Bandora enters the US. As soon as possible, Bandora USA is born

After closing a deal with Portuguese-descendant businessmen with Dunkin' Donuts and Dave's Fat Chicken stores in the state of New Jersey, as well as with a chain of opticians with a presence in ten states , Bandora is preparing the machine to roll out its solution in the United States.

This is the first major step towards internationalisation for the Porto-based startup. By the end of the year, the company, which has an artificial intelligence (AI) solution that helps buildings become more autonomous and energy efficient, will create a Bandora USA. “ We plan to set up in the United States as soon as possible, ” says Márcia Pereira, founder and CEO of Bandora, in an interview with ECO.

The Gulf is another region that the startup is looking at with internationalization goals and, here too, it admits the possibility of creating a local company . “We are looking with particular interest at the Gulf region. Although we already have a partner, we are considering having a physical presence for Bandora in that area as well, considering the huge number of data centers that are being built in that region”, he explains.

What happens next will mark the startup's entry into a new business segment, data centers , in addition to retail and restaurants. And it could quickly expand to other regions, such as the United States.

The startup has closed an extension of its round with the American company HearstLab, bringing the capital raised to date to 1.7 million . This year, it expects to start raising a new round.

About a year ago, you announced a round of 1.5 million to strengthen your international expansion . You were targeting Europe, Latin America, the Dominican Republic and Colombia. How is this expansion process going?

Interestingly, the first market we expanded into was none of these. It was the United States. It came about opportunistically through our lead investor , BlueCrow Capital, who introduced us to a local business developer with contacts in New Jersey who were Portuguese-descendant entrepreneurs who were Dunkin' Donuts franchisees. We closed our first client with Dunkin' Donuts stores and also the Dave's Fat Chicken franchise in the state of New Jersey.

We are very excited, because even in terms of customer acquisition, it is completely different from the Portuguese market, even from the European market, where a franchisee has a maximum of seven or eight stores. Here, an average franchisee can easily reach more than 200 stores, so the cost of customer acquisition is much lower. On the other hand, they have much more demanding operational efficiency needs than a Portuguese franchisee with five to seven stores. A solution like Bandora makes perfect sense in this geography.

They started with two stores, but what are the plans? Expanding these customers’ networks, entering other sectors…

The goal is, once the savings have been proven — we managed to achieve [energy] savings of 50% and 30% in each of the stores in the first month and 50% in the second month — we are in negotiations to roll out . Then we have a problem here, a good problem, operational. In other words, we want to operationalize as quickly as possible. Therefore, we are simultaneously establishing partnerships. We already have a local partner in New Jersey, but one partner cannot do 200-300 stores in a short space of time; we need to multiply this by more partners. We are already forming partnerships with companies, with technicians certified in air conditioning and electrical systems, to be able to have greater capillarity and roll out these projects simultaneously.

We also managed to close a very large contract with a company based in the state of Florida, with opticians in about ten states, New Mexico, California, Florida, South Carolina, etc. There are 300 stores in total and we are also working with local partners to roll out . We plan to incorporate the company in the United States as soon as possible.

We need to build muscle, especially in the United States, where anything that involves transferring revenues abroad is frowned upon. Understanding how the market works, it makes perfect sense to incorporate and take this leap [creating a Bandora USA] now.

Create a Bandora USA?

This is exactly the strategy, especially because we realized that [the expansion] has forced us to do road shows almost every month, lasting one to two weeks, since the beginning of the year, because customers want to see Bandora's face; it's not enough to see a partner. They want to see it, they want to feel comfortable, they want to get to know it. We need to build muscle, especially in the United States, where anything that involves transferring revenues abroad is not seen favorably. Understanding how the market works, it makes perfect sense to incorporate and take this leap now.

Will there be a team, a country manager or will the CEO take over leadership of this market?

For now, I am doing this road show and we will have a local operations person. He will be a kind of country manager but in a more operational aspect, with sufficient technical knowledge to establish a bridge between clients and these local partners and, in addition, to train them. Naturally, we want to hire people, and we will build the team from there.

When will the company be incorporated?

In the second half of the year. That's what we have in the plan and we are already working on that aspect.

You said that by creating the company in the US, you want to provide comfort to your customers, with the payment situation. Did the current situation in the country, of a certain internalization, of a 'closing of doors', contribute to your decision?

This new Administration is strongly promoting investment in the American market and, therefore, looks favorably on the incorporation of companies in the country. We recently attended a conference, Select USA, promoted by American embassies around the world, in which all states were doing reverse pitching so that foreign companies could establish themselves in their states, make investments and hire locally, even with strong tax benefits, for hiring and also for setting up factories, etc. Not that Bandora needs this, but this new Administration is making a strong investment, not that the previous ones didn't do it either, it's not an event created now.

Obviously, it is an important step, because by incorporating and invoicing there, the taxes are much more pleasant than importing the software from Bandora.

If a top-rated investor comes along and one of the conditions is headquarters , we won't throw away a good deal because of the headquarters . But our focus is to keep our headquarters in Portugal as much as possible.

Could this lead to Bandora's headquarters being moved to the USA at a later stage?

An expansion into markets such as the United States, which is the most advanced, will never have the muscle of our headquarters in Portugal, where our engineering base is . Our engineering is all in Porto and, most likely, that is where it will continue, especially because, for now, we promote face-to-face work a lot, it has been like this since 2023. In these markets where we are expanding, it will be more operational, sales.

Now I can't say no either. If a top-rated investor comes along and one of the conditions is headquarters , we won't throw away a good deal because of the headquarters . But our focus is to keep our headquarters in Portugal as much as possible.

In the US, they are in roll out . By the end, how many spaces do you estimate will have your technology?

We expect to be able to surpass the 600-building mark in this market. In the first half of the year, we have been working not only on the sales component, but also on operationalization, on making our operation scalable and more agile in terms of installation. We used the investment to operationalize the proof of concept, for a more robust operation that can achieve this capillarity. We are at an excellent moment in achieving this. We also understand the weaknesses of our customers in terms of infrastructure. I will give a simple example, such as the internet. Many of our customers still have some difficulties, grey areas where they do not have Wi-Fi, cable internet access, or even very powerful firewalls where access to our platform is blocked. Therefore, we chose to use solutions with SIM cards with roaming that allow us to scale all over the world without any problems and without the need for the customer's infrastructure, except obviously for electricity. We have worked hard to get to this point and we are 100% confident in the next step we are going to take.

In other markets, we have partners that do not require our presence for now. (…) We have established partners in Peru, two in Colombia, we also continue to have partners in the Gulf Cooperation Council (GCC), in the United Arab Emirates and in Qatar, and we currently have a partner in Spain. We have dropped the Dominican Republic and Brazil, which has become a… difficult market. It is a market that has not been doing well.

Will the focus be on the US and consolidation, or are Latin America and the Dominican Republic still in the plans?

It is in our objectives, but in a different format. We felt that it made sense to make this bet in the United States, because the market acceptance was so fast and even so unexpected, in a more muscular way, with a physical presence and incorporating it into this market.

In other markets, we have partners that do not require our presence for now. In other words, we are calmly exploring them, providing all the conditions, information, free proof of concept, local training, if necessary... We have established partners in Peru, two in Colombia, we also continue to have partners in the Gulf Cooperation Council (GCC), the United Arab Emirates and Qatar, and we currently have a partner in Spain. We have dropped the Dominican Republic and Brazil, which has become a... difficult market. It is a market that has not been going well.

Brazil has not historically been an easy market for Portuguese companies. Is it due to bureaucracy, a certain closure of borders…?

There is no doubt that this is a market with great potential. In other words, we have detected that there is a lot of interest, particularly in the hospitality sector, where our product could make a huge difference. We almost reached the contract stage, but we never actually signed the contract, because then they want a freebie. We offer a proof of concept, but they want it to last six months... In other words, it doesn't really fit in with our investment strategy when we have markets where a month of proof of concept is enough and we sign a contract. For the company's life stage, it is not a very interesting market because it requires a large investment and time. And time is something we don't have because we want to enter quickly and grow quickly.

So at this moment Brazil…

It is on standby . We tried three partners that didn't work out well. We're not going to close the door, but right now it is on standby because we realize that it is not an easy market. Furthermore, except for very recent buildings, between one and four years old, there are also the opposite extreme, buildings with very old air conditioning equipment, very similar to the ones we have in our homes, which are not compatible with commercial-scale systems, which is what we work with. The infrastructure itself is also a barrier and, therefore, integration becomes much more complex and time-consuming. We need markets that are more mature in terms of smart buildings, sensors, and ready to receive our technology.

And is the European market to move forward? Or does the demand for expansion in the US make you look more cautiously at this side of the Atlantic?

We are not closing our doors to the European market, but we cannot look at it as a bloc; we have to look at it country by country. We were recently at the South Summit in Madrid, where we took the opportunity to meet with two potential clients, and we already have a local partner, specifically in Madrid, to support us in this expansion. Obviously, it is not a massive expansion like the one we are thinking of for the United States; it is opportunistic. These are clients who have been coming to us, following us on social media, on LinkedIn, in the news, we have been very active at conferences, and this then generates leads and business opportunities, and we go there and close deals, especially when we are talking about large groups, which is the case with these two clients we are working with.

But we have to look at it in a very fragmented way, market by market. Spain is one market, France is another with completely different rules. Naturally, what excites us about a market like the United States is that there are no bureaucratic barriers to entry. We just need to incorporate and register our business. If we are operating in New Jersey, we have to register our operation in the state of New Jersey. If we are in Florida, we have to register. But it is as simple as registering. Of course, there are also state taxes, but they are not as complex as understanding all the legislation of a country. I hope that Europe can evolve towards a truly common market.

[New European strategy for startups and scaleups ] the intentions are good, of course, and of course that is what we need, precisely to prevent scaleups from fleeing to other, larger, single markets. (…) I hope that it does not become something like our law on stock options , all good intentions, but so far we still do not have anything that really helps to attribute stock options to scaleup employees.

Europe's new strategy for startups and scaleups could make your expansion process easier or could reality…

The intentions are good, of course, and that is exactly what we need, precisely to prevent scaleups from fleeing to other unique and larger markets. In the same way that, for example, Spanish scaleups flee to Latin American markets, also with this ease. I hope that it does not become something like our law on stock options , all good intentions, but so far we still do not have anything that really helps to attribute stock options to scaleup employees.

It is an excellent idea if it actually comes to fruition, if there really is a potentially common market that can facilitate the growth and expansion of businesses in Europe. It not only helps European companies themselves, but also greatly helps other scaleups that also want to establish themselves and invest in other markets. There are many scaleups , even unicorns, that are currently establishing themselves in Portugal, particularly in Lisbon, and then encounter these barriers.

Do these expansion plans require a new round of investment or will the operation be able to generate the necessary capital?

We have the capacity to make this entry and we were able to do so with the [previous] round, that is, we reorganized our business model, channeled and reorganized the entire business, to give more muscle to what we want to do, namely investing in the United States. We are also looking with particular interest at the Gulf region. Although we already have a partner, we are considering having a physical presence for Bandora in that area as well, considering the huge number of data centers that are being built in that region and that then leads to the current major problem of energy and water, and we believe that Bandora can help solve the problem.

A Bandora Dubai, or somewhere else in the region?

We are strongly considering it. A few weeks ago, we were in Doha, Qatar, at the Bloomberg Economic Forum, and it is indeed a very interesting market, especially given the number of data centers ... There is talk, I don't know if it is 100% true, that Microsoft's data centers will all migrate from Europe to that region, where there are better conditions in terms of taxes as well. This is also somewhat in line with Dubai having ChatGPT premium free for the entire population, for example.

We are looking particularly closely at the Gulf region. Although we already have a partner, we are considering having a physical presence for Bandora in that area as well, given the huge number of data centers that are being built in that region.

It would also be a first for Bandora in this type of project. Until now the focus has been on commercial retail and restaurant buildings.

We are also already developing this business plan to develop a line of our product dedicated to data centers , because they naturally have requirements that commercial buildings do not have, such as security or data privacy . We naturally want to seize and, in some way, close the cycle here: data centers for artificial intelligence and then an artificial intelligence solution to help data centers become more efficient.

Back to the round. Are there any plans to raise more capital this year?

We expect to start raising funds in the last quarter, especially because this year we closed an extension of our round with the New York investor, HearstLab [the investment arm of Hearst Corporation]. It is a small extension [100 thousand euros], but the goal is to convert it into a future round with the follow-on , which is their modus operandi for entering European startups, especially.

The goal is to close a round and we are already working, not only with them but also with our current investors, BlueCrow and Portugal Ventures, to find investors. We are looking at North American investors, where we are currently, to help us here in the operationalization.

We were really concerned about the situation of the new Administration [in the US], but on the other hand, energy continues to be a hot topic . The construction of large data centers to support LLMs has made energy a hot topic again, and so Bandora having a solution to reduce energy consumption makes perfect sense for any country.

Given the current context, tariff war, etc. , is it more difficult to raise capital now?

I can't speak globally, I don't have that visibility, but what we've felt is that the market is still very active. Every week we're contacted by investors who have just raised a fund. We've also recently seen the US Administration invest in VCs, so these private equity funds have the financial muscle to make these investments. Interestingly, somewhat counter-cyclically to the anti-climate change policy orientation, we've been getting a lot of interest... I think that this was also followed by the creation of some buzz , with the entry of this American fund from HearstLab into Bandora's capital, which has somehow boosted our profile. We were really worried about the situation of the new Administration, but on the other hand, energy continues to be a hot topic . The construction of large data centers to support LLMs has once again made energy a hot topic , so Bandora having a solution to reduce energy consumption makes perfect sense for any country.

In the US, there are also known large investment projects in data centers . Are you also thinking about capturing this segment in this market or will the focus continue on retail?

Once we are prepared and have tested our solution in data centers , we can easily scale and offer our solution in the North American market. Although, yes, we are focused on retail, our bread and butter, where we know we can scale well, quickly and do our job well. Now our focus is on retail in this market, but we cannot close our eyes. In Doha, I met with one of the directors of Startup Green in San Francisco who told me 'Marcia, you have to move to data centers because this is really the real need, where the vein is and where you really have to work'. We have to go there.

A year ago, the goal was to increase revenue tenfold and reach 600 buildings in two years. What are the new KPIs?

We didn't reach [the target] last year, partly because we set very ambitious goals and underestimated the issue of operationalization, which took us some time. From January onwards, we are accelerating with very interesting contracts, not only in the Portuguese market, and this year we will finally reach our sales target, our business volume, and we believe we will surpass the one million mark [in turnover].