From a university contestant to a pioneer upcycling B-corp
Lucas Corvacho and Jonas Lessa, Retalhar Co-Founders
Retalhar is a social enterprise based in São Paulo that upcycles used textiles to make corporate gifts, blankets, and other textile products. Founded by Lucas Corvacho and Jonas Lessa, the Brazilian enterprise provides corporate clients a sustainable way to dispose of their used uniforms and other textile products, helping them to comply with Brazil’s Solid Waste Policy. The enterprise trains and contracts people from low-income communities.
Retalhar joined the NESsT Portfolio after winning the 2014 Social Enterprise Competition hosted by University of São Paulo with support from Blackstone Foundation. NESsT was Retalhar’s first external investor and offered financing in the forms of grants and recoverable grants to support its growth. In 2021, six years after joining NESsT, Retalhar is now a B Corp registering consistent growth and impacting the lives of more than 10,000 people annually, including homeless individuals who have received its upcycled blankets during winter. In addition to demonstrating strong social and financial results, Retalhar’s environmental impact regularly surpassed its goals – the company’s recycling capacity achieved a total of 200 tons of uniforms recycled per year.
Retalhar is now consolidating an impact business model primarily based on circular economy principles. To lower pollution, the enterprise focuses on developing a closed loop production, a process by which it uses its own material waste to create new textile items. The company is also investing in repurposing intelligence to identify and develop upcycling solutions for various types of fibers and fabrics.
How did this university-born start-up overcome major challenges that new and small enterprises face to become an industry leader in textile waste management in Brazil?
In the past six years, Retalhar made many strategic decisions with support from NESsT, which led to significant revenue growth and contributed to its steady transition into the circular economy.
Upcycling the core
Retalhar was first born as a recycling company for textile waste, mainly from old uniforms. When it first started, the Brazil enterprise offered two types of services to its clients: (1) defibering uniforms and offering them as raw materials to industry partners and (2) producing corporate gifts for companies utilizing upcycled textile. Since its inception, training and hiring women from low-income communities in São Paulo have been central to its business model.
After a few years of implementing this strategy, Retalhar realized that it was not the ideal pathway to growth. The model consumed most of the enterprise's fixed costs and did not lead to an end product with a level of circularity that the company wanted to achieve.
After receiving advice from different supporters, including NESsT partners, a group of trusted external advisors, the company started to design a new model – concentrating on innovation that would provide tailored solutions to different clients rather than a one-size-fits-all product.
““NESsT helped to validate Retalhar’s journey. We know we can still count on the NESsT team and network for advice and mentoring. We also hope to contribute, give back to new entrepreneurs, as our journey might help those who are starting”. ”
Since then, Retalhar has provided unique consulting and implementation services to its corporate clients. In addition to producing corporate gifts, the enterprise also began offering clients products and services that are aligned with their core business initiatives. This is the case of FedEx, which buys recycled blankets from Retalhar to donate as part of their social responsibility program, Fedex Cares.
At the same time, Retalhar tested different strategies that could make their reverse logistics operations quicker and more efficient and sustain its production, including outsourcing or establishing strategic partnerships with cooperatives.
Retalhar strengthened its growth by piloting new products and services. Cotton Move, launched in 2022, is a platform that connects stakeholders in the textile production ecosystem. Through the platform, companies can send clothing items at the end of their use cycle for recycling. One of the items that is recycled was jean fibers, which are repurposed not only as new clothing fabrics but also as vases and garden furniture that are made with polyethylene.
How NESsT supported Retalhar:
Besides providing different forms of patient financing and strategic advice to enhance Retalhar’s new business model, NESsT supported the company in the following ways during its six years of incubation:
Validated its business model, tracking its financials, measuring impact, and supported the design and implementation of HR, marketing and sales plans.
Identified its financial needs and supported its fundraising strategies.
Led the co-CEOs to continue testing new ideas and pivot the model when needed and before raising new investments.
Supported the development of the company’s social impact goals and identified key metrics.
Offered grants and recoverable grants tied to milestones to support Retalhar’s growth at different stages of development.
““Retalhar repeatedly demonstrated the capacity to overcome challenges that many new and small businesses face in Brazil. Its commitment to social impact, resilient management team and sustained business and impact growth were key areas that motivated NESsT to invest in the company for six years. We are very proud of the accomplishments of Retalhar and we have no doubts about their future success!” ”
Learnings from Retalhar’s successful exit:
Invest in team and capacity building (governance, human resources, marketing and sales, e-commerce, finance, investment readiness), especially if you do not have a background in business, which was the case of Retalhar founders.
Seek external strategic support that can improve the direction and focus of your vision. Be aware of your own limitations and open to learning from others.
Know where you want to take the company: set long-term goals and metrics to measure them.
Set structured financial goals and devise an actionable plan. Strong social and environmental results can only be achieved with revenue generation.
Reconcile visionary thinking with concrete action steps. Transform your intentions into solid plans and goals.
Understand your social impact. It is better to invest in the quality of the job opportunity – offering stable salaries, dignified work conditions and development opportunities.