Mirakl raises $300 million for its marketplace platform

French startup Mirakl has raised a $300 million funding round at a $1.5 billion valuation — the company is now a unicorn. Mirakl helps you launch and manage a marketplace on your e-commerce website. Many customers also rely on Mirakl-powered marketplaces for B2B transactions.

Permira Advisers is leading the round, with existing investors 83North, Bain Capital Ventures, Elaia Partners and Felix Capital also participating.

“We’ve closed this round in 43 days,” co-founder and U.S. CEO Adrien Nussenbaum told me. But the due diligence process has been intense. “[Permira Advisers] made 250 calls to clients, leads, partners and former employees.”

Many e-commerce companies rely on third-party sellers to increase their offering. Instead of having one seller selling to many customers, marketplaces let you sell products from many sellers to many customers. Mirakl has built a solution to manage the marketplace of your e-commerce platform.

300 companies have been working with Mirakl for their marketplace, such as Best Buy Canada, Carrefour, Darty and Office Depot. More recently, Mirakl has been increasingly working with B2B clients as well.

These industry-specific marketplaces can be used for procurement or bulk selling of parts. In this category, clients include Airbus Helicopters, Toyota Material Handling and Accor’s Astore. 60% of Mirakl’s marketplace are still consumer-facing marketplaces, but the company is adding as many B2B and B2C marketplaces these days.

“We’ve developed a lot of features that enable platform business models that go further than simple marketplaces,” co-founder and CEO Philippe Corrot told me. “For instance, we’ve invested in services — it lets our clients develop service platforms.”

In France, Conforama can upsell customers with different services when they buy some furniture for instance. Mirakl has also launched its own catalog manager so that you can merge listings, add information, etc.

The company is using artificial intelligence to do the heavy-lifting on this front. There are other AI-enabled features, such as fraud detection.

Given that Mirakl is a marketplace expert, it’s not surprising that the company has also created a sort of marketplace of marketplaces with Mirakl Connect.

“Mirakl Connect is a platform that is going to be the single entry point for everybody in the marketplace ecosystem, from sellers to operators and partners,” Corrot said.

For sellers, it’s quite obvious. You can create a company profile and promote products on multiple marketplaces at once. But the company is also starting to work with payment service providers, fulfillment companies, feed aggregators and other partners. The company wants to become a one-stop shop on marketplaces with those partners.

Overall, Mirakl-powered marketplaces have generated $1.2 billion in gross merchandise volume (GMV) during the first half of 2020. It represents a 111% year-over-year increase, despite the economic crisis.

With today’s funding round, the company plans to expand across all areas — same features, same business model, but with more resources. It plans to hire 500 engineers and scale its sales and customer success teams.

eBay reportedly getting close to selling its classified-ads unit to Adevinta

eBay is reportedly getting close to a deal to sell its classified-ads business to Adevinta, a Norwegian company that runs online marketplaces across Europe and Latin America. According to a Wall Street Journal report, if the negotiations are successful, a cash and stock deal could be announced as soon as Monday. The transaction is expected to value eBay’s classified business at about $8 billion.

The Wall Street Journal first reported in February that eBay was planning to sell off its classifieds business, with prospective buyers named at that time including private equity firms TPG and Blackstone Group, Naspers, and German publisher Axel Springer SE.

More recently, Prosus NV, an Amsterdam-based investment firm that is controlled by Naspers, emerged as a contender, but Bloomberg reported over the weekend that negotiations hit a bump because eBay wants to maintain a stake in the classifieds business after selling it.

Activist shareholders Elliot Management and Starboard Value LP have pushed eBay to sell off non-core business units to focus on its marketplace, resulting in the sale of StubHub to viagogo for more than $4 billion last year and the appointment of a new chief executive officer.

Ebay’s classifieds division operates mostly outside of the United States, including in Canada, Europe, Africa, Australia and Mexico. If Adevinta ends up acquiring it, it can expand its international portfolio of peer-to-peer e-commerce platforms.

An Adevinta representative told TechCrunch the company had no comment on the reported negotiations. TechCrunch has also reached out to eBay.

Ebay said in its last quarterly earnings report, issued in April, that it was “explor[ing] potential value-creating alternatives for its Classifieds business, is holding active discussions with multiple parties and anticipates having an update by the middle of the year.”

During the first quarter of this year, eBay’s main marketplace business generated $2.1 billion in revenue, down, while its classifieds business saw $248 million in revenue. In 2019, the classifieds business made $1.1 billion in revenue, versus $7.6 billion for eBay Marketplace, which is weathering competition from larger online rivals like Amazon.

Amazon US sellers will have to display their name and address starting Sept. 1, 2020

Amazon on Wednesday informed its U.S. sellers they will soon have to display their business name and address on their Amazon.com seller profile page. For individual sellers, this will include the individual’s name and address. A similar system is already in place across Amazon’s stores in Europe, Japan and Mexico, due to local laws. Amazon says it’s making the change to ensure there’s a more consistent baseline of seller information across its platform, so online shoppers can make informed buying decisions.

The change, of course, is not just about transparency.

Amazon’s U.S. marketplace is its oldest and largest, with 461,000 active U.S. sellers out of its 2.2 million worldwide actives. In total, there are 8.6 million registered sellers worldwide and Amazon adds around a million more per year, according to Marketplace Pulse data.

Amazon’s marketplace also accounts for around half the retailer’s sales. But as it has grown, it has been afflicted by a variety of issues and fraud, including problems with counterfeit goods.

Though Amazon has long been accused of avoiding these issues, it’s more recently pledged to spend billions to address the problem. Amazon even inserted itself into legal battles with fraudulent sellers and counterfeiters over the past couple of years, including those with designers and accessory makers, as well as others participating in the fake reviews economy.

Last year, Amazon also launched a set of tools for brands and manufacturers under its “Project Zero” initiative, which work to proactively combat counterfeiting.

And just this April, Amazon announced it was piloting a new system aimed at verifying the identity of third-party sellers over video-conferencing — a shift from its in-person verifications that had to stop due to the coronavirus outbreak. Through this system, Amazon checks that the individual seller’s ID matches the person and the documents they shared with their application, among other things.

Now Amazon is telling its U.S. sellers their business name and address will need to be on their profile by September 1, 2020.

The change will help businesses fighting fraud or taking legal action against sellers over counterfeit goods. Consumers will also have an address in case the product has caused harm and they need to contact the seller or even initiative legal action of their own.

Once the new system goes live in the U.S., the seller’s storefront on Amazon.com will display an expanded set of information about their business.

A photo from Marketplace Pulse shows how this may look, with a comparison of a U.K. seller page with its current U.S. counterpart:

Image Credits: Marketplace Pulse

In a statement, Amazon says the change is about consistently, avoiding the topic of online fraud.

“Over the years, we have developed many ways for sellers to share more about their business, including through features like the seller profile pages, ‘Store’ pages for brand owners, and Handmade ‘Maker Profile’ pages,” an Amazon spokesperson said. “These features help customers learn more about sellers’ businesses and their products. Beginning September 1, we will also display sellers’ business name and address on their Amazon.com seller profile page to ensure there is a consistent baseline of seller information to help customers make informed shopping decisions,” they said.

Stock content service Storyblocks evolves with new partner program

Storyblocks, the subscription-based stock audio, imagery and video service formerly known as Videoblocks, today announced the launch of its new Member Library Partner Program. The company has also shuttered its pay-per-download marketplace and is now fully invested in its all-inclusive subscription program.

The reason for this move, the company says, it to better align its offerings with the needs of both its subscribers and contributors. The company also says that less than 5% of its members every purchased anything from the old marketplace.

youtubergirl

With the new program, subscribers get access to a wide range of royalty free stock imagery without restrictions. That, of course, is not all that different from how the company’s program worked before. Unlimited access to the company’s video library starts at $39/month (though you get a 50% discount if you pre-pay for a year). At that price, the service is clearly going after YouTubers and others who need regular access to stock video. Access to its audio and image library is significantly cheaper.

Contributors get paid for every download, sharing in the pool of total revenue Storyblocks gains from its subscribers, and the service provides them with detailed analytics about how their content performs on the platform.

“For contributors, the Partner Program is uniquely designed to prioritize sustainable revenue growth alongside subscription growth: as the market grows, contributor earnings grow,” the company explains.

For now, the company will work with a targeted group of contributors to build the library and will add additional contributors over time. The company agues that this new program will triple contributors’ earnings, but that obviously remains to be seen.

“The Member Library Partner Program puts us in the unique position to provide diverse, high-quality stock media that the mass creative class demands while providing an earnings boost for our contributor community, and allowing them to better share in our success over the long run,” said Storyblocks CEO TJ Leonard. “We believe you cannot pivot an old approach to meet the needs of a new audience, and so we have created a fresh approach to stock media access that reflects the freedom, flexibility and choice required by today’s digital storytellers.”

 

How even the best marketplace startups get paralyzed

Over the past 15 years, I’ve seen a pernicious disease infect a number of marketplace startups. I call it Marketplace Paralysis. The root cause of the disease is quite innocent and seemingly harmless. Smart people with good intentions fall victim to it all the time. It starts when a platform has sufficient scale — such that there is a good amount of data on things like performance, quality rankings, purchase rates, and fill ratios. What a platform implements as a result of that data, and how it’s received by their user base, is what can lead to marketplace paralysis.

In this post, I will detail what Marketplace Paralysis is and what startups can do to avoid it. Before I get into the nitty-gritty, here’s a snapshot of the lessons you’ll learn by reading this post:

  1. Segment and focus on high-value users
  2. Remember the silent majority
  3. Modify company goals to include quality components
  4. Empower small, autonomous teams

The easiest way to explain Marketplace Paralysis is with a hypothetical example. So allow me to introduce you to Labor Marketplace X (LMX).

Equipped with the aforementioned data, the well-intentioned product managers at LMX will think about policies or features to try and improve a KPI, like fill ratio or job success rate. They might craft a policy that would separate users into two tiers.

Tier 1 gets a shiny gold star next to their name, along with extra pay, bonuses, and preferred job access. Tier 2 gets standard pay and standard job access. They’ve done their homework and feel this will benefit the marketplace.

So, they build the feature. They launch it and make an announcement to their users. And then… a revolt!

Vertical market networks, effective startup names, Libra, Carbon, and Sidewalk Labs

The next service marketplace wave: Vertical market networks

B2B service marketplaces (think translation as a service) are an extraordinarily lucrative startup category. But despite the incredible potential of these platforms to generate outsized returns, many fail. Why?

Ivan Smolnikov, the CEO and founder of translation service startup Smartcat, investigates why certain marketplaces seem to grow while others stall. His conclusion is that unlocking value for both sides of the marketplace is much more challenging than it appears, and the most successful, next-generation marketplaces are going to come from highly networked, efficient platforms for complex projects targeting specific verticals.

Smolnikov then gives a step-by-step guide to optimizing marketplace growth.

One reason is that several service providers must often work together to complete a single job for a buyer, requiring a complex workflow from end to end. As a result, it’s difficult for marketplaces to not only mediate service delivery but also make it significantly more efficient for buyers and suppliers. If both the buyer and suppliers don’t see a significant efficiency gain other than being initially matched, why would they continue using the marketplace?

What startup names are most effective?

Perhaps the first step in building a company is just figuring out what to call it. Adam Zelcer, who founded Adboy, explores some tactics on how to optimize a startup’s name.

The next service marketplace wave: Vertical market-networks

The last few decades have produced many successful marketplaces. We went from goods marketplace pioneers such as eBay and Amazon to simple service marketplaces such as Uber, Lyft, Doordash, Upwork, Thumbtack, TaskRabbit, and Fiverr. But why haven’t we seen many successful B2B service marketplaces?

Table of Contents


Why Many B2B Service Marketplaces Failed

Some would argue that companies such as Upwork, Thumbtack, Fiverr, or TaskRabbit are horizontal B2B marketplaces in the sense that they provide access to suppliers of different services. But while businesses do indeed transact with freelancers on such “horizontal” marketplaces, for most service verticals these are limited-value, one-off transactions. They fail to enable long-term business collaborations.

So, such marketplaces haven’t delivered more valuable services nor introduced a new paradigm for how businesses buy specific services at scale and on an on-going basis. Why is that?

Horizontal marketplaces are stuck at the discovery process

Horizontal services marketplaces don’t provide much value beyond matching clients with quality service providers. In other words, they don’t facilitate collaboration between buyers and suppliers, never mind provide ways for the two parties to collaborate more efficiently over time as they engage in follow-on projects.

In essence, the model these marketplaces were built around is not much different from the likes of Craigslist, which put a convenient UX on traditional classified advertisements.

Complex B2B services require workflow and collaboration tools

In their article “What’s Next for Marketplace Startups?,” Andrew Chen and Li Jin found that there aren’t many successful service marketplaces because those offerings are complex, diverse, and difficult to evaluate. It’s challenging to define a successful transaction in a service marketplace because it’s harder to quantify success.

One reason is that several service providers must often work together to complete a single job for a buyer, requiring a complex workflow from end to end. As a result, it’s difficult for marketplaces to not only mediate service delivery but also make it significantly more efficient for buyers and suppliers. If both the buyer and suppliers don’t see a significant efficiency gain other than being initially matched, why would they continue using the marketplace?

(Image via Getty Images / Lidiia Moor)

The $50 billion translation industry is a prime example of complex B2B services marketplaces. On the supply side are roughly 50,000 small agencies around the globe responsible for more than 85% of this $50 billion industry. (Note we are referring to agencies here as suppliers, though they play on both sides.)

On the demand side are businesses that need to translate text from one language into another. Plus about 1,500,000 freelance linguists work in this industry, many of whom are more specialized than professionals in other industries.

Anyone can find and hire a translator on Fiverr or Upwork. Both provide a vast selection of language translators. However, the quality and cost of the translation depends on the translation tools available to the translator as well as their subject expertise.

Neither Fiverr nor Upwork provide computer-aided translation (CAT) and collaborative workflow solutions for users of their platforms. Additionally, neither provides an effective way for all parties to collaborate and continuously improve the efficiency and quality.

But the problem with traditional marketplaces goes even further: Multiple translators and reviewers are usually needed to complete a single job for a customer. Multi-language translation projects are even more complicated. Such projects require multiple service providers and cost estimates, in addition to project management tools.

This is why building a B2B service marketplace is difficult. Service marketplaces must not only connect buyers and suppliers, but also provide tools to enable an efficient and collaborative workflow that reduces wasted time and effort.

Horizontal marketplaces suffer high attrition

In addition to the problems already outlined, traditional marketplaces experience another issue that prevents them from growing and retaining market participants: Buyer and supplier attrition.

Many business services are based on regularly recurring engagements. In some cases, a buyer and a service provider interact daily, requiring a different workflow than gig-marketplaces are built around.

Buyers and suppliers have little motivation to continue interacting on a platform with no workflow automation solutions. They lack a way to improve service efficiency and quality, automate collaboration, payment, paperwork, and other basic processes required for a business.

This is why many traditional marketplaces suffer from slow network effects and high attrition. (A network effect is what happens when a platform, product, or service delivers more value the more it is used.

Think Facebook, eBay, WhatsApp.) Why wouldn’t companies work directly with service providers outside of a marketplace after they were introduced? What incentives keep the service transaction on the marketplace? These are critical questions to answer when building a marketplace.

Traditional marketplaces target broad services, making it nearly impossible to provide workflow solutions for buyers and suppliers. Going forward, successful service marketplaces will be developed relying on an industry-specific SaaS workflow. This will focus buyers and suppliers on longer-term projects and interactions that serve the unique needs of collaborations and transactions in a specific vertical.

Image via Getty Images / OstapenkoOlena

What makes a successful service marketplace?

In “The next 10 Years Will Be About Market Networks,” James Currier, Managing Partner at NFX Ventures, defines a new era of service marketplaces, which he calls market networks.

A market network is a platform that combines elements of an n-sided marketplace, a network, and workflow solutions. An n-sided marketplace is one that requires coordination of multiple supply-side parties to provide a complex service for a single buyer.

Market networks enable multiple buyers and suppliers to interact, collaborate, and transact on the same platform. They provide users with industry-specific workflow solutions that enable efficient, ongoing collaboration on long-term projects. This reduces costs and leads to a higher quality of services and increased overall value for all users.

But how do you actually build a successful market-network platform? While the answer to that varies from company to company, here is our approach. We were able to build a market network for the translation industry that combines the components: network, marketplace, and workflow solution.

STEP 1: SaaS workflow platform unlocks high-value collaboration

The first step to building an effective complex market network is to develop a workflow that is easy for users to embrace. It might not seem like much, but this increases productivity by enabling teams to perform tasks that were previously impossible.

Over 100 Goodwill stores are bringing their inventory to OfferUp

Goodwill and mobile marketplace app OfferUp have announced a new partnership focused on bringing Goodwill’s secondhand inventory to the millions of OfferUp shoppers, for both local pickup and delivery. The deal sees over 100 Goodwill stores listing their inventory in OfferUp in New York, New Jersey, San Francisco, San Mateo and Marin Counties, South Florida, Greater Detroit, San Antonio, and Central and Southern Indiana.

The move brings Goodwill’s pre-owned inventory to a modern mobile e-commerce platform, allowing staff to track sales, and view the real-time flow of products, payments, and data in one interface.

However, it’s not the first time Goodwill has gone online. The organization today runs its own e-commerce site, ShopGoodwill.com, and many of its local stores have a presence on eBay.

Via OfferUp, mobile users will now be able to browse their Goodwill’s local inventory in the app alongside other sellers’ content. New items will be uploaded regularly, and listed under the regional Goodwill handles so customers know they’re buying from Goodwill as opposed to an individual seller. These handles will feature a “Verified Business” badge, as well, and the profiles will include helpful information like the store hours, address, and an “about us” section.

The partnership is powered by OfferUp’s new API, currently in beta testing, and Upright Labs’ Lister software, which handles the inventory uploads to OfferUp.

Goodwill will be responsible for managing its listings, including the product images, shipping, order management, financial reporting, and auditing. It’s largely using OfferUp as another sales channel, instead of relying largely on foot traffic to its brick-and-mortar locations.

Like any other OfferUp user, Goodwill doesn’t have a financial relationship with the mobile marketplace.

If a customer buys a Goodwill item, they can go to their local store and pay with cash with no fee. However, if they choose to have the item shipped, OfferUp charges a 9.9% fee to cover shipping and handling across the 48 contiguous U.S. states. This is the same fee any other seller would pay on OfferUp.

The individual Goodwill stores can choose whether or not to offer shipping, the company also says. Some may opt to ship smaller items, like tech, games, or jewelry, but only allow for local pickup if it’s a larger item, like furniture.

The two organizations had already been testing the system ahead of today’s formal announcement about availability. Though early, several Goodwill locations are reporting positive outcomes.

“We started to list furniture and other items from our stores on OfferUp in January, and the early results have been great. The majority of the items we post on OfferUp sell within 72 hours, and some have sold in as quickly as 10 minutes after being listed on the app,” said Jay Lytle, Vice President and Chief Information Officer, Goodwill of Central & Southern Indiana. “The exposure of our high-quality donations to so many new customers, coupled with the feedback and engagement we’ve experienced on OfferUp, has been tremendous for us,” he added.

“Potential shoppers were unaware of the great inventory that our local stores have for sale,” said Goodwill South Florida CEO David Landsberg, in a related statement. “OfferUp allows us to showcase large, pickup only inventory and increase foot traffic to stores. This also translates into new donors, and helps us fulfill our mission of training and employing people with disabilities and other barriers to work here in South Florida.”

OfferUp says it forged the deals with the individual stores in the supported regions, not at a national level, because Goodwill stores operate independently and because employee bandwidth and resources vary by store.

“Every store is looking to increase foot traffic, along with sales, and the leaders we’ve worked with manage multiple stores in heavily-trafficked markets,” an OfferUp spokesperson explains. “With the OfferUp API and Upright Lab’s Listing Tool, employees can take a picture using a mobile device and instantly upload to OfferUp, so it’s improved the flow of receiving and selling their items,” they added.

 

Takeaways from F8 and Facebook’s next phase

Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, TechCrunch’s Josh Constine and Frederic Lardinois discuss major announcements that came out of Facebook’s F8 conference and dig into how Facebook is trying to redefine itself for the future.

Though touted as a developer-focused conference, Facebook spent much of F8 discussing privacy upgrades, how the company is improving its social impact, and a series of new initiatives on the consumer and enterprise side. Josh and Frederic discuss which announcements seem to make the most strategic sense, and which may create attractive (or unattractive) opportunities for new startups and investment.

“This F8 was aspirational for Facebook. Instead of being about what Facebook is, and accelerating the growth of it, this F8 was about Facebook, and what Facebook wants to be in the future.

That’s not the newsfeed, that’s not pages, that’s not profiles. That’s marketplace, that’s Watch, that’s Groups. With that change, Facebook is finally going to start to decouple itself from the products that have dragged down its brand over the last few years through a series of nonstop scandals.”

(Photo by Justin Sullivan/Getty Images)

Josh and Frederic dive deeper into Facebook’s plans around its redesign, Messenger, Dating, Marketplace, WhatsApp, VR, smart home hardware and more. The two also dig into the biggest news, or lack thereof, on the developer side, including Facebook’s Ax and BoTorch initiatives.

For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free. 

PayPal to invest $750M, and Dragoneer $100M into MercadoLibre, Argentina’s e-commerce powerhouse

It’s not only SoftBank that’s eyeing up the opportunity to tap into the quickly expanding market for e-commerce in Latin America. MercadoLibre, a marketplace and financial services powerhouse based out of Argentina and serving 18 countries across the region, has announced that PayPal is investing $750 million, and VC Dragoneer another $100 million, as part of a $1.8 billion equity offering to grow its business — specifically to expand the functionality of its e-commerce platform; improve its logistics infrastructure; and invest in financial technologies “that further solidify the company’s position as a powerful provider of inclusive end-to-end financial technology and payments solutions.”

The remaining $1 billion of the equity offering will be offered as common stock, the company said. PayPal and Dragoneer’s investments are contingent on the company raising the remainder publicly, although judging by the company’s track record as a public stock, and the fact that PayPal also announced this news on its own site, it doesn’t appear the parties are in great doubt about the deal’s completion.

MercadoLibre is traded on Nasdaq and currently has a market cap of $21.75 billion.

The investment is both a financial and strategic one for both MercadoLibre and PayPal.

After getting spun out from eBay several years ago, PayPal has been on a mission to diversify its customer base to include a wider variety use cases, and partnerships to power payments for different marketplaces.

“Digital commerce in Latin America is experiencing tremendous growth and MercadoLibre is well-positioned for continued leadership,” said Dan Schulman, President and CEO, PayPal, in a statement. “We’ve been impressed with the digital commerce and payments ecosystem Marcos and his team have built. We see great opportunities to integrate our respective capabilities to create unique and valuable payment experiences for our combined 500 million customers throughout the region and around the world.”

The two have already worked together and the financial commitment PayPal is making here not only will help it reap dividends from MercadoLibre’s business growth, but also ensure that it integrates ever more of its features in prominent ways to drive more transactions on its own rails. And given how payments is actually more localised than many people might assume, it also gives the company a direct pipeline into tracking and catering to consumer and merchant tastes and preferences when it comes to buying and selling goods and related financial services.

“Over the past 20 years, we have heavily invested in developing the preeminent e-commerce and FinTech ecosystem in Latin America,” said Marcos Galperin, CEO of Mercado Libre, in a statement. “We are excited to welcome these investments which will allow us to significantly accelerate our growth. We look forward to accelerating our leadership in ecommerce and payments and foster financial inclusion in Latin America as a result of our alliance with a global leader in the industry such as PayPal.”

At a time when more mature markets like the US and Western Europe are slowing down in their e-commerce growth (while still remaining huge markets in their own right), the opportunity in developing markets like Latin America is a big one.

As SoftBank revealed last week when it unveiled its own $2 billion fund to back tech startups in the region, more than 50 million people in the region are now categorised as “middle class,” with increased disposable income. The region accounts for 10 percent of the world’s population and 8 percent of the world’s GDP, two times the GDP of India and half that of China. There are some 375 million internet users and 250 million smartphone users, putting it ahead of the U.S. in terms of sheer numbers.

Moreover, retail e-commerce has nearly doubled in the last three years, going to $54 billion in 2018 from $29.8 billion in 2015, figures that have definitely fuelled MercadoLibre’s own growth. In 2018, the company sold more than 334 million items, amounting to over $12 billion of gross merchandise volume. Payment transactions on MercadoPago, its payments business unit, increased by 70 percent during 2018, totalling 389 million transactions and $18 billion of total payment volume, the company said.

At the same time, these are nascent numbers: some 400 million people are still without bank accounts or credit histories in the region.

In terms of the other big investor being announced in this round, Dragoneer is a legendary and very experienced investor when it comes to interesting opportunities in e-commerce. The company has stakes in other giant regional e-commerce marketplaces like Alibaba and Flipkart; disruptive ‘gig economy’ leaders like Airbnb, Uber, DoorDash and Instacart, as well as a plethora of other huge startup names like Slack and Snap. It seems MercadoLibre as currently the top bet for not only competing against the likes of Amazon, but a range of smaller local players that are also looking to tap into this quickly expanding economy — in other words, the same opportunity SoftBank is chasing, but from the other end of the field.

“Through its investments in FinTech, logistics, and customer experience, MercadoLibre is solidifying its leading market position in e-commerce and digital payments across Latin America, and we believe we are witnessing a major tipping point in the region,” said Marc Stad, founder and managing partner of Dragoneer Investment Group, in a statement.

“We’ve known Marcos and his team for over a decade and are thrilled to partner with them through this high growth and transformative period.” Goldman Sachs is acting as sole financial advisor to MercadoLibre on the PayPal and Dragoneer investments, and Cleary Gottlieb is serving as MercadoLibre’s legal advisor. Goldman Sachs, J.P. Morgan and Morgan Stanley are acting as joint bookrunners on the public equity offering.

As a side note, it’s interesting to consider the approach that MercadoLibre is taking with this round. PayPal’s investment is coming in the form of a purchase of common stock, while Dragoneer’s is coming by way of an affiliate that has agreed to purchase $100 million of Series A perpetual convertible preferred stock, with the rest to be raised publicly. When you consider how Lyft, and likely Uber, and many other very highly valued, high-profile scaled startups are likely also to list publicly, this could end up being a route that we see getting used more often when these companies, which are all still operating at a loss and will need to raise capital, might opt to take, too,