To make it easier for you to read this article, we suggest downloading it in PDF format.
Embark on a captivating journey with Rene Almeida, Co-CEO of Voke, as he unveils the compelling narrative behind 220 Capital’s strategic acquisition of Agasus. From overcoming fundraising hurdles to navigating the challenges of transforming a HaaS provider into a market leader, Almeida shares the intriguing details of Voke’s remarkable growth. This interview offers an inside look into the intricacies of entrepreneurship, strategic decision-making, and the resilience required to elevate a company to unprecedented heights.
According to numerous investors, Voke represents one of the most significant deals in the history of SFsin Brazil. Before delving into the details of the company, let’s trace back to the origins before the acquisition. How did 220 Capital come into existence?
After gaining experience at Credit Suisse, Morgan Stanley, and McKinsey, I pursued an MBA at IE Business School in Spain in 2016. During a class on ETA led by Blake Winchell, a renowned SF investor in the USA, I became enamored with the model. Instead of venturing into a startup, an initial idea as I aspired to become an entrepreneur, I believed it would be more prudent to acquire an existing company. Given my risk-averse nature, the concept of preserving the legacy of a company with established clients and profits was far more appealing. I discussed this with my IE teammate, João Luis P. Lima, and we began exploring the opportunity to launch a new SF in Brazil. At that time, only three companies (Taqia Capital, Meissa Capital, Colibri Investimentos) had succeeded in raising an SF and were in search of an acquisition. Simultaneously, there were approximately 100,000 SMEs in Brazil, presenting a colossal opportunity. While succession in the past often involved family members, a shift in mentality was evident in the last decade. Many business owners lacked a successor, and some were willing to pass on their companies to their employees to extend the legacy.
How did the fundraising for 220 Capital unfold, and what were the investment criteria in the quest for the perfect company to acquire?
In January 2017, we returned to Brazil and initiated our fundraising efforts. While successful in garnering support from U.S. investors, the process was more challenging in Brazil. We spent several months explaining the model to investors and family offices. By the end of June, we had completed our fundraising, with over 80% of the capital from foreign institutional investors. We secured backing from Anacapa Partners, JB46, M2O, Relay Investments, WSC & Company, among others, and two Brazilian investors: Newton Equity Partners and Spectra Investments.
The search commenced in June 2017, evaluating over 400 companies. Our criteria were stringent to the SF model yet agnostic, we sought a growing company with at least a 15% margin of benefits, recurrent revenues, no complexity to run, and a reasonable price. We avoided non-orthodox deals, such as distressed companies or startups, and excluded retail and manufacturing (which, in fact, is quite vetted in the US, although European investors are more willing to study this kind of opportunities). We targeted B2B services companies in sectors like education, logistics, and rental. We wanted a “boring business” with a lot of recurring revenues where there was room for a lot of dumb mistakes made by us, the future managers.
Ultimately, we found Agasus, one of the largest hardware-as-a-service (HaaS) providers in Brazil. Agasus was the perfect company for a searcher, met all the criteria we were looking for, except one: the only criterion we couldn’t tick was it was capex intensive. We went to different banks to explain the business model of the company, and in the end, they accepted to finance us, and therefore in May 2019, we successfully invested in the company.
Tell us more about the acquired company, Agasus. How was it initially?
Headquartered in São Paulo, Agasus specialized in IT equipment leasing since 2000, offering short-term and long-term leasing arrangements for IT equipment. Essentially, we were the ideal IT outsourcing solution and functioned as the “desk team” whenever an employee encountered an issue with their computer. When acquired, the company had around 60 employees, a turnover of BRL38M, and over 50% EBITDA margin, roughly BRL20M. Agasus served customers in 12 states and 186 cities throughout Brazil, maintaining a churn rate below 1%. The company had rented over 25,000 desktops and servers and leased nearly 30,000 laptops and 4,000 smartphones and tablets.
Our decision to divide roles, with João focusing on day-to-day operations and myself on M&A strategy, aimed to transform Agasus into the leading HaaS company in Brazil. We wanted to take advantage of this highly fragmented industry in Brazil.
Over the past few years, your growth primarily came through a build-up strategy, unusual for a company acquired by a SF. How did you manage it, and what challenges did you face?
Our obsession with growth led us to seek specific target companies that could enhance our portfolio. In 2020, we made our first acquisition with the buyout of JR1 Informatica. It was a small deal (the company had only BRL10M turnover), but it was strategic for us as it allowed us to access an incipient market at that time: the resale of used equipment, and therefore, control the last stage of the equipment’s life cycle.
In 2021, we were approached by the founders of Microcity, who were the leading HaaS company in Brazil at that time. They had followed our history and wanted to pursue their legacy with someone who deeply understood the business. The problem: they were bigger than us at this point. We convinced our investors to purchase this traditional player, and they backed us via an additional round of capital. We bought the company in January 2022, and this led us to revenues of BRL422M in 2022, a growth of 225% over 2021, and we surpassed 600 employees. Additionally, we acquired a third company late in 2022.
These acquisitions posed significant challenges in managing a rapidly growing company. In 2023, our focus shifted to efficiency and professionalization, investing in systems and ERP to automate processes. Partnership proved crucial, as being a sole CEO would be challenging. Managing a company of this magnitude remains an ongoing challenge, but it has been a rewarding journey, and we are still a work in progress.
How is the company now, and are you exploring exit options?
We are immensely proud of our team, which has positioned Voke as the leader in the HaaS business in Brazil. Our investment in people has made us more efficient. Recently, we achieved a significant milestone: half a million computer units rented in Brazil. Rebranding to “Voke” last year, our turnover stands at BRL540M, and our EBITDA is BRL310M. This marks a fifteenfold increase in benefits since acquiring Agasus four years ago.
We are not actively seeking an exit; for us, a successful exit will be a consequence of our hard work, and it will happen when the time is right.
