The Brazilian Internet scene is attracting some heavy-hitting investors.
Brazilian start-up Elike Social Commerce has closed on its Series A funding with an investment from Intel Capital — the global investment and mergers and acquisitions arm of semiconductor giant Intel Corp. — for an undisclosed amount.
Elike is an application that has two components: a B2B “my shopping” platform that allows Brazilian retailers to open stores online accessible by consumers through the B2C app within Facebook. The B2C platform is the social shopping component that allows sharing, liking and buying through the digital marketplace.
Elike, launched in July 2011, already has 10 high-end retail stores on its site, with three more launching next month. It uses a hybrid performance pricing-revenue share model.
Tatiana Albuquerque, Elike’s cofounder, said about 70 percent of the high-end merchandise on the B2B platform is fashion, with the balance in other categories such as home and electronics.
“The site allows users to shop [digitally] with their friends and gives retailers who open stores inside the social book to get closer to the user,” Albuquerque said. She plans to use the funding from Intel to improve the technology behind the platform, add new features and bring aboard creative talent.
Since 1991, Intel Capital has invested more than $10.4 billion in over 1,212 start-ups and companies in 51 countries. Some of its current retail-related investments include Fashion Republic Technologies Ltd., a China-based online fashion platform that allows users to generate fashion content in the community via a vertical search engine; Goldsquare Pvt. Ltd., which operates in Asia the members-only online shopping destination site Fashionandyou.com, and Netretail Holding BV, which operates localized e-commerce sites in five Central and Eastern European countries (Czech Republic, Germany, Poland, Hungary and Slovakia) under Mall.cz. Other Brazilian investments in fashion this year by Intel were the e-commerce, members-only Web site Coquelux and the social networking platform Fashion.me.
Given the amount of time Brazilians are online, the investments in Elike and Fashion.me are helping to facilitate how fashion brands in Brazil interact with consumers.
In A.T. Kearney’s 2012 Retail E-commerce Index, released in June, Brazil ranks second to China as a top emerging market for e-commerce development. The country has 80 million Internet users who spend $10.6 billion online a year, the largest total in Latin America. The consulting firm projects that Brazilians are expected to spend $18.7 billion by 2017, or a 12 percent annual growth rate, as online shopping grows. The e-commerce market is gaining momentum as the Brazilian government is strengthening is digital commerce laws to bolster the security of online payments.
Technology and e-commerce ventures are the more recent sectors eyed by cash-rich venture capitalists and private equity firms.
Seth Zalkin of The Astor Group, an investment banking firm with offices in New York and Rio de Janeiro having an expertise in the consumer brand sector, said his firm saw growing interest in Brazil when it had an office in Miami. That prompted the opening of the Rio de Janeiro office in 2009.
Astor Capital is the investment arm of Astor Group, and had taken an ownership stake in Elike after providing seed funding. As part of its investment, it also advises the firms it has an ownership stake in. In the case of Elike, Zalkin is a board member and brought in Intel Capital, which has had a presence in Brazil for 15 years.
While Zalkin said there is a “huge opportunity due to the growing middle class” for firms looking to invest in Brazilian companies, he noted that there are still many factors that delay getting deals done. Bureaucracy is one, as is logistics. There can also be tax and accounting issues, not to mention that negotiations often take far longer due to cultural differences than for transactions taking place in the U.S. Currently, Astor is advising companies, particularly many health and beauty firms, who desire to enter the Brazilian marketplace but don’t know where to start.
Other firms that have been laying the groundwork to capture opportunities in Brazil include private equity company Carlyle Group. Carlyle was among the first of the top private equity firms to venture into new markets, and in the past four years has set its eyes on investments in consumer retail, logistics, infrastructure and oil and gas.
The firm has invested in five companies so far, including a 51 percent stake in Scalina SA, the largest intimate apparel firm in Brazil. That investment was reduced to 39 percent last year due to a transaction with a third-party investor.
According to Juan Carlos Felix, managing director at Carlyle in São Paulo, the private equity firm studied the consumer retail space for two years before making its first investment in Scalina. He added that his office determined that there’s strong potential for investment and growth in the women’s consumer apparel space.
Felix noted that the growth in the women’s apparel space is due to the stability of the economy for the past 12 years, and with it a huge creation of wealth within the middle class and its resultant purchasing power. Women in particular, he said, drive 55 percent of total consumption in Brazil. Moreover, as more women enter the labor force, the “gap in salaries between men and women in the same position is decreasing when compared with developing industries,” he said.
According to a report in May by the KKR Global Macro & Asset Allocation Team, led by Henry H. McVey, Brazil has a large and growing middle class that now represents more than 50 percent of its nearly 200 million citizens. “In addition to rising incomes, Brazil has compelling demographic prospects for the near term, with 51 percent of its citizens under 30 years old. As this demographic matures and enters financial independence, wealth creation and broad-based spending is expected to follow,” the report concluded.
When the JK Iguatemi mall opened in São Paulo last month, more than 70,000 people packed the shopping center, home to stores such as Van Cleef & Arpels, Lanvin, Miu Miu, Bulgari, Chanel, Zegna and Zara.
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)
The @cfda has shifted the dates of #NYFW, with Men’s showing on February 5 through February 7, and Women’s will directly follow, running from February 8 through 14. The preliminary schedule will be released on the CFDA’s web site in the next few days, but Mark Beckham, VP of marketing for the CFDA, revealed that @rafsimons will be back to close the men’s-specific part of the week with a show on February 7 #wwdfashion (📷: Kelly Taub)
@ferragamo is introducing a new space dedicated to the development of women’s and men’s leather good samples. The laboratory, which is created eco-friendly materials and designed to reduce the environmental impact of the manufacturing processes, will allow the company to expand its accessories offering through traditional artisanal approaches. #wwdfashion (📷: @aitorrosasphoto)
How does a “regular, degular, schmegular” girl from the Bronx, N.Y., become a Grammy-nominated artist with a certified platinum record in less than a year? Call it the @iamcardib come up. The 25-year-old has become a musical sensation, and the fashion world is taking note. “If I could describe her style I would say drama. She’s really into the dramatics,” says Cardi B’s stylist @kollincarter. See how Carter styles her bold and out there looks with the link in bio. #wwdfashion
“There is no formula. There is no guideline. I can watch Ted Talks all day, but there is no one who can advise me on exactly what it is I should be doing,” said @ronniefieg, CEO of @kith, in an interview with WWD’s @ariahughes at the brand’s new SoHo office in Manhattan. Head to WWD.com to see how Fieg went from hanging out in shoe stockrooms at 13 to building his own business. #wwdfashion (📷: @weston.wells)
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion