Sao Paulo — Praso, a B2B platform that connects businesses with restaurants, bars, bakeries, and cafes, has raised $9.5 million (equivalent to R$45 million) in a Series A funding round, the startup announced Wednesday. Valor Capital Group and NFX led the investment alongside Base Partners, Formus Capital (Alarko and Sabanci), Iporanga Ventures, and Endeavor Scale-Up. The round had been anticipated by Bloomberg Línea.
The Brazil-based company’s new investment round resulted in a higher valuation, although the figure was not disclosed.
Praso has used this capital injection to acquire the intellectual property of Floki, a food technology company specializing in automated solutions for bar and restaurant procurement. The intention behind this purchase is to expand Praso’s product portfolio over the next year.
Praso operates as a multi-category e-commerce platform, designed to streamline interactions between the retail sector and industry players. Their platform offers a wide range of supplies and supermarket products, spanning categories such as spices, flour, grains, cereals, dairy products, oils, olives, beverages, and everyday consumables. This expansion is expected to improve the B2B shopping experience.
The company had raised approximately $3 million in a Seed round led by Base Partners in November 2021, which was fbollowed by an extension.
Valor Capital Group has invested in four early-stage startups this year and was already an investor in Floki. Floki, founded in 2020 originally as an online marketplace operator, leverages artificial intelligence and machine learning for autonomous digital procurement.
“There are several Floki investors who have been with us for a while and decided to stay. The same investors who led the last round for Floki are leading this round. I think they understood that there was greater complementary potential in bringing the two businesses together,” said Praso’s CEO, Samuel Carvalho, to Bloomberg Línea.
According to PitchBook data, Floki had raised R$50 million in a deal led by NFX and Valor Capital Group in March 2022.
Iporanga Ventures and other investors who participated in Floki’s investments are now entering as investors in Praso. Luigi Rodrigues and Marcelo Espiga, co-founders of Floki, have become shareholders in Praso, but will not continue to be part of the operation.
According to LAVCA (Association for Private Equity Investment in Latin America), investment figures have adjusted to the current credit environment of higher interest rates. Early-stage and Seed investments have decreased compared to recently higher values but remain above pre-pandemic averages.
Venture capitalists invested $1.7 billion in 338 transactions across Latin American startups during the first half of 2023.
Northeast Focus
Praso’s CEO explained that the startup has a geographical focus on the Northeast region of Brazil. It serves approximately 8,000 small retailers in the region, along with just over 100 suppliers.
Praso has 165 staff members working in the states of Pernambuco, Paraíba, Alagoas, and Ceará. “We intend to expand the team and, particularly, invest more in the product.”
Born in Recife, Carvalho has a family history of entrepreneurship, as they owned a consumer goods industry.
“I grew up in an environment where small retailers became increasingly dependent on a low-profit channel. I saw the need to create a better experience for these retailers while meeting the industry’s demand for greater reach,” he said, citing difficulties for retailers in obtaining credit and managing their operations. This was the inspiration for Praso.
After high school, Carvalho joined the Estudar Foundation, founded by Jorge Paulo Lemann, Marcel Telles, and Carlos Alberto Sicupira, which provides scholarships to young people who are accepted to study abroad. He studied at Stanford and met André Street, one of the cofounders of Stone (STNE). Carvalho began working for the company with the acquisition of the software company Linx.
“Part of the acquisition strategy was how to take the software designed for large companies to also serve small ones. Much of my time was dedicated to small retailers, to understand how they spend their time and how the software could help them in their daily operations,” he explained.
Founded in 2021 by Carvalho, Fernando Bilfinger, and Rodrigo Castellari, Praso initially started as a purchasing and inventory platform. The plan was to spare restaurant owners the trip to buy food items like fruits and vegetables, but it quickly evolved to encompass financial services.
The company now offers credit to small retailers, allowing them to purchase inputs and products with greater flexibility. “This changes the interaction with the retailer because instead of them going after suppliers, we go to them to serve them,” explained the CEO.
Praso charges commissions on the products sold on the platform and also charges a fee for credit and working capital offers for small retailers.
The acquisition of Floki adds a new dimension to Praso’s business. “We are incorporating this technology into our platform to add more value to our customers, enabling them to make informed decisions about purchases and inventory,” he said.
When asked about expansion plans, Carvalho emphasized that the focus remains on the Northeast, where there is still ample room for growth. The company aims to bring more suppliers to its platform, becoming a kind of one-stop-shop for restaurants and small business supplies.
The integration with Floki also raises the question of how Praso intends to position itself in the market in relation to other startups with similar business models, such as Inventa and Zak. Carvalho said the company’s mission is to be the “best employee a retailer never had,” offering simple and effective solutions to allow them to focus on growing their businesses.
Floki operated its purchasing intelligence platform for restaurants in São Paulo. “It’s much more of a data and demand forecasting business,” he explained about the technology that will be added to Praso, which has a logistics network with two distribution centers.