Allugg: Corporate Venture Building to develop innovative technology and rapidly scale a startup’s business

When we find a company that shares the same purpose as ours, which is to provide broadened access to equipment, new learning opportunities and high-quality resources to as many people as possible, it’s easy to build a business model that generates value for everyone.” – Felipe Rabaçal, Co-founder of Allugg.

The pandemic made a rapid and  significant shift in how people operate in society and to the economy at large. The public health need for social isolation drove a major shift toward remote work, and organizations worldwide had to provide the means for their employees to work from home. This scenario quickly proved to be a significant challenge because companies lacked the experience and know-how to navigate and quickly adapt to the new work landscape.

With the aim of offering an agile alternative for this new workplace reality, Allugg, a startup specializing in renting IT equipment such as laptops and servers, was born. Since the beginning of its operations two years ago, Allugg has already rented the equivalent of nearly $2 million worth of materials to its first customers, primarily startups.

Allugg’s business model is providing companies with Hardware as a Service (HaaS), which provides a combination of the digital convenience of leasing,  with centralized logistics processes, attention to user experience, and a commitment to sustainability.

“We understood that the business made sense in a digital and scalable way, and we knew it needed to be operated more like a startup than a traditional company. Our goal was to be a platform capable of connecting customers, suppliers, and logistics.” – Felipe Rabaçal.

EThis combination of positive factors has made the business model attractive not only to customers, but to investors and Venture Builders like CESAR. It’s no wonder that the startup has just raised a R$4 million funding round to scale its business and triple the size of the company by 2024.

Fast access to RD&I talent to rapidly scale startups

Corporate Venture Building

In its early days, Allugg provided its rental service in a more rudimentary and disconnected manner, using various communication channels to run the operation. Thus, one of the main challenges for the startup was to attract a technology team to build a unified digital platform that was custom-built to meet its customer needs.

Allugg’s goal was to find the best strategic partners with deep RD&I expertise across Brazil’s leading tech innovation ecosystems. However, the founders encountered individuals primarily interested in designing more traditional business models, financial plans, or HR structures.

Then, in 2021, Felipe Rabaçal, one of Allugg’s co-founders, attended a lecture by Eduardo Peixoto, CEO of CESAR.

“Eduardo shared some insights about CESAR, and we saw a lot of value to be tapped to grow Allugg’s business. We shared the same purpose of thinking about people and scalability, and this alignment shaped how the project should be built, not just as a service but as a partnership in the CVB model.” – Felipe Rabaçal.

Therefore, Allugg’s founders decided that instead of seeking investors and using the financial injection to hire a development team, it was more efficient to establish a RD&I partnership with CESAR to provide the sophisticated expertise needed to develop a robust technology platform. Additionally, CESAR possessed the knowledge to contribute to the structuring of the business model and how to design the best customer experience within the platform.

Engagement in technology, business, design, and experience

As a Venture Builder, CESAR believed in the project and became a strategic partner for Allugg by applying our methodology and co-investing in the design and development of the innovative, digital platform for asset and contract management.

“Even in the early stages, it was already possible to perceive the competence of the executives involved. They demonstrated a deep understanding of the business and the market they are operating in. When it reached our Venture Board, we learned we have a very similar culture, which has positively impacted our collaboration with Allugg. We have achieved incredible results thus far.” – Átila Bittencourt, Head of New Ventures at CESAR.

With the aim of designing an MVP (minimally viable product) for a next-generation platform that would truly add value to Allugg and its customers, we invested in a Lean Inception dynamic even during the business evaluation to map out an initial ideation and scope of work. Following that, we crafted a proposal for a Targeted Innovation Lab (TIL), a laboratory to design a custom-built solution for each problem, by defining a process with fast cycles of experimentation and prioritization of what would be most relevant for the challenge within the project’s time frame.

Today, the project is being led by a team of developers, designers, and entrepreneurship experts from CESAR, who are dedicated to building a new digital solution and designing the business roadmap with the primary goal of rapidly scaling the startup. In addition, alongside the technology development phase, CESAR is assisting in hiring professionals to join Allugg’s technical team.  Once hired, CESAR will provide them with the knowledge and training they need to maintain and improve the platform over time.

“My role in the process with Allugg began even before the Venture Building phase, when we were looking for startups to invest in. We saw an opportunity in Allugg to transform the lives of people and organizations. We assembled a highly skilled team for the challenge, and throughout the journey, we have been preparing the Allugg team to eventually take over the management of the new platform. It has been a fantastic case of innovation and startup empowerment, with all of CESAR’s technical knowledge being used to build an innovative platform through rapid experimentation cycles.” – Thiago Veras, Principal Technical Manager at CESAR.

Another very positive aspect of the organizations’ strategic partnership is the opportunities created for students who want to enter the IT job market, especially in the Northeast area of Brazil. Today, most of the internship and permanent hires made by Allugg have included university students from the state of Pernambuco, including students from CESAR’s  innovation school.

Allugg aims to provide access to cutting-edge technology equipment to as many companies as possible to  foster the growth of the Brazilian market. After going through all the stages of a startup roadmap with CESAR, including the creation of an MVP, achieving market fit, and defining an Ideal Customer Profile (ICP), the goal is to continue gaining traction this year and prepare for scaling of the business in 2024.

“We are fully integrated, and know exactly what is being done, and where the project is heading. Not only do we understand how to develop the solution, but today we feel confident in the skill sets and knowledge or our internal technology team to keep fueling our rapid growth.”  –  Francisco Rabaçal, Co-founder of Allugg.

The great advantage of the Venture Building strategy is the possibility that, even after the technical baton is passed, Allugg will always have continued access to CESAR as a trusted partner to guide it in the areas of design, technology, and business in its key initiatives and to keep up with new market developments.

“We found in Allugg the perfect opportunity to bring together the best of two worlds: CESAR’s know-how in building pioneering technological solutions in various market sectors, coupled with the founders’ extensive entrepreneurial experience and their in-depth knowledge of the market in which the startup operates. With this, we believe that the result of this business partnership will be rapid growth for Allugg and greater satisfaction among customers seeking the company’s services.” – José Augusto Branco, Entrepreneurship Analyst at CESAR. 

Empowering Businesses through Venture Building

One of CESAR’s innovation arms identifies scalable business models and propels startups through Corporate Venture Building. In this strategy, CESAR’s involvement is quite comprehensive: including talent to support technology development, and ongoing contributions to structure, analyze, and enhance the business model, as well as the user experience. After all, we understand that technology, design, and business go hand in hand.

The support of an innovation center like CESAR can be crucial for entrepreneurs who don’t come from a technology background, or startups that lack the know-how to structure a technical team with the necessary skills. As a result, startups can rely on Corporate Venture programs from the very inception of the solution to ensure product quality, market fit and experience to pave a more certain path to business success.

In partnership with Kyvo, we have created Arbos, an initiative that combines corporate investments and joint action with startups on a guided journey to accelerate businesses and socio-environmental impact indicators on a global scale.

To learn how your organization or startup can connect with Arbos or other CESAR Venture Building initiatives, click here to arrange a time to speak with a consultant.