was previously backed by Newark Venture Partners (whose founder Don Katz previously founded Audible).
“We are excited to be a part of Veritonic’s continued growth and success,” said Greycroft’s Alan Patricof in a statement. “I’m personally very passionate about the future of voice, and the team at Veritonic deeply understands how to use audio to drive recall, stickiness and brand awareness — which is hugely important in a highly-competitive consumer brand landscape.”
Simonelli added that Veritonic will use the new funding to expand its data science and sales teams. Eventually, he hopes to start analyzing non-advertising content as well — for example, since Audible is an investor, he said, “Analyzing every audiobook on the planet is something we’re ready for and excited to do.”
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Amazon debuts its first fully electric delivery vehicle, created in partnership with Rivian
Amazon has received delivery of its very first, custom-built EV delivery van — a vehicle built through its partnership with electric transportation startup Rivian. The van doesn’t look too different from existing, traditional fuel and hybrid commercial delivery vans (though there are a lot more rounded edges), but most of the innovation is happening in less obvious places.
In a blog post detailing the vehicle, Amazon outlined some of the unique features of its custom vehicle, including sensor-based highway driving and traffic assist features; exterior cameras that can provide a 360-degree view for the driver via a digital display; a larger interior floor space in the cabin to help with drivers getting to and from the cabin compartment; surround tail lights for better braking visibility for other drivers; integrated three-level shelving and a bulkhead cargo compartment separating door; and finally, of course –built-in Alexa voice assistant integration.
Amazon announced a sizeable investment in Rivian in 2019, when it led a $700 million round for the startup EV maker. The e-commerce giant then announced last September that it was ordering 100,000 of the custom-made electric delivery vans. Rivian also intends to build and ship electric pickups and SUVs to consumers, on top of its commercial vehicle plans.
Amazon plans to ramp deployment of its all-electric fleet form here, starting with 10,000 custom vans on roads globally within the next two years, and then expanding to a total fleet size of that full 100,000 order by 2030, the company says. Rivian, meanwhile, says it has begun a pilot production line run of its Illinois factory, and plans to begin delivery of its SUV starting in June 2021, with shipments of its SUV starting next August.
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Which neobanks will rise or fall?
Denis Barrier is co-founder and CEO of Cathay Innovation, a global venture capital firm investing across North America, Europe, Asia and Africa.
Alex Lazarow is an author, a global venture investor with Cathay Innovation and is an adjunct professor with the Middlebury Institute for International Studies MBA program.
More posts by this contributor
The neobank, or digital bank, phenomenon continues to take the world by storm, with global winners, from Brazil’s Nubank valued at $10 billion and Berlin’s N26 valued at $3.5 billion, to Chime, now valued at $14.5 billion as the most valuable consumer fintech in the United States.
Neobanks have led the charge of the $3.6 billion in venture capital funding for consumer fintech startups this year. And as the coronavirus-fueled acceleration of digital transformation continues, it seems the digital bank is here to stay, with some estimates pointing to neobanks reaching 60 million customers in North America and Europe by the end of 2020, and surpassing 145 million by 2024.
The space is also becoming more crowded, a trend which will only accelerate with fintech eating the world and creating greater infrastructure that enables any company to include a bank account as a product extension.
FT Partners Fintech Industry Research, January 2020
As a result, neobanks are not a monolithic model and not all are created equal. Looking underneath the hood of business models across the globe reveals remarkable operational differences and highlights specific features that are more likely to succeed in the long-term.
Five global models of neobanks
Today there are five distinct models that are leading globally:
Interchange-led: Relies on payments revenue, sourced through interchange as the revenue driver. Every time a customer uses the neobank’s card as a payment method they get paid [e.g. Chime / US; Neon (hybrid of 1 & 2) / Brazil].
Credit-led: Leverages a credit-first model, starting off with a credit card or similar offering, and later providing a bank account [e.g. Nubank, Neon (hybrid of 1 & 2) / Brazil].
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Daily Crunch: Amazon unveils its own game-streaming platform
Amazon announces a new game service and plenty of hardware upgrades, tech companies team up against app stores and United Airlines tests a program for rapid COVID-19 testing. This is your Daily Crunch for September 24, 2020.
The big story: Amazon unveils its own game-streaming platform
Amazon’s competitor to Google Stadia and Microsoft xCloud is called Luna, and it’s available starting today at an early access price of $5.99 per month. Subscribers will be able to play games across PC, Mac and iOS, with more than 50 games in the library.
The company made the announcement at a virtual press event, where it also revealed a redesigned Echo line (with spherical speakers and swiveling screens), the latest Ring security camera and a new, lower-cost Fire TV Stick Lite.
You can also check out our full roundup of Amazon’s announcements.
The tech giants
App makers band together to fight for App Store changes with new ‘Coalition for App Fairness’ — Thirteen app publishers, including Epic Games, Deezer, Basecamp, Tile, Spotify and others, launched a coalition formalizing their efforts to force app store providers to change their policies or face regulation.
LinkedIn launches Stories, plus Zoom, BlueJeans and Teams video integrations as part of wider redesign — LinkedIn has built its business around recruitment, so this redesign pushes engagement in other ways as it waits for the job economy to pick up.
Facebook gives more details about its efforts against hate speech before Myanmar’s general election — This includes adding Burmese language warning screens to flag information rated false by third-party fact-checkers.
Startups, funding and venture capital
Why isn’t Robinhood a verb yet? — The latest episode of Equity discusses a giant funding round for Robinhood.
Twitter-backed Indian social network ShareChat raises $40 million — Following TikTok’s ban in India, scores of startups have launched short-video apps, but ShareChat has clearly established dominance.
Spotify CEO Daniel Ek pledges $1Bn of his wealth to back deeptech startups from Europe — Ek pointed to machine learning, biotechnology, materials sciences and energy as the sectors he’d like to invest in.
Advice and analysis from Extra Crunch
3 founders on why they pursued alternative startup ownership structures — At Disrupt, we heard about alternative approaches to ensuring that VCs and early founders aren’t the only ones who benefit from startup success.
Coinbase UX teardown: 5 fails and how to fix them — Many of these lessons, including the need to avoid the “Get Started” trap, can be applied to other digital products.
As tech stocks dip, is insurtech startup Root targeting an IPO? — Alex Wilhelm writes that Root’s debut could clarify Lemonade’s IPO and valuation.
(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
United Airlines is making COVID-19 tests available to passengers, powered in part by Color — United is embarking on a new pilot project to see if easy access to COVID-19 testing immediately prior to a flight can help ease freedom of mobility.
Announcing the final agenda for TC Sessions: Mobility 2020 — TechCrunch reporters and editors will interview some of the top leaders in transportation.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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WhyLabs brings more transparancy to ML ops
WhyLabs, a new machine learning startup that was spun out of the Allen Institute, is coming out of stealth today. Founded by a group of former Amazon machine learning engineers, Alessya Visnjic, Sam Gracie and Andy Dang, together with Madrona Venture Group principal Maria Karaivanova, WhyLabs’ focus is on ML operations after models have been trained — not on building those models from the ground up.
The team also today announced that it has raised a $4 million seed funding round from Madrona Venture Group, Bezos Expeditions, Defy Partners and Ascend VC.
Visnjic, the company’s CEO, used to work on Amazon’s demand forecasting model.
“The team was all research scientists, and I was the only engineer who had kind of tier-one operating experience,” she told me. “So I thought, “Okay, how bad could it be? I carried the pager for the retail website before. But it was one of the first AI deployments that we’d done at Amazon at scale. The pager duty was extra fun because there were no real tools. So when things would go wrong — like we’d order way too many black socks out of the blue — it was a lot of manual effort to figure out why issues were happening.”
Image Credits: WhyLabs
But while large companies like Amazon have built their own internal tools to help their data scientists and AI practitioners operate their AI systems, most enterprises continue to struggle with this — and a lot of AI projects simply fail and never make it into production. “We believe that one of the big reasons that happens is because of the operating process that remains super manual,” Visnjic said. “So at WhyLabs, we’re building the tools to address that — specifically to monitor and track data quality and alert — you can think of it as Datadog for AI applications.”
The team has brought ambitions, but to get started, it is focusing on observability. The team is building — and open-sourcing — a new tool for continuously logging what’s happening in the AI system, using a low-overhead agent. That platform-agnostic system, dubbed WhyLogs, is meant to help practitioners understand the data that moves through the AI/ML pipeline.
For a lot of businesses, Visnjic noted, the amount of data that flows through these systems is so large that it doesn’t make sense for them to keep “lots of big haystacks with possibly some needles in there for some investigation to come in the future.” So what they do instead is just discard all of this. With its data logging solution, WhyLabs aims to give these companies the tools to investigate their data and find issues right at the start of the pipeline.
Image Credits: WhyLabs
According to Karaivanova, the company doesn’t have paying customers yet, but it is working on a number of proofs of concepts. Among those users is Zulily, which is also a design partner for the company. The company is going after mid-size enterprises for the time being, but as Karaivanova noted, to hit the sweet spot for the company, a customer needs to have an established data science team with 10 to 15 ML practitioners. While the team is still figuring out its pricing model, it’ll likely be a volume-based approach, Karaivanova said.
“We love to invest in great founding teams who have built solutions at scale inside cutting-edge companies, who can then bring products to the broader market at the right time. The WhyLabs team are practitioners building for practitioners. They have intimate, first-hand knowledge of the challenges facing AI builders from their years at Amazon and are putting that experience and insight to work for their customers,” said Tim Porter, managing director at Madrona. “We couldn’t be more excited to invest in WhyLabs and partner with them to bring cross-platform model reliability and observability to this exploding category of MLOps.”
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As the Western US burns, a forest carbon capture monitoring service nabs cash from Amazon & Bill Gates-backed fund
Pachama, the forest carbon sequestration monitoring service that tracks how much carbon dioxide is actually captured in forestry offset projects, has raised $5 million in fresh funding from a clutch of high-profile investors, including Amazon and Breakthrough Energy Ventures.
The investment is one of several deals that Amazon has announced today through its Climate Pledge Fund. Breakthrough Energy Ventures, the firm backed by Bill Gates and other billionaires, led the round, which brings Pachama’s total haul to $9 million so it can scale its forest restoration and conservation emissions reduction monitoring service, the company said.
With the Western United States continuing to burn from several fires that cover acres of drought-impacted forests and deforestation continuing to be a problem around the world, Pachama’s solution couldn’t be more timely. The company’s remote verification and monitoring service using satellite imagery and artificial intelligence measures carbon captured by forests.
It also couldn’t be more personal. Pachama’s founder, Diego Saez-Gil, lost his own home in the wildfires that tore through California earlier this year.
“We will need to restore hundreds of thousands of acres of forests and carbon credits can be the funding mechanism,” Saez-Gil wrote in a direct message.
Pachama joins two other companies that are jointly financed by Breakthrough Energy Ventures and Amazon’s Climate Pledge Fund.
Other big corporate investors also backed Pachama. Groupe Arnault’s investment arm, Aglaé Ventures, and Airbnb’s alumni fund, AirAngels invested, as did a number of prominent family offices and early-stage funds. Sweet Capital, the fund investing the personal wealth of gaming company King.com’s management team; Serena Ventures (the investment vehicle for tennis superstar Serena Williams) and Chris Sacca’s Lowercarbon Capital fund also invested in the round, along with Third Kind Ventures and Xplorer Ventures.
“There is growing demand from businesses with ESG commitments looking for ways to become carbon neutral, and afforestation is one of the most attractive carbon removal options ready today at scale,” said Carmichael Roberts, of Breakthrough Energy Ventures, in a statement. “By leveraging technology to create new levels of measurement, monitoring, and verification of carbon removal—while also onboarding new carbon removal projects seamlessly—Pachama makes it easier for any company to become carbon neutral. With its advanced enterprise tools and resources, the company has enormous potential to accelerate carbon neutrality initiatives for businesses through afforestation.”
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APAC cloud infrastructure revenue reaches $9B in Q2 with Amazon leading the way
When you look at the Asia-Pacific (APAC) regional cloud infrastructure numbers, it would be easy to think that one of the Chinese cloud giants, particularly Alibaba, would be the leader in that geography, but new numbers from Synergy Research show Amazon leading across the region overall, which generated $9 billion in revenue in Q2.
The only exception to Amazon’s dominance was in China, where Alibaba leads the way with Tencent and Baidu coming in second and third, respectively. As Synergy’s John Dinsdale points out, China has its own unique market dynamics, and while Amazon leads in other APAC sub-regions, it remains competitive.
“China is a unique market and remains dominated by local companies, but beyond China there is strong competition between a range of global and local companies. Amazon is the leader in four of the five sub-regions, but it is not the market leader in every country,” he explained in a statement.
Image Credits: Synergy Research
The $9 billion in revenue across the region in Q2 represents less than a third of the more than $30 billion generated in the worldwide market in the quarter, but the APAC cloud market is still growing at more than 40% per year. It’s also worth pointing out as a means of comparison that Amazon alone generated more than the entire APAC region, with $10.81 billion in cloud infrastructure revenue in Q2.
While Dinsdale sees room for local vendors to grow, he says that the global nature of the cloud market in general makes it difficult for these players to compete with the largest companies, especially as they try to expand outside their markets.
“The challenge for local players is that in most ways cloud is a truly global market, requiring global presence, leading edge technology, strong brand name and credibility, extremely deep pockets and a long-term focus. For any local cloud companies looking to expand significantly beyond their home market, that is an extremely challenging proposition,” Dinsdale said in a statement.
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London VCs launch joint initiative to expand funding opportunities for underrepresented founders
A group of U.K.-based VCs have come together to create a new virtual pitching event designed to address the problems with the current startup ecosystem that can lead to inequalities and “warm intros” made only between privileged classes and ethnicities.
Held on the 30th of September, “Access All” will be a new virtual event geared toward founders from underrepresented groups.
Participating founders will be invited to pitch their startups to a number of London’s leading VCs and companies, including Downing Ventures, Playfair Capital, SpeedInvest and SoftBank, as well as Microsoft, Amazon, Accenture and O2.
The joint initiative has been put together by Floww, Force Over Mass and Wayra UK, with the mission to create more opportunity for BAME founders, based on merit, reducing bias and addressing the problems of the “the old boys network” of venture capital deal flow.
According to some figures, startups with all-male founding teams raise 91% of the venture capital in the U.K., but the stats around ethnic minority founders are harder to find. In the U.S. for example, 0.02% of venture capital is allocated to Black female founders.
Martijn de Wever, CEO and founder of Floww, which is coordinating the event, said: “With Access All, we rallied together in the startup community because we believe that the system needs change. Black, Asian and other ethnic minority founders, need to have fair access.”
Floww’s team of accountants and content writers will work with applicants for free to review their business plans and get them ready to pitch to the participating investors. TechCrunch and Forbes journalists will be joining the panel as judges.
Founders can register here.
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