Goldman Sachs Invests $23M in Brazilian E-commerce Startup Olist

Olist Secures $23 Million Extension to Series D Funding

Olist, a Brazilian e-commerce marketplace integrator, has successfully obtained an extension to its Series D funding round, raising $23 million. This investment was spearheaded by Goldman Sachs Asset Management, increasing the total Series D financing to $80 million.

Previous Investment and Company Growth

Redpoint eventures, an existing investor who initially invested in Olist in 2015, also participated in this latest funding round. To date, Olist has amassed over $126 million in funding since its establishment in 2015.

Reports from Bloomberg suggest this round may be the final one prior to the company’s anticipated initial public offering.

Series C and Earlier Funding Rounds

SoftBank previously led the initial tranche of Olist’s Series D funding in November, as well as the company’s $46 million Series C round in 2019. Earlier investments were also made by Valor Capital, Velt Partners, FJ Labs, Península, and angel investor Kevin Efrusy.

Olist’s Core Mission and Business Model

Olist focuses on connecting small businesses with prominent online marketplaces. This enables entrepreneurs to broaden their reach and sell products to a larger consumer base.

The company was founded with the explicit goal of empowering small merchants to increase their market share throughout Brazil, utilizing a Software-as-a-Service (SaaS) licensing model targeted at brick-and-mortar businesses.

Growth and Customer Base

By October 2019, Olist had already amassed a customer base exceeding 7,000 businesses. The company initially employed a drop-shipping model, facilitating direct product delivery from stores to customers nationwide, allowing for scalable growth with minimal capital expenditure.

Currently, Olist states its platform delivers comprehensive tools supporting all aspects of e-commerce operations, aiming to facilitate substantial increases in sales volume for its merchants. The platform now supports approximately 25,000 merchants.

E-commerce Boom and Latin American Market

The startup is demonstrably benefiting from the surge in e-commerce activity globally, driven by shifts in consumer behavior. Latin America, in particular, has experienced significant growth in e-commerce adoption.

The region’s e-commerce market, valued at $85 billion, is expanding rapidly, with projections estimating a value of $116.2 billion by 2023.

Revenue Growth

Olist reported a tripling of revenue in the first quarter of 2021 compared to the previous year, although specific figures were not disclosed. Revenue also doubled in 2020, as reported by Bloomberg.

Olist Store and its Features

Olist Store, the company’s primary product, provides merchants with tools to manage product listings, logistics, and payment processing. It also offers a unique customer experience through integrations with major channels like Mercado Livre, B2W, and Via Varejo.

The product achieved a record Gross Merchandise Volume (GMV) in the first half of the year, representing a 2.5x increase compared to the same period in the prior year.

Launch of Olist Shops

In the previous year, Olist introduced Olist Shops, enabling users to create a virtual storefront in under three minutes. This product includes payment checkout functionality and integration with logistics providers.

Olist Shops supports interfaces in Portuguese, English, and Spanish, and has attracted over 200,000 users across 180 countries since its launch.

CEO Statement and Future Plans

“The pandemic has accelerated the digitalization of business processes worldwide, consequently driving e-commerce growth in an unexpected manner,” stated Tiago Dalvi, Olist’s founder and CEO.

The newly acquired capital will be allocated to investments in technology and product development, exploration of mergers and acquisitions, and expansion of international operations. This builds upon the acquisitions of Clickspace and Pax Logistica last year, which expanded Olist’s presence in the logistics sector with a network of over 4,000 registered drivers.

Strategic Partnerships

CFO Eduardo Ferraz indicated the company is currently engaged in preliminary discussions with ERP providers, retailers, and companies offering complementary solutions.

“This is why we also decided to expand the investment in our Series D and bring Goldman Sachs as another relevant investor to our cap table,” he explained.

Goldman Sachs’ Perspective

David Castelblanco, Managing Director and Head of Latin America Corporate and Growth Equity Investing for Goldman Sachs Asset Management, expressed his firm’s admiration for Olist’s ability to empower small and medium-sized businesses (SMBs) to increase their revenue.

“Tiago and the Olist team are incredibly customer-oriented and have created an innovative technological solution for their e-commerce clients,” he added.

Competitive Landscape

Olist operates within a rapidly evolving market. In March, Nuvemshop, a São Paulo-based company, secured $90 million in funding led by Silicon Valley venture firm Accel. Nuvemshop provides an e-commerce platform designed to facilitate direct connections between SMBs and their customers.