Praso, a Brazil-based company providing a distribution platform for small retailers, secured $9.3 million in Series A funding. It also announced the acquisition of the intellectual property of Floki, a company using artificial intelligence to automate the purchases of small bars and restaurants. Terms of the acquisition were not disclosed.

Retailers across Latin America often have to manage relationships with dozens, if not hundreds, of wholesale stores in order to get the products they need to fill their shelves. While e-commerce has exploded in the region, this process continues to be one that is largely offline and manual. Experiences include waiting in long lines to check out and even with ordering online, having to drive to pick up the merchandise.

In the past few years, startups, for example, Nocnoc, Miferia and Chiper, were founded to bring technological solutions to the problem. Praso joins them, founded in 2021 by Samuel Carvalho, Fernando Bilfinger and Rodrigo Castellari.

B2B focus

Prior to starting Praso, CEO Carvalho was working with mom-and-pop shops while at Stone, a company offering financial technology solutions to merchants.

“We saw, over the last 10 to 12 years, quick digitization of the consumer space when it comes to e-commerce, but business-to-business was largely untapped, and we felt like there was a huge opportunity to address this,” Carvalho told TechCrunch.

The company connects large foodservice manufacturers with small retailers — like bars, restaurants, cafés and bakeries — and provides a data-driven approach to demand generation, last-mile logistics, understanding purchasing behavior and a credit solution.

By situating Praso in the northeastern part of the country, headquartered in Carvalho’s hometown of Recife, Carvalho said the company has little competition in the region. It is also big enough, with 50 million people and 500,000 potential merchant customers.

Carvalho said competitors focus on corner stores and other retail that are price sensitive. However, bars, restaurants, cafés and bakeries are more convenience and service-focused and generally have higher margins, so they don’t have to bargain on price as much.

“There’s still a lot of room to grow here with local manufacturers, and we have plans to connect manufacturers from outside Northeast Brazil,” he said. “Some local manufacturers have become more reliant on large wholesalers, but want to find a way to reach small merchants, where before it wasn’t profitable.”

Shifting business model

Praso is working with 120 supply partners and 7,500 merchants. Its original business model included purchasing from the supply partners and reselling to the merchant. It provides customer data, like purchasing behavior, to the supplier.

More and more, it is shifting to offering fulfillment rather than having the inventory on hand. Carvalho said many manufacturers don’t have the logistics capacity to serve merchants, so Praso will run the entire fulfillment operation to the small customers. It will monetize the logistics and demand generation. Praso also monetizes for bringing in customers through its marketplace.

Over the past year, the company grew its revenue 7x and is on track to grow another 3x by the end of this year. In 2023, Praso became contribution profit positive for generating profit on every order it delivers, Carvalho said.

Meanwhile, Valor Capital Group and NFX co-led the Series A and were joined by existing investor Base Partners, Formus Capital, Iporanga Ventures and Endeavor Scale-Up. In total, Praso has raised $14.5 million.

Carvalho plans to invest in continuing to build out the logistics network in the four metro areas where Praso operates and implementing Floki’s data intelligence and purchasing insights into existing customer portfolios. Future features will include accounts payable management so that Praso will know when a merchant needs working capital, as well as inventory management that will eventually be able to fulfill orders automatically.

It is also working on a credit offering for merchants where it will provide attractive payment terms in the form of working capital so that customers can do something similar to “buy now, pay later.”

“These merchants are overcharged and underserved in pretty much everything they do,” Carvalho said. “We believe there’s huge potential to build a very significant business just layering services focused on these foodservice and small businesses.”