Your Amazing Brand Amplifier. This English expression corresponds to the acronym Yaba, one of the emerging companies born in Barcelona that could experience the fastest growth in the coming years if everything goes well. The startup, founded in 2020 by Alejandro Fresneda, David Baratech, Rubén Ferreiro, Sergi de Pablos, and Patxi Archanco, has just closed its first major funding round, thus having 75 million euros to boost an ambitious plan to acquire companies specialized in selling products through Amazon and become the reference aggregator for the American e-commerce giant in Southern Europe.
There are several reasons that could facilitate Yaba's success: they are pioneers in developing this business model in Spain; due to the entrepreneurial power and previous experience of its five founders; and due to the strong potential offered by the aggregators market, considering the unstoppable rise of e-commerce and the enormous power of Amazon. One only needs to look at one fact: it is estimated that there are 6 million sellers within Amazon, of which approximately 60,000 invoice more than 1 million dollars and 85% are profitable companies. Furthermore, the number of sellers increases exponentially, with around 4,000 companies joining the Amazon universe daily. Of these 6 million stores, twelve are already owned by Yaba, so the growth potential of the Barcelona startup is very significant.
It is estimated that of everything Amazon sells, 30% are its own products, meaning orders for items manufactured by the American company itself or acquired from other companies (vendors). The other 70% are products supplied by that universe of more than six million sellers spread across the world, from whom Amazon charges a 15% commission for operating through its platform. The world leader in e-commerce also charges another commission that can also reach 15% for logistics management and delivery of orders to customers, so sellers, broadly speaking, keep 70 out of every hundred euros they sell through Amazon.
In this sense, taking into account that they must also face the cost of acquiring the products they sell, it is vital for this type of company to generate economies of scale that allow them to reduce their expenses as much as possible and improve their efficiency to be profitable and have the necessary money to invest in marketing and position their products as well as possible within Amazon to achieve greater sales. It is in this need to generate economies of scale where aggregators like Yaba make sense, that is, companies that bring together many sellers and provide them with centralized services for both back office, logistics, purchasing, technology, inventory management, data intelligence, and marketing.
In its first year of life, Yaba has acquired 12 sellers that add up to an aggregated turnover of 18 million euros. These are stores highly focused on specific market niches located in Spain, Italy, Cyprus, the Netherlands, and Eastern Europe. Specifically, they specialize in selling home products, beauty, baby care, sports, and pet products on Amazon. Among these brands are Banbaloo (baby safety barriers), and Superscandi, a brand of ecological cleaning cloths. Their acquisition target is companies that invoice between one and two million euros and are already profitable.
According to Alejandro Fresneda, CEO of Yaba, the purchase of six more companies is being finalized ---in the due diligence phase---, so they will soon manage 18 companies. The challenge, however, is to close the year with 30 sellers and enter new market categories, such as outdoor products, superfoods, or lighting. "Our three-year goal is for Yaba to achieve an aggregated turnover of at least 150 million euros," says David Baratech, also founder and CEO of the startup.
Until now, Yaba had raised 9 million euros to finance its growth plan. With the Series A financing round it has just closed, it has raised an additional 66 million euros, bringing its resources to 75 million. Although the company does not break it down, most of the new funds raised are in the form of debt, an option that allows the five founders not to be excessively diluted and to maintain the majority shareholding of the company.
Thus, the US fund Crossbeam Venture Partners and the German 10x Founders have just entered Yaba as new investors. Other firms that had already invested in the company, such as Bonsai Partners, Aldea Ventures, JME Ventures, and Inveready, as well as family offices and business angels, also participated in the round.
In parallel, a large part of the new resources has been provided by the Tikehau Capital debt fund, which has committed to accompanying the company during its growth through its credit vehicle. According to Fresneda, the second financing round or Series B will seek to close in the first quarter of 2023.
Of the new investors, Crossbeam already has experience in the Amazon seller aggregator sector (it has invested in similar companies in the US and Asia) and with Yaba, it makes its first investment in Europe. "With the team's philosophy and enormous experience in e-commerce, Yaba is very well positioned to continue boosting native digital brands in Europe and other international marketplaces," highlights Ali Hamed, managing partner at Crossbeam. For his part, Maxime Laurent-Bellue, from Tikehau Capital, emphasizes that "Yaba meets all the requirements to become a success story in the e-commerce sector in Europe" thanks to having "an excellent team with high execution capacity and an enormous opportunity for seller consolidation."
New hires
For Fresneda, the investment round "marks a before and after" for the company, as it means "validating its business model and allowing it to advance to the next level." According to Yaba's CEO, the capital increase and debt will be used to finance the acquisition of new companies, increase investment in marketing, and increase the firm's workforce, which now employs 40 people and expects to close the year with 70. The company's headquarters are in Barcelona, but the team is also distributed between Madrid, Italy, France, and Mexico.
It is estimated that currently, globally, there are about 50 Amazon seller aggregators that have already raised about 13.5 billion dollars in capital. In a conversation with The New Barcelona Post, Fresneda explains that the company founded by Jeff Bezos values the emergence of aggregators very positively, as they are companies that contribute to professionalizing the market and building stronger brands that consequently manage to sell more. The entrepreneur also points out that Amazon has found another "golden goose" in addition to the two commissions it already habitually charges: paid marketing, that is, the money that sellers pay to better position their products in keyword searches within the online store, a model that replicates Google and is now booming.
In this sense, one of Yaba's keys is to provide the companies it acquires with highly specialized teams in this type of marketing. Being under the umbrella of an aggregator, these companies also have access to resources to finance growth, can negotiate jointly with suppliers or charter containers among several firms and share knowledge and best practices to maximize their sales. "Since everyone sells on Amazon, it is very easy to generate these economies of scale and replicate models," explains Fresneda.
According to the entrepreneur, in the medium term, Yaba plans to diversify its sales channels and also operate outside of Amazon. Thus, its roadmap includes entering other marketplaces, having its brands launch their own online stores, and also the option of selling products directly in physical stores.
The five founding partners
Four of Yaba's five entrepreneurs already dedicate 100% of their time to the company's growth. For his part, Ruben Ferreiro, president of Yaba, remains at the helm of his duties as CEO of the digital marketing company Viko, of which he is also the largest shareholder.
Before founding Yaba, Alejandro Fresneda created the companies Woffu and Mr. Noow. For his part, David Baratech worked at Trovit and is also co-founder of the online supermarket Ulabox. Patxi Archanco also has experience in e-commerce and in the pet business, having worked in the group that owns Kiwoko and Tiendanimal. Finally, Sergi de Pablos, Yaba's Chief Technology Officer (CTO), also comes from Ulabox.