Ariel Arrieta: Bixti Acquisition a Wake-Up Call for VCs


Yesterday, news of Elo7’s purchase of Bixti echoed throughout the web. Bixti, a member of NXTP Labs’ first acceleration class, was a strategic acquisition for the Brazilian Elo7.

Bixti is a marketplace for design, art and handcrafts, the objective being the buying and selling online of products that are original, unique and creative. The startup’s young entrepreneurial team (the average age of the group is 22) is composed of co-founders Marina Caporale  and Alexis Caporale, project and metrics analyst Demián Squiersky, and CTO Ángel Velasquez.

What is the significance of this first exit?

– The acceleration model has received its first validation, completing its participation with this exit. The sale of Bixti multiplied NXTP’s investment by five.

– Angel investors are taking the risks necessary in the industry for growth, a joint effort by experienced investors and those who are new to the business.

– There is a notable absence when it comes to the participation of VCs. Bixti was one of three companies in its acceleration class that didn’t receive an investment out of its first round search. Nevertheless, it is now the first company to be sold and become a success story for its investors.

What’s next?

If the strategies proposed work to spread the Etsy business model throughout Latin America (let’s not forget their presence in Geeks on a Plane), the U.S. company will likely purchase Elo7 in order to expand in the region.

PulsoSocial’s Maca Lara-Dillon spoke with Ariel Arrieta, CEO and Founder of NXTP Labs, regarding the Bixti sales process. You can find the transcript of the interview below:

Maca Lara-Dillon: You’re celebrating the accelerator’s first exit right now, correct?

Ariel Arrieta: Exactly, this is our first exit. It’s actually come a bit earlier than we expected. We generally observe a cycle for companies that are sold of about three years, when value can really be captured. That said, we’re very happy that Bixti has been sold to Elo7. It’s a sound strategy on the part of Elo7 because Bixti brings with it a presence in many parts of Latin America that Elo7 doesn’t have. Elo7 is competing with Rocket, which is the leader in the region and in Brazil. With this acquisition, the company is seeking to overtake its competitor.

MLD: What was it about the proposal that sparked the decision to sell so early on?

AA: The decision was made by Alexis, the CEO of the company, and the founding team. We support that decision. I think it is an important strategic choice. While the ideal would have been to sell to Etsy, the model company, I think that selling to Elo7 is a good thing for the Bixti team. They will be able to receive equity from Elo7 from an eventual sale to Etsy.

MLD: And does this strengthen the NXTP Labs as an accelerator?

AA: It’s valuable for us because it demonstrates that the model works, that we create value and have the ability to capitalize on that value. I think it’s also a good sign for the entire industry, especially for VCs, for whom this should serve as a wake-up call. There are many opportunities out there that imply taking risks, but those risks come with big rewards.

MLD: What needs to happen for VCs to recognize these opportunities and not let them slip by? How many VCs saw Bixti, for example, and passed it up?

AA: Here, it’s important to make a distinction. Elo7 is a strategic buyer, and this is an exit for investors, in this case, NXTP. It’s an exemplary case for investors looking to inject funds and then sell.  With our first class of startups for acceleration, we invested in 15 companies, and 12 received funding – Bixti was not one of them. Right now, we’re helping the companies from our second edition, where we worked with 17 businesses. I think it’s an important moment for those companies to receive investments.

MLD: Why didn’t Bixti receive investment? Was it too risky, or what was it?

AA: One of the aspects of Bixti that seems most risky is that the founder is just 22 years old, but I think that, after Facebook, people have to realize that age isn’t always the best indicator of risk. I do, however, believe that it was an important factor. The company demonstrated that it can capture clients and develop traction in the market. It also proved its ability to develop in more than one country, which happened over the last few months. I think the presence of James Haft of PAL Capital (a partner of NXTPLabs) was essential in helping Bixti to negotiate a deal that pleased all parties involved.

MLD: And what was the return for NXTP?

AA: The numbers are confidential, but what I can tell you is that we multiplied the capital invested by five, with which we’re very happy. Obviously, if we would have waited to sell until next year, we would have multiplied the original number by 20 or 30. All the same, we’re content with this, and we believe we’ve achieved a balance that is beneficial for the entrepreneurs and the seller. The founders are very excited and hope that soon the company will be able to achieve in Latin America what Etsy has in the United States.

See the full interview in Spanish below:

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Emily Stewart

Originally from the United States. Degree in Comparative Literature & Society from Columbia University. Background in marketing and communications, including copywriting, translation, editing and content creation. Localization experience. Twitter @doblackshoe