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Nuvini was supposed to be Brazil’s Constellation Software - and now it’s worth $35M. What happened?
Chutzpah, meet gravity
Alex Prokofjev
June 18, 2024
Disclaimer: RollUpEurope cannot be held liable for any assumptions or facts presented in this article. While the article provides specific figures and calculations regarding a real company, readers are advised to independently verify the information provided and make their own judgments. Any decisions made based on the content of this article are done so at the reader's own risk. This not investment advice!
This blog, and the database that underpins it, has a strong bias to Western (read, North American and European) aggregators.
The bias is not intentional, but it is a bias nevertheless.
There are hardly any entries for Latin America, despite the fact that the region is home to economic powerhouses like Mexico (pop. 130M) and Brazil (pop. 218M). Of course, there is Totvs and Stefanini Group. However, these are massive companies that each turn over $1B+. Both were founded in the 1980s. Both grew into M&A, rather than were born with it.
The opportunity for purpose-built serial acquirers is real. According to the 2024 edition of the State of SaaS in LatAm study, Brazil’s domestic software industry counts 1,000+ companies with $6.3B aggregate sales.
So imagine our excitement when we stumbled upon Nuvini - the self-styled Constellation Software of Brazil. Nuvini was founded in 2019 by the Brazilian tech entrepreneurs Pierre Schurmann and Luiz Busnello. In October 2023, it listed on NASDAQ by way of a SPAC sponsored by Mercato Partners, a US growth equity firm.
Nuvini acquires profitable B2B SaaS businesses with ARR between $2M and $10M. So far it has bought 7.
So how’s it going, Nuvini?
At the first glance, not great. Share price is down almost 90%, resulting in a market cap of only $35M as of COB Friday 14 June 2024.
The Nuvini / Mercato team in happier days. Source: NASDAQ
In this article we review:
Nuvini’s investor pitch
Nuvini’s portfolio
Five possible reasons for the rocky NASDAQ debut
Let’s dive in!
Nuvini’s investor pitch
Nuvini’s SPAC investor presentation is a decent template for anyone looking to build the “Constellation Software of X”. X being a sizable middle income economy. Like Brazil.
The pitch is a credible one:
Brazil has a large tech gap vs. advanced economies + conducive direction of travel
Brazil also has a well developed homegrown software sector
Nuvini has a legitimate M&A playbook, underpinned by a decent funnel
What confuses me is the side by side with the compounding grandees like Constellation, Vitec, Roper and Tyler. All four companies went public when they were MUCH larger than Nuvini - which at the time of the SPAC sported revenues approaching $40M.
Source: Nuvini
Nuvini targets growing, profitable SaaS businesses that operate in 3 verticals:
Marketing and Sales
Productivity
Finance and Control
As such, Nuvini is an odd mashup of VMS-like businesses that would not feel out of place in Constellation’s or Valsoft’s portfolios (Effective, Ipe) and PLG SaaS businesses (the rest). 98% of Nuvini’s clients are SMBs; almost half are micro enterprises.
Source: Nuvini
Nuvini’s portfolio…
…was shaped by the M&A spree that took place between October 2020 and June 2021, when 6 out of the 7 companies were acquired: