SoftBank leads US$140 million round in VTEX to fulfill global expansion goal

Contxto – “All your customer experiences. A unified commerce platform”. This is the claim headlining VTEX’s product description page. The bravado recently got some pretty solid backing, since the carioca company recently received a US$140 million investment. The round was led that Japanese conglomerate so beloved by us—SoftBank.

Not shabby for a company that has now become a giant of cloud-based, management, software as a service (SaaS) startup for e-commerce businesses. Its platform offers a single aggregation point for in-store and online sales, order management, customer service, and experience management.

In fact, VTEX has done so well that it feels awkward calling it a startup, considering it was founded last century. 1999 to be exact, but I’ll leave that particular consideration to you.

On the deal

Originally from Rio de Janeiro, VTEX has now decided to truly commit to its global vision. It raised US$140 million, primarily from SoftBank’s Latin American fund in order to expand its international reach. Other investors include Gávea Investimentos and Constellation Asset management. Napers and Riverwood Capital are also previous backers of the company.

Paulo Passoni, managing investment partner at SoftBank’s Latin America fund, believes that VTEX has three key attributes that earmark the company for success:

First, a strong team culture.

Second, a best-in-class product.

And, last but certainly not least, he believes that its entrepreneurs possess a mindset geared towards profitability.

“Brands and retailers want reliability and the ability to test their own innovations. VTEX offers both, filling a gap in the market,” continued Mr. Passoni in a statement. “With VTEX, companies get access to a proven, cloud-native platform with the flexibility to test add-ons in the same data layer.”

While the company’s valuation remains undisclosed, both founders, Mariano Gomide and Geraldo Thomaz, calmly reassure everybody that they still hold more than 50 percent of the company between them. You can do the math yourself—if you can get your numbers to crunch down on.

Similar to those old-school Latin American tech companies—OLX, Despegar, and MercadoLibre—, VTEX has managed to grow mainly through the sweat off its own brow. The fact that the company has raised no more than US$13 million over its 20 years of operations shows it. 

Even though the company already has some operations out of Latin America—mainly in the U.S.—, according to TechCrunch, 80 percent of the company’s revenue still relies on its native region.

The company currently serves big names in the retail industry including Walmart, Levi’s, Sony, L’Oréal, and Motorola. It processes over US$2.4 billion in gross merchandise. Furthermore, after a long while in the market, VTEX has now managed to grow at a rate of 43 percent, year-on-year over the last half-decade. 

Latin America is cool, but it’s not enough

As it might appear obvious that the chief reasons for companies to look into partnering with VTEX would involve its regional know-how and reach. So, when a corporation does look into coming to Latin America, VTEX will often be its go-to choice to standardize storefront, manage marketplace relations, analytics, and basically provide a local alternative against SAP, Oracle, Salesforce, and other ERPs (Enterprise Resource Planning).

Nevertheless, from VTEX’s founders’ vantage point, the “build it and they will come” model is no longer a sustainable approach. E-commerce players either compete globally or they don’t compete at all.

“At the end of the day, e-commerce software is a combination of knowledge. If you don’t have access to thousands of global cases you can’t imbue the software with knowledge,” says Mr. Gomide.

He goes on to conclude that even if companies once focused on a specific region, the fact of the matter is that the shift to global is happening whether you want it or not. “China has proven that, so a lot of companies are now coming to us because their existing providers of e-commerce tools can’t ‘do international’.”

VTEX’s founders would like to think that they are well placed to launch their global commerce platform beyond Latin America. Mr. Gomide says that “there are very few companies that can serve that global approach”.

Since this is indeed the case, the question becomes; can they succeed in these lofty aims of global expansion? Well, at least now VTEX has some Japanese money to make their case for them.

-VC