Merama, a Latin American retail brand acceleration startup with an emphasis on e-commerce, has just announced a $225 million Series B funding round led by SoftBank Latin America and Advent International. Also participating were Globo Ventures, the investment arm of the Globo communication group, and the existing investors Monashees, Valor Capital, Balderton Capital, and MAYA Capital.
This equity round comes just five months after Merama raised $160 million in April when the company had just completed five months of operation (it debuted on the market in December 2020). The startup’s speedy rise goes hand in hand with Latin America‘s teeming e-commerce market: LAVCA‘s (the Association for Private Capital Investment in Latin America) recent stats show a 71.9% growth in venture investment in e-commerce by 2020.
Furthermore, VCs turned their attention to so-called “e-commerce brand aggregators,” the business model of Merama, and of Mexico’s Valoreo and Wonder Brands, which have also raised rounds recently. Advent itself invests in Thrasio, the largest global acquirer of Amazon brands.
Since Series A, Merama reports to have doubled in size and to be on track to reach $250 million in revenue by 2021. The newly injected capital will be used to expand the startup‘s brand portfolio, provide working capital for existing brands, and develop a platform with features such as demand planning automation and supply management from multiple international sources, to accelerate emerging brands.
This investment round also brings Paulo Passoni, SoftBank’s managing partner for Latin America, and Wilson Rosa, Advent International’s partner for retail investments in Latin America, to Merama’s board. Alex Szapiro, operating partner at Softbank and former country manager at Amazon Brazil, will join as a board observer.
According to Passoni, Merama has so far built a handpicked portfolio and the goal is to develop leading e-commerce brands across Latin America. The startup‘s portfolio currently includes more than 30 brands in countries such as Brazil, Mexico, Chile, Colombia, Peru, and the United States.
“Latin America is a benchmark, it is the region where e-commerce and the best online retailers are expanding exponentially. It makes more sense to focus on the best brands, on category leaders,” says Guilherme Nosralla, co-founder of Merama alongside Renato Andrade, Mexican Felipe Delgado, and U.S. Sujay Tyle, now Merama’s CEO.
Merama wants to be a kind of Latin American Unilever
Headquartered in Brazil and Mexico, the company started its operations last December aiming to be the main player of brands in the region and the biggest partner of retail and ecommerce giants, such as Mercado Libre, Amazon, Magazine Luiza, B2W, and Via Varejo. A kind of Latin American Unilever.
“Merama’s proposal is to be a holding of brands focused on digital platforms. We adapted a business model that already exists in the United States and European countries, known as aggregators. We adapted this model for Latin America,” Andrade explained in a recent interview with LABS.
Merama’s business is based on scale, which also explains the volume of the rounds so far since it needs full cash flow to bring brands to its portfolio. Merama focuses on identifying the brands that stand out the most in each category and buying a majority stake in them, allowing entrepreneurs to continue operating day-to-day as partners, with access to technology, capital, and the help of a specialist e-commerce team.
“E-commerce is growing a lot in Latin America. It is a region that already has many successful businesses, but entrepreneurs face challenges. For example, it grows but reinvests all the profit. At the same time, there is a lack of capital to boost the business. Merama unlocks growth by offering the capital and the conditions for the operation to have liquidity, but also to take off in digital and internationalize,” Nosralla said recently.