Company: Tienda Nube // Nuvem Shop
Co-Founder & CEO: Santiago Sosa
Investors: Elevar Equity, IGNIA, KaszeK Ventures, NXTP Labs, FJ Labs
Tienda Nube, a cloud solutions e-commerce provider for entrepreneurs and SMEs in Latin America, raised a US$7m Series B from a strong syndicate of investors. Elevar Equity, an impact investment firm, led the round, with participation from IGNIA, an early-stage Mexican fund focused on services for Mexico’s emerging middle class, as well as previous investors KaszeK Ventures, NXTP Labs, and FJ Labs, a seed fund in New York founded by entrepreneurs Fabrice Grinda and Jose Marin.
Tienda Nube provides over 16,000 merchants an omnichannel e-commerce platform, with integrations for credit card and offline payment, shipping and logistics, and distribution in the region’s major online marketplaces. In this interview, co-founder and CEO Santiago Sosa shares insights into the challenges online merchants face in Latin America, and how Tienda Nube is innovating around them.
LAVCA: Who are the founders, and how did you start Tienda Nube?
Santiago Sosa: The founders are Santiago Sosa (CEO), José Abuchaem (CMO), Martín Palombo (Product Director), Alejandro Alfonso (CTO) and Alejandro Vazquez (Customer Success Director). We have been studying and working together for more than 12 years now.
We are all friends from college in Buenos Aires and completed our degrees together. We all shared the same passion for building technology, so right after university we decided to continue working side by side. We developed different business ideas… Tienda Nube was among them, but it wasn’t until late in 2011 that we decided to drop every other project to focus only on the e-commerce platform.
LAVCA: What markets does Tienda Nube serve?
Santiago Sosa: Tienda Nube is the Spanish name of our brand, and it came first in late 2011. NuvemShop was created in 2012 when we launched our Brazilian brand. Our two main markets are Brazil and Argentina, but we also have thousands of customers in other Latin American countries, mainly Mexico, Colombia, Chile, and Peru.
LAVCA: E-commerce sales in Latin America are expected to exceed US$50b in 2017. What are your observations about the e-commerce market in the region right now?
Santiago Sosa: The main challenge and opportunity lies in being able to help merchants succeed in an undeveloped ecosystem and a challenging economy.
The payments and logistics infrastructures are still underdeveloped when compared to other regions. There is still a certain fear about purchasing online, and significant fraud. Merchants also struggle with inflation, recession, and local bureaucracy. Moreover, access to capital is very limited.
Despite this context, we have managed to make it easy for any entrepreneur or SMB to start, manage, and promote their own online business, and today we power more than 16,000 merchants.
LAVCA: How much of your clients’ transactions are happening on mobile versus desktop?
Santiago Sosa: More than half of the transactions in our platform occur on mobile devices and we have seen huge growth in the last two years. We expect this trend to continue and we believe that around 85% of total transactions (or even more) will take place on mobile devices in the next two or three years.
We have made and continue to make significant investments in technology to allow our customers to succeed in a mobile era. We also invest in educating our customers about this trend. We do so in our E-commerce University, a free educational site with the purpose of teaching more about running an online business.
LAVCA: The payment gap is a known problem in Latin America, and one of the reasons we’ve seen heavy investment in fintech solutions in the region. How is Tienda Nube tackling this to help merchants transact online?
Santiago Sosa: It is a very interesting challenge indeed, and we are focused on making it easier and easier for our merchants to accept payments.
Regarding mobile technology, we have a number of interesting developments. Among them, we began to automatically create secure sites (providing free SSL certificates), which are optimized for a mobile purchasing experience, and made significant investments in speeding up sites (a very important issue considering that most consumers navigate on 2G or 3G networks).
We are also investing in new developments like PWA and AMP, that are aimed to make sites even faster. From the payments point of view, we are working on a new technology that will provide a “one click buying experience”. This has existed for a long time in the US, but is still totally unavailable for a Latin American SMB.
LAVCA: How have you financed the company to date?
Santiago Sosa: Tienda Nube has raised more than US$10m to date: The first round was a US$300k angel round in 2011 and a follow on round in early 2013. A few well known investors like NXTP Labs, Wences Casares, Alec Oxenford, and Fabrice Grinda (among others) participated in the early rounds.
In late 2014, the company raised a US$2.75m Series A from KaszeK Ventures, and earlier this year we closed a US$7m Series B. Elevar Equity led the round, with participation from IGNIA and KaszeK Ventures.
LAVCA: How did you connect with your investors, and how have they been helpful so far?
Santiago Sosa: KaszeK Ventures’ partners are very well known in the Argentinian ecosystem so it was relatively easy to connect with them in the early days of the company. Their MercadoLibre background is relevant, as they understand e-commerce well. They also have a strong operational background that helps founders scale the company.
One of our angel investors introduced us to Elevar, and Elevar introduced us to IGNIA. We have been working with them for a relatively short period of time, but it has been enough to realize that they are excellent investors and are already adding significant strategic and operational value.
LAVCA: What’s next for Tienda Nube?
Santiago Sosa: Our mission is to continue enabling entrepreneurs and SMBs to succeed, and to fulfill the dream of running their own business. Our customers are the main focus of the story we are writing and we will continue working for them.
The proceeds obtained from the Series B round will be used to enable our customers to continue expanding their sales while keeping daily administration as simple as possible.