During his time in the consumer goods industry at giants like Kraft Heinz and Mondelez, Raphael Traticoski frequently encountered a recurring issue: the difficulty of outsourcing production and managing those suppliers. To address this problem – and to profit from it – he founded GrowinCo four years ago, a startup that has been described as the ‘Uber of industries’. Essentially, GrowinCo connects factories with idle capacity to other industries or brands that need to produce quickly, and it helps manage these outsourced operations on a software as a service (SaaS) platform. This market – still small in Brazil – is known in the USA as ‘comanufacturing’.
Normally, a multinational needing to launch a new product – without having the manufacturing capacity – has to contact factories one by one to find out which one is idle and then hire it. “And these big companies always have a very high standard of quality, so it’s not just any factory that passes their filter,” Raphael told Brazil Journal. With this process, the average time to get a new product on the shelf – the so-called speed to market – is around 20 months. But by connecting both ends and delivering a platform that consolidates data from all providers, GrowinCo says it has cut this timeframe in half.
“We always do a pre-assessment to evaluate the quality of the factories,” says Raphael. “And the secret sauce of how we manage to find these industries and enrich their data is that we created an algorithm that allows us to identify idleness based on historical data and see which products each factory makes.” Now, GrowinCo has just closed its first funding round to step on the accelerator and scale up outside Brazil. The $1 million fundraising was done with three early-stage funds – Harvard Angels, GV Angels, and Urca Angels – in addition to Mandi Ventures, a venture capital manager by Antônio Moreira Salles and Julio Benetti. Raphael said that GrowinCo had never done a funding round because it has been cash flow positive since the sixth month of operation, “but we decided to raise funds now because we found the product-market fit. It’s a thesis that I think can scale a lot, and we are going to bet big on it.”
“We always do a pre-assessment to evaluate the quality of the factories,” says Raphael. “And the secret sauce of how we manage to find these industries and enrich their data is that we created an algorithm that allows us to identify idleness based on historical data and see which products each factory makes.” Now, GrowinCo has just closed its first funding round to step on the accelerator and scale up outside Brazil. The $1 million fundraising was done with three early-stage funds – Harvard Angels, GV Angels, and Urca Angels – in addition to Mandi Ventures, a venture capital manager by Antônio Moreira Salles and Julio Benetti. Raphael said that GrowinCo had never done a funding round because it has been cash flow positive since the sixth month of operation, “but we decided to raise funds now because we found the product-market fit. It’s a thesis that I think can scale a lot, and we are going to bet big on it.”
In its current model, GrowinCo operates only with exclusive ecosystems for large clients, who bring their current supplier network into the platform, which is then expanded with the startup’s network. “In this model, we become their official collaboration platform with suppliers, and they can manage all these outsourced operations there. We also provide various data about each factory, like the level of idleness and the products they make, and help manage the entire process, such as confidentiality agreements,” said the founder.
The startup earns money only through a monthly subscription and does not charge a commission for transactions. However, GrowinCo is now creating a marketplace aimed at mid-sized industries, digital brands, and supermarket own brands. An MVP is already running with 50 industries, which are paying a fee on transactions. In the future, Raphael said he expects transactional revenue to become the main revenue line of the startup, surpassing the subscription.
GrowinCo already has 86,000 industries registered on the platform, including clients and outsourced companies. The client list includes multinationals like Mondelez, Kellogg’s, Natura&Co, and Ajinomoto. Today, about 70% of the revenue comes from outside Brazil, with the United States accounting for 30%, Mexico 8%, and the rest spread across various countries. Part of the round’s resources will be used to grow even more in the USA, where the ‘comanufacturing’ market is much more mature than in Brazil – largely due to the greater penetration of supermarket own brands.
“The market in Europe is even more mature, and we are starting to have some things there too,” said the CEO.
Original Source: https://braziljournal.com/growinco-a-startup-que-quer-popularizar-a-comanufatura/
