(TechCrunch) After nearly being eradicated when the Dot-com bubble burst in 2000, the Brazilian startup community has been slow to come back. However, over the last two years, growth has been accelerating and Brazil’s startups seem poised to make a comeback. As Roi pointed out recently, the support ecosystem for young businesses in Brazil is still thin and plenty of friction remains (like high labor costs and inflexible legislation), but the potential is big and getting bigger — and venture capital is beginning to flow as a result.
The examples are becoming more numerous, as startups like the angel-backed Printi, which is trying to create a web-based Kinko’s for the local market, the Founders Fund and Social+Capital-backed online learning platform, Descomplica, Atomico-funded “Internet of Things” player Evrythng, the Redpoint-backed “TechCrunch of Brazil,” Startupi and Accel and Tiger Global-funded, baby-focused eCommerce startup Baby.com — to name a few.
As Internet-connectivity proliferates, along with its startup community, Brazil has seen an explosion in its eCommerce market. Forrester, for example, estimates that Brazilian eCommerce will increase 18 percent year-over-year, with total sales expected to hit $22 billion by 2016. While Baby.com.br has seen a lot of buzz since launching in 2011, it’s not the only startup looking to capitalize on Brazil’s exploding eCommerce market.
Founded in December 2009, Bebestore, one of the original baby and children-focused online marketplaces in Brazil, is today announcing a big raise of its own, having recently closed a $10.2 million round of series B financing, led by W7 Capital and Atomico. This adds to the $7.8 million Atomico invested in the startup’s series A round, bringing its total capital to $17.8 million.
Why the big interest from Atomico — the same firm that’s raising a $286 million fund and was just voted “The VC of the Year” at Europe’s tech startup awards?
Since receiving its first investment from Atomico in December 2011, the founders tell us, Bebestore has quadrupled its revenue and now offers over 45,000 items in its store. As of January, the company’s run rate was $21.4 million, with month-over-month revenue growth at 20 percent in January.
So, the business is continuing to grow, and it’s finding that Brazilian parents, especially among the younger generation are increasingly turning to the Web to find affordable products that can be shipped quickly, rather than the alternative. As one of the early movers, Bebestore opted for the broad approach, offering a range of parent-focused products — from strollers, shoes and diapers for toddlers to products for moms (beauty products, accessories, etc) and clothes, toys and games for kids.
Initially a port of the Diapers.com model, Bebestore has become more focused on value-add products like clothes, toys and accessories, the founders tell us, rather than lower-margin products like diapers. And, like Baby.com.br, the company has been determined to implement a social strategy by becoming a resource for parents on Facebook, beyond simply being an eCommerce marketplace.
But, with seemingly such similar models, how does Bebe Store see itself as different from Baby.com.br, its main competitor? The founders tell us that the company is more focused on higher-end products in major cities, particularly in the southeast part of Brazil, whereas it sees Baby.com using diapers as its anchor product, cross-selling other products, while focusing on the northern regions of Brazil, particularly more rural areas.
In turn, Baby.com.br also recently launched dinda.com.br, which is essentially a flash sales model for baby-related products, while the founders say that Bebe Store has no intention of pursuing the flash sales model.
While these are relatively small differences, Brazil is so big geographically with such a large (and increasingly connected) population, there’s plenty of room for more than kid-focused e-Commerce player. Who will own the most market share? That remains to be seen, but there’s definitely a land grab coming.