Our investment thesis looks to capital-light software businesses that drive efficiency and become indispensable in users’ everyday work. When met with a large end-market, these are the basic qualities we look for in a B2B SaaS business. Add in a logical plan for how to grow revenue with existing clients and to build new products leveraging the core service — and you have our attention.
Arquivei, who definitely have our attention, are a perfect example of the above.
Brazil’s 21m SMBs and enterprises are legally required to document every B2B transaction through a complex and burdensome e-invoicing system. Invoices need to be submitted to the government and they must also be stored for a further five years. Failure to do so ends in an onerous fine.
Arquivei automates and streamlines this entire process. Their platform automatically retrieves client invoices from the government web service and manages all legal requirements. Previously distributed over countless folders in multiple cloud applications, invoices are now centralized in a single place allowing for searching, sorting, and storage. This gives a company’s employees, accountants, and auditors a common point of reference to reconcile cash flows and remain in good standing. Customers save eighty-plus work hours a month and untold penalties for non-compliance.
Close to 20% of Brazil’s GDP flow through Arquivei’s veins.
More than 6m SMBs and enterprises is a huge market to build a service atop. But there is more to Arquivei than its core SaaS: close to 20% of Brazil’s GDP flow through Arquivei’s veins. This is in the form of data-rich e-invoices. These contain detailed information on flows of supplies, costs, freight, and product specifications. Here is where Arquivei’s nascent business intelligence unit comes in.
With access to that many of Brazil’s e-invoices in structured XML files, Arquivei can mine unique insights for clients around spend analytics, supplier scoring, and risk management. These products help businesses make better procurement decisions and optimize their supply chains. Further products designed for economists, consultants, and investors include real-time dashboards of economic activity and market data related to pricing, indexing, market size & share.
Arquivei’s business model draws on recurring subscriptions on the core SaaS and annual contracts for business intelligence. Financially, we are attracted to its best-in-class SaaS gross margins and high operating leverage on the business intelligence side. At scale, we believe Arquivei can support robust EBITDA margins with an efficient capital-light model. Both sides of the business are self-reinforcing and only tighten with greater uptake.
Arquivei’s founding team, Christian, Isis, and Bruno, are exceptional entrepreneurs, built to execute on the company vision. Recently selected as Endeavor entrepreneurs in Brazil, they have created an impressive company culture, fostered by strong leadership and an ownership mentality at every management layer.
We are excited to partner with the team to write the next chapter of the story together. All the data points to the greatest of success.