The Dafiti Group, Latin America’s fashion e-commerce leader, is a major league player. Since its launch just two years ago, the company has brought in US$225 million in investments, backed by JP Morgan, Quadrant Capital Advisors, and now, Ontario Teachers’ Pension Plan (Teachers’).
The US$70 million received from Teachers’ represent Dafiti’s largest capital injection to date. It’s also received US$10 million from Mexico’s León Group, a consortium represented by the owners of the country’s largest shoe brands.
Toronto-based Teachers’ is Canada’s largest single-profession pension plan, with US$129.5 billion in assets as of December 2012. It has previously backed 360Buy.com, a Chinese e-commerce platform, with a US$400 million investment.
Philipp Povel, Co-founder of Dafiti, said in the investment announcement that this funding endorses backers’ trust in the potential of Brazilian fashion online retail and in Dafiti’s position as a leader in the segment regionally. He added:
We will use this money to strengthen our customer service and our product assortment. All in all, this impressive funding helps us to bring Dafiti to the next level and fulfill on our strategic objective to change the way people in Latin America buy fashion, lifestyle and sports products.
Brazil, Dafiti’s biggest market, is among the most attractive countries in the world when it comes to retail investments. Brazil’s e-commerce sector is expected to grow 25% in 2013, having added 10 million new e-consumers in 2012. It is estimated that by 2015, 39% of internet users (31.6 million people) will have made at least one purchase online. Apparel is taking off especially well in the country, having reached leadership for the first time in Brazil’s e-commerce categories this year.
Argentina, another big market for Dafiti, is also doing well in the e-commerce realm. The sector grew 44% in 2012, with 32% of internet users making purchases online.
“Supported by a growing middle class, huge consumption potential and significant growth in online and mobile access, Dafiti is well positioned to succeed in online retail in Brazil and Latin America,” said Wayne Kozun, Senior Vice-President, Public Equities at Teachers’. “We look forward to partnering with Dafiti’s successful management team.”
Dafiti boasts operations in Brazil, Argentina, Chile, Colombia and Mexico. It offers 125,000 products from 2,000 brands and employs 1,400 professionals in Brazil alone.
Insights from the Inside
In light of Dafiti’s latest investment, we reached out to one of its co-founders, Marius Lueckemeyer, to get some insight into the deal:
Jóse Martin: An investment signifies advancement in a company’s maturity. What does this investment mean for Dafiti as a company?
Marius Lueckemeyer: For Dafiti, this investment is an important milestone that will help the company to continue consolidating its position of leadership in the regional market and growing fast by providing an excellent experience for clients.
On the other hand, it is revalidation to be able to continue offering maximum convenience to our clients, with free shipping, a 30-day return policy, and interest-free payment installments.
JM: How is it that a Canadian organization has taken interest in a Latin American company?
ML: In a very short period of time, Dafiti has achieved high penetration and regional positioning. This has attracted a pension fund, as is the case of Teachers’, to invest in a business that has high potential for its portfolio.
JM: What services will you improve with the investment and how?
ML: One of our main points of focus looking ahead is increasing efforts in technological innovation to be applied in improving navigation and purchasing experiences for consumers. To achieve that, we’ll rely on the company’s main pillars – technology and a top-notch team that guarantees customer satisfaction.
Likewise, we’ll work hard to improve delivery times and increase the number of brands we work with as well as our inventory.
JM: Dafiti has said that, in this next phase, it will change the way fashion products are consumed in Latin America. What exactly is this vision?
ML: Our vision is to have the best fashion product offer in Latin America. With easy access to fashion 24 hours per day, 365 days a year, we offer fast delivery and secure payment transactions.
In Argentina, there is no other option out there today that can match the over 200 brands and product variety offered by Dafiti. This renders our proposal unique.
JM: What are Dafiti’s plans for expanding its services to other countries in the region?
ML: We’re always considering new expansion options, but this investment will be focused on the countries in which we work right now.
September has started out strong for startup news in Latin America. Chilean-born ComparaOnline announced a US$11 million Series B round at the start of the month, and Eventbrite acquired Eventioz. And last month, we witnessed Restorando’s US$13.3 million and Globant’s announcement of an impending IPO.