Behind the Term Sheet: Backchannel’s $3M Pre-Seed

Revolutionizing Surplus Inventory Management in Latin America

By: Federico Gómez Romero & Ana Rocha

Surplus inventory remains one of the most pressing challenges faced by brands worldwide. Outdated workflows, fragmented channels, brand equity risks and financial losses have created significant inefficiencies — particularly acute in Latin America, a region whose retail market is projected to surpass $1,100B by 2024.

Backchannel directly tackles these inefficiencies with an innovative and transformative approach. Their private B2B marketplace empowers brands to discreetly manage and strategically liquidate surplus inventory.

At Cathay Latam, we’re proud to lead Backchannel’s oversubscribed $3M round alongside esteemed co-investors Preface Ventures, Silence VC, Positive Ventures, Norte Ventures and Latitud. Here’s why.

The Challenge.

Inefficient Inventory Management

Surplus inventory is a global market worth over $500B annually, yet traditional methods remain inefficient, particularly in Latin America.

• Outdated Processes: Brands typically offload surplus through informal networks, resulting in poor control, visibility and efficiency.
• Brand Equity Risks: Unregulated sales channels often cannibalize full-price sales and damage brand perception.
• Financial & Environmental Costs: Brands sell surplus inventory at minimum prices — or worse, destroy goods outright to avoid market confusion. More than $160B are destroyed every year, leading to not only losses for the brands, but irreparable damage to the environment.

A Critical Moment

Recent economic volatility and post-pandemic supply chain disruptions have amplified surplus inventory challenges, making the need for a solution like Backchannel’s more urgent than ever. Without formalized off-price channels such as outlet malls or retail networks like TJ Maxx — common in the U.S. — Latin American brands urgently need structured, scalable solutions.

Enter Backchannel.

Backchannel is stepping into this gap with a solution tailored to Latin America’s unique dynamics. By providing brands with control, transparency and efficiency, the platform is positioned to become the go-to solution for surplus inventory management across the region.

The Strategic Marketplace

Backchannel’s platform brings a structured, technology-driven solution, offering:

• Intelligent Buyer Segmentation: Utilizing AI-driven matching, brands control inventory distribution by geography, sales channels and strategic objectives — protecting their core sales channels and brand reputation.
• Dynamic Pricing: Advanced algorithms optimize pricing strategies, maximizing recovery rates while offering competitive prices to buyers.
• Streamlined Logistics: Integrated partnerships with leading couriers ensure smooth and cost-effective deliveries, overcoming regional logistical hurdles.

Currently, Backchannel supports 30 prominent brand sellers, listing over 1.5M products and 50 carefully vetted buyers, ensuring quality and alignment with sellers’ strategic objectives.

The Team: Proven Founders with Deep Expertise

Backchannel’s seasoned co-founders, Guillermo Freire and Guillermo Arslanian, bring a wealth of experience to the table. As co-founders of Trocafone, they previously built Brazil’s leading refurbished electronics marketplace, scaling it to $100M in annual revenue and employing over 1,000 people. 

Their firsthand experience in reverse logistics at Trocafone gave them unique insights into the challenges brands face in Latin America. This founder-market fit, combined with their operational expertise in scaling high-growth startups, makes them uniquely qualified to tackle this opportunity.

The Vision

While Backchannel’s initial focus is on apparel, footwear, cosmetics and consumer electronics — we estimate a regional addressable market of $9B in Brazil and $24B across Latin America — their potential extends far beyond these categories. The team envisions expanding into sectors such as food, furniture and beverages, as well as enabling cross-border transactions. Ultimately, Backchannel aims to become the default operating system for B2B commerce across the region.

The Global Advantage: Lessons from Ghost

Our investment in Ghost, the leading surplus inventory marketplace in the U.S., gave us a front-row seat to the transformative potential of structured inventory solutions. Ghost demonstrated how a well-designed platform could bring order to a fragmented market, enabling brands to regain control over their inventory while significantly increasing recovery rates.

This experience provided invaluable insights into what it takes to succeed in this space:

1. The importance of giving brands control over where and how their inventory is sold.
2. The need for a scalable, tech-driven infrastructure to efficiently manage high transaction volumes.
3. The power of a strong team with deep industry expertise.

As a truly global platform, Cathay Innovation leverages its extensive international presence and insights to anticipate market needs and identify transformative solutions. This global perspective enables us to discover innovative business models like Backchannel and adapt them effectively to Latin America’s unique market conditions.

Parting Thoughts.

At Cathay Latam, our recent investments — including leading refurbished electronics player Reuse — demonstrate our commitment to sustainable and profitable commerce. Backchannel aligns perfectly with our mission, providing large brands a critical tool for profitability, sustainability and market strategy.

We’re excited to partner with Backchannel as they reshape surplus inventory management, enhancing both profitability for brands and sustainability for the region.