How Shop Circle Reached $45M ARR by May 2026 After $10M Profit at a 35% EBITDA Margin in 2025 (Interview with CEO Luca Cartechini)

Introduction and Shop Circle Overview

Nathan Latka

0:01Hey folks, my guest today is Luca Cartechini. He's the co-founder and CEO of ShopCircle, a platform that acquires and scales B2B software companies through AI driven infrastructure. He previously worked in equity research at Jefferies covering European tech and in VC and at a VC firm. was named Forbes 30 under 30 Europe. That's technology 2022. ShopCircle.co Luca, you ready to take us to the top?

Luca Cartechini

0:24Yeah, hi Nathan, very nice to be here. Big fan of your content, I've been following for a while, so I'm very happy to be here.

Nathan Latka

0:31well, thanks for jumping on. Yeah, you have to tell us what you do. So my quick take and you tell me where I'm wrong is you're really competing in sort of the Thrasio space, the ecommerce debt and sort of roll up space and it looks like you've more recently pivoted or is that wrong?

Business Model: AI-Native Software Holding Company

Luca Cartechini

0:42No, well, we we are technology holding right so ⁓ everything we do is around software So we never acquire the brand It's like the easiest way to define it. Nathan would be an AI native holding acquiring and scaling mission critical software. So you're right, we started in commerce software. We never did brands. started in software provided to ⁓ commerce brands and like big shops and big enterprise brands as well in the retail space. But today, you know, over time, as we got bigger and bigger and we raised more capital, we increasingly acquire more enterprise products, usually what we call mission critical across different verticals as well. Commerce software was the start starting point and then over time over the last four years and a half we raised several rounds, five rounds including the angel round at the beginning as well. with more capital come more responsibility and broader scope as well to close acquisition across different spaces. yeah, that's that's I would say Nathan is probably a bit more comparable to the likes of beacon software in the US Bending Spoons in Italy, which is the same country where I come from. ⁓ or Constellation Software, although like this guy have been around for a very long time relatively to us.

Nathan Latka

2:02Yep. Okay. So to wrap this up, when I, when my research team said, Nathan, Hey, these guys started, started in the Shopify ecosystem. You weren't lending to Shopify ecosystem folks or buying Shopify ecosystem companies.

Early Focus on Shopify Ecosystem Apps

Luca Cartechini

2:13No, we acquired several Shopify apps, so software provided to Shopify brands in a way. So the main difference is the following. So we do software, ⁓ but for different verticals, one of them being ⁓ e-commerce, so retail, the other two being like manufacturing software and supply chain software. So it's a combination of these three. Think about it as software for the physical world, ⁓ Nathan.

Nathan Latka

2:20⁓ I see. This is right, right? Are these some of the early, I'm just using Claude real time here, but these are some of the early deals.

Luca Cartechini

2:43These are all these are all software products that. were provided to Shopify brands and ⁓ outside Shopify as well in some occasion. So some of them deal with inventory, shipping, ⁓ upselling and so forth. That was the initial focus as well. Very high profitability, ⁓ PLG, so most of the traffic coming organically from the app store as well. So extremely high profitability, slightly higher churn. And then over time, we're moving more towards larger enterprise over the last two years. So the average customer value of the acquisition is a bit higher than what we used to do. Again, is a result of ⁓ having more capital and larger size. So you need to expand the thesis versus the initial one. Something similar happened.

Nathan Latka

3:31So take us into one of those initial deals with as much detail as you can. It's like hulkapps.com. Was that like less than a million dollar acquisition and they were doing 500k of ARR with 30 customers or just paint one of the early pictures here?

First Acquisition and Early Deal Profile

Luca Cartechini

3:42Sure, sure, So at the beginning in Aitken, we started with very little capital. So I'm a first time founder, as you mentioned in the introduction, I come from the equity research software space across ⁓ Europe. I was covering 20 listed companies in the technology space and then I moved to VC. So when I raised capital, we had to go through a combination of entrepreneurs ⁓ and executive and we raised the first round, which was $1.5 million. We closed the first acquisition, which was

Nathan Latka

4:11What year was the 1.5 million that you raised?

Luca Cartechini

4:13Yeah, that was 2021. ⁓ And so we did the first acquisition which was something in ⁓ the video background creating like background for a website in different ways and customize it as much as possible. It was a very small acquisition. I believe back then it was 200k ARR and over time we showed that we could scale the model. So we scale the first acquisition and then in December 2021 we landed the first institution around with NFX and QED American funds investing in And from there, we raised like four more equity rounds since December 2020.

Nathan Latka

4:50Well, sorry, how much was that in December? So let's just paint the equity picture first. So you raised 1.5 million in early December, 2021.

Luca Cartechini

4:53Yeah, yeah. ⁓ So 1.5, it was the very first round, which, you know, basically lasted for like seven months and then we raised 7.5 equity in December 2021. And then over time, We did three other equity rounds, always increasing the valuation without ever stretching it too much. I'm a big fan of keeping things rational, but generating very good returns and results for our investors as well. But we don't disclose the total mix. We raised more than $200 million, ⁓ Nathan, which broadly half of it is equity and half of it is that we also have a credit facility. ⁓

Nathan Latka

5:40Hold on, Luca, hold on, Luca. We're jumping out. So just on the equity side first, because the debt's a different story, which is exciting too. I want to dive into that, but on the equity side. So first deal was 1.5 million raised in early 2021. You then we'll call that your pre seed or your seed. And then you did like a series a for 7.5 million in December of 2021. Correct. And then you've raised a total life to date of a hundred million in equity. So there's a bunch more rounds after the 7.5 million.

Luca Cartechini

5:44Yeah. crap. Yeah, yeah, correct, yes. Yeah, a bit more than 100 million. Yes, yes, correct. Yes. So we raised in total four equity institutional rounds, so led by institutions, led by VCs ⁓ or growth equity. And then before that, we raised this $1.5 million that you just mentioned. The total equity raise ⁓ is a bit more than $100 million.

Series B Extension: $60M Equity Plus Debt

Nathan Latka

6:25Okay, the most recent publicly thing that you guys talked about was a Series B extension in 2025 and you called it sort of a 100 million Series B extension. What does that mean? How long were you raising the 100 million over?

Luca Cartechini

6:36⁓ So like as I said before, like the total is more than 200 million dollar of which half of it is debt and half of it is equity. So in that announcement, we don't have the breakdown between the two. So in the hundred million dollar you have at that facility as well and the equity point, we don't disclose.

Nathan Latka

6:54So just to be clear, sorry, when you say Series B to 100 million, this was not all equity. was 50 million equity, 50 million debt.

Luca Cartechini

6:58It's not, it's not, it's it's not. Well, yeah, we don't disclose it. We don't disclose the split, but yes, it's a mix of equity and debt. So ⁓ in total.

Nathan Latka

7:06Well, sorry, hold on. split it. You split it right here. Luca is already public, right? So combining 60 million inequities or 60 million, this is your own press release.

Luca Cartechini

7:14Yeah, but like that that's you know for that particular round is like to basically series B one which happened like ⁓ Before and it was the series B one and then that happened that it was the one that you take and you're looking at is the B extension ⁓ in total it was 60 million dollar equity and the differences that coming from the credit and that facility overall ⁓ if that helps you is 100 plus million dollar equity across the four equity rounds that we close plus the angel round plus that on top. That doesn't make sense.

Total Capital Raised and Debt Structure

Nathan Latka

7:54Okay, so let's now shift, it does, that's very helpful. Let's shift to the debt side of the story. When did you realize that it would be smart for you to go raise a debt round? And I assume you're using that money mainly to fund acquisitions, right?

Luca Cartechini

8:05Yeah, so exactly. We do acquisition it and so. For us, we raised ⁓ debt from not the very first angel round because it was financed with angel money only. But then once we raised the first institutional capital, it made sense to combine it with the debt facility. At the time, the provider was TriplePoint Capital. You you've been looking at the acquisition space, I think, in the past, and it's just way more efficient to combine equity with debt to close up acquisition. ⁓ it was a pretty natural decision we knew from the very beginning. that we were going to combine equity with debt. guess you might argue that the standard model of making acquisition, LBO, it almost always combine an equity component with a debt component as well. And so over time, that's what I was trying to say before as well, we raised pretty much 50 % equity and 50 % debt when I tell you the overall number of 200 plus million dollars that we raised to date.

Buy and Hold Strategy and Acquisition Multiples

Nathan Latka

9:07of the 100 million debt facility you have available, have you used all that or are you still trying to draw up to the full amount?

Luca Cartechini

9:12No, no, still have, again, like I don't precisely share the split of what we have available or not. But like at the moment we have a hundred million plus of capital to deploy over the next, let's call it like 12 months. part of it is that and part of it is equity.

Nathan Latka

9:32If we go in and look at you pick whether it's Aiden or 50 point or crack in D recent deals that you've done when you're structuring these deals. mean, people are wondering what multiples are looking like. They're obviously compressed since 2021. You're the person to ask, cause you're the actual buyer, right? Are you guys buying typically like constellation levels of one to two X ARR, or are you more like a VISTA equity level where you're happy to pay seven, 10, 15 X ARR if it's the right fit.

Luca Cartechini

9:54Yeah, it really depends, on the type of acquisition that we do. We are not constrained like Constellation, like you mentioned, to pay like one to XLRR. We also because we require companies that usually tend to grow a bit more. So ⁓ it's a real mix. tend to, you know, for us, the return on capital deploy is relatively important, right? Meaning that, you know, we need because we don't have an exit for these companies, we buy and hold them forever is important, like to keep the profitability as well and to extract profitability from the acquisitions over time. So it's important for the companies either to be profitable or become profitable over time. So we also look at multiple of EBITDA or at least ⁓ forecast on what the return on the EBITDA will be. ⁓ Usually, for a company growing more, we could go above double digits EBITDA in some occasions, ⁓ but we also close acquisitions where the companies were growing a bit less and we pay less than 10x EBITDA.

Nathan Latka

10:51OK, ⁓ when I had the SAS group on, they got a lot of inbound after the interview because they were really able to go deep on, hey, here's how we think about working with founders. Here's how we structure it pre and post close. Here's the playbook we run once we close. Are you comfortable diving into any of that with one of your recent acquisitions?

Luca Cartechini

11:07Sure, yeah, 100%. Yeah, let me know what you're interested in. Usually like we...

Nathan Latka

11:11Well, let's do Aiden because the other ones I couldn't, like when I pulled up a 50 point group, it's like a holding page. It didn't look like, like it looks like this is rolled up, but Aiden looks like a real sort of business.

Luca Cartechini

11:19Well, yes, it's not the right website. I think it's 506.co, but we can keep Aiden. We can look at Aiden.

Nathan Latka

11:26Yeah, let's do Aiden because this looks like a I mean, this looks like a healthy sort of software company. So how did you source the deal? And then yeah, walk us through it. What playbook are you running on it?

Luca Cartechini

11:30Yes. Yeah, we have usually like Nathan a combination of we have an origination team whose goal is only like, know, to source companies and build relationship with usually bootstrapped founders, but we also occasionally look at VC-backed founders as well. And they are split across Europe. We have someone looking at the DACH market, someone looking at Southern Europe and someone looking at the UK and the Nordics as well. In this case, you know, the people that source deals, they also have relationships with brokers or &A advisors. In this case, particularly, the deal was sourced from an advisor's part of our network. yeah, there was another ⁓ potential buyers that bid for the deal. And then we decided to ⁓ bid a bit more. And in a way, we were providing a lot of value because we already had ⁓ several clients more than

Nathan Latka

12:10Okay.

Luca Cartechini

12:28you know, several thousands clients in the commerce space. So the guys, the team is based in the Netherlands, decided to partner with us. ⁓ The acquisition process was close end to end in probably like a bit more than two months, two months and a half. ⁓ It was one year and a half ago. And the company, that's a very good example, Nathan, because the company ⁓ almost doubled the size of the team after our acquisition. almost double as well the size of revenue. They're now approaching like three million AR. Again, back in the days we used to close slightly smaller acquisition and they're very profitable as well. So usually like in our model is a combination, a healthy combination of, know, EBITDA and revenue growth. In this case, these guys are growing at 70, 80 % year on year. So they did more than double the revenue in a bit more than one year. Yeah, that's right. ⁓ And they keep being profitable. I strongly believe that software should be run in a profitable way and that's what we strive to do in most of the acquisition. We also help them a lot with AI implementation. So we have a centralized AI team which is called CircleX. They help with automation on one hand, think about customer support automation and increasing the productivity of the developers. and then helping embedding AI or agentic features into existing products. In this case, it's a guided selling tool for larger enterprise and they build or we build collectively together an automated LLM window basically to have a natural conversation with the guided selling assistant once you land the website.

2026 Revenue Target and Portfolio ARR Today

Nathan Latka

14:13Really interesting. love this model where you're taking it over, applying your playbook and scaling it. ⁓ are you comfortable sharing at a portfolio level today? What do you think you'll finish out in 2026 and total revenue across the whole portfolio?

Luca Cartechini

14:25Yeah, sure, sure. we, our goal, Nathan is like to land between 60 to 70 million ARR. And we are on a good track. So in the first half we are the half of the revenue that we need to get there So we should we should be somewhere 70 to 60 from 60 to 70 depends on the acquisition that we're gonna close in the second half at the moment we are closing to one actually in a week or so and one in four to five weeks and then we have a very healthy pipeline for the second half But it should be somewhere in the range that I provided to you between 60 to 70 million ARR with 35 % to be the margin, which is probably the most impressive part. The businesses are very profitable, especially on the PLG side of the business. We can run apps and products with more than 60, 70 % profitability. And that's why, you know, it also makes sense to use leverage as well to close this acquisition later into your point. And yeah, I think that's where we can reasonably get this year. And then the goal would be like to pass the threshold of 100 million in ARR. For us, it's a relatively

Nathan Latka

15:31Hold on,

Luca Cartechini

15:32Thanks.

Nathan Latka

15:32Luca, hold on. There's a lot to unpack there. So just to be clear, you said you're already halfway there. We're recording here in May of 2026. It's fair to say you guys are over 30 million of ARR today across the whole portfolio.

Luca Cartechini

15:40Yeah, yeah, significantly over. Yeah, yeah, yeah. It's a bit below $50 million ARR. Yeah.

Nathan Latka

15:46Okay, so you're already at like, call it 45 million of ARR, you want to get up to 60 by the end of the year.

Luca Cartechini

15:51Correct, and for us, a bit more than 60, I like to think, Nathan. And for us, the bridge is relatively simple because we have the capital to acquire software businesses in a way. So we already know what type of acquisition we can do, the multiples that we can pay. So it's a matter of the timing of the acquisition per se. And on top of that, then you have the underlying organic growth of the business that we operate.

Nathan Latka

16:14And can we get a growth rate? So 2025, what did you finish with in terms of ARR?

2025 Revenue, Profitability, and Growth Rate

Luca Cartechini

16:19⁓ So basically it took us three years to get to 30 million in ARR and then in one year we this year we're adding the same amount of revenue that we added in the previous three combined because you know there is a matter of like compounding as well so you know we raised significantly more capital as you say like over the last two rounds ⁓ more than 60 million dollar equity and extension of the debt facility as well and so this year we deploy much more ⁓ in a way also like the multiples came down. a little bit for the acquisition.

Nathan Latka

16:50So Luca, just to be clear, sorry. So you finished 2025 with around 30 million of ARR and your goal is to double that this year. Okay. And profits last year were about 10 or 15%. You said.

Luca Cartechini

16:54Yeah, we're doubling this year. Yes, we're doubling the total. No, no. 35 % of the margin. So yeah, the profit was around $10 million this year. We hope to keep the margins ⁓ above like...

Nathan Latka

17:09That's wild. Yeah, that's wild. how many, across how many portfolio companies is that?

Luca Cartechini

17:16So we close, ⁓ last year we closed 15 acquisitions, up until the end of last year we closed 15 acquisitions, and this year we're closing another ⁓ five ⁓ of which one has been closed. ⁓ So it would be 20 in ⁓ total, but the number of companies that we operate is actually, of products that we operate is actually higher than that, Nathan, because some of the acquisitions that we made have multiple products, if it makes sense.

Debt Facility: TriplePoint to i80 Group

Nathan Latka

17:43I see. When you buy these companies, do you take each deal to your debt and equity partners and they have to approve each deal or do you have a blanket approval to basically do the deal yourself without their approval?

Luca Cartechini

17:46Yeah. ⁓ We usually like, you we don't have a private equity owning 50 % of the business. So we only raise from people that have like less than 50%, significantly less.

Nathan Latka

18:04Yeah, but triple point, for example, your debt facility, if you need 5 million of debt from them to close a deal, do you have to take the deal to them and they do an SPV for that deal?

Luca Cartechini

18:08Yeah. No, no, no, it's a pre-committed facility. So like that's why when we announced it on the race, I guess, like to your point, Nathan, like we announced the full race because it's pre-committed. So as long as then we negotiate all the condition upfront, as long as we hit certain metrics and criteria, then we can draw the capital whenever we need to make the acquisition and close the acquisition relatively quickly. We only have like, you know, 10 days notice combined with the equity that we already have in ⁓ the balance sheet. And at the moment we still have more than $60 million of equity to deploy plus the debt uncommitted plus the debt. Yeah, correct. Yes.

Nathan Latka

18:45Does that mean you have 60 million of cash in the bank still? That's great. Okay, and then triple point, know, they're a publicly traded BDC. So you know, some of their data, obviously they will start they're not publicly traded. My bad, my bad. They do put out some of their past deals, though. I mean, they're typically lending money out and like the low teens are like 10 to 13%. Are you in that range with them?

Luca Cartechini

19:06Yeah, it's actually so we started with triple point Nathan. And that was the point like, you when you asked me about the first acquisition, we started with triple point when we closed the first institutional equity round in December 2021. And then we moved to another provider, which is called IAT. And over time, we reduced the interest rates ⁓ two times. So we started from the low teens, like you mentioned, and now we are, ⁓ you know, high single digits. Let's call it this way.

Nathan Latka

19:36Okay. And I 80 typically will fund through like 60 to 70 % of the deal, depending on how wide or not why the credit box is. that accurate?

Luca Cartechini

19:43depending on how much leverage we want to put on the business as well, how profitable is the business, what do we want ShopCircle to look like over time in terms of leverage ratio. So it depends, we have the flexibility to go higher than 60 % or lower than 60%.

CircleX AI Team and Internal Automation

Nathan Latka

19:59Really interesting. Okay, let's wrap up here at the last two minutes. Your AI team you're building internally. How many engineers are on that team?

Luca Cartechini

20:05We have 10 people and we're hiring more. ⁓ And they usually focus, it's called Circle X, Nathan, the name of the team. They usually focus on automation. So again, think about building an agent to answer customer support tickets and scale it across different products that we operate. ⁓ Productivity, general productivity of people. And then the sexy part, which is more on the innovation point. So they come in, think about it almost as the deployment company that OpenAI just announced. So there is a big gap between what frontier models can do and implementation across company, especially in software business usually Yeah

Nathan Latka

20:43I agree. I'm just trying to get a sense of how commit like resources. So what's the total team size today? All head count across all portfolio companies.

Luca Cartechini

20:50Yeah, it's 300 people, 290 to 300 people. And the AI central team is 10. So obviously, it's not enough to scale 10 people across the whole portfolio. But they usually help with ⁓ the coming in as a consultancy company, they help identifying what are the use cases. And then it needs to be from the bottom up as well. So you need to ⁓ help companies to change ⁓ approach. their approach when it comes to AI, train the product managers and the developers as well, because the central AI team alone won't be enough. So it's a combination of efforts coming from the companies and the efforts coming from the holding centralized team, in this case CircleX.

Valuation Multiples and Financial Engineering

Nathan Latka

21:38Luca, how much of what you do, and this is a compliment by the way, you come from Jefferies, financial engineering is a big thing if you can do it, right? Can you find low multiples and then you trade yourself at a higher multiple, right? So in 2025, you did your series B extension, right? You're on 30 million of ARR. Are you comfortable sharing sort of a range of what you trade around? Are we talking like a 10X or a 5X or a 40X?

Luca Cartechini

21:56Yeah, obviously there is a concept of buying companies. at the lower multiples than we raise out on ATEM. But in general, that multiple is justified by increased operations. So I think we published it on our press release as well. If you take rule of 40, on average, we increase the rule of 40 calculation or formula by 15,000. So 1,500, sorry, basis point, a combination of EBITDA coming from the automation that was mentioned before. also accelerating the growth of the company. So it's about 10 to 15 % on average across the acquisition that we close. ⁓ usually the higher multiple that we trade out is dictated by us improving the operation of the companies after acquisition. ⁓ In terms of multiples, it really depends on the companies that we acquire based on the growth rate, rule 40.

Nathan Latka

22:54Luca, you're multiple though. mean, are you comfortable? Did you guys trade at more than a 10X?

Luca Cartechini

22:57No, we don't share it. We don't share the multiple netelecon.

Nathan Latka

23:01Can you give any sort of range? mean, a wide range to stay vague is fine. Like were you below or below a 10x multiple? Are you comfortable sharing that?

Luca Cartechini

23:08Yeah, so ⁓ we tend to trade at a multiple of EBITDA. think it's increasing, but at the beginning we didn't have EBITDA, so it was impossible to do it on that front. Now it's double digits EBITDA, definitely. And on revenue, it wouldn't be anything crazy. It's like less than 10X because we never wanted to stretch the valuation too much. So ⁓ you can combine, it's probably like an average of like a bit of multiple above, ⁓ definitely like double digits and revenue multiple, which is more in the range of single digits.

Ideal Acquisition Target Profile

Nathan Latka

23:47That's really helpful. Yeah. Thanks for sharing that. What do you wish I asked about? I haven't asked about as we wrap up here.

Luca Cartechini

23:53⁓ Maybe like what we look in the companies that we acquire so that you know if someone in the audience I know that you speak with.

Nathan Latka

23:59Yeah, we have a big audience. listen to the show so you know. So yeah, give the pitch. Who should reach out to you?

Luca Cartechini

24:03Exactly. So usually ⁓ we tend to partner with founders that you know, they could have raised capital as well in the past but like usually like most of the acquisition that we close So far were either founders that raised little capital or they didn't raise any capital at all ⁓ Usually in the range between 3 to 15 million ARR, Nathan so You know over time as I mentioned before we started with very small acquisition and now this with spot is probably somewhere between 5 to 10 million ARR ⁓ We strive for rule of 40, but they don't necessarily have to be there when we acquire them so they could get there gradually after acquisition as well. Across several verticals but mostly like manufacturing, supply chain software and commerce software as well. Retention is also important to us so if anyone ⁓ is around these metrics and around these verticals we would love to talk.

Nathan Latka

25:00guys on that note, shop circle.co Luca came in, educated us today, launched in 2021 1.5 million raised early on to get their first deal done. was a video. a company, editing company, 200 K of ARR by December that same year, they raised a 7.5 million series a fast forward to today through 2025 26. They raised over a hundred million bucks of equity and back that up with another hundred million bucks of debt available to do these acquisitions. So far they've acquired between 15 and 20 companies. Uh, their most recent valuation series B evaluation was caught less than a 10 X revenue multiple, but greater than a 10 X EBITDA multiple. are 45 million of ARR today spread across their entire portfolio, making up over 300 FTEs. And again, Uh, 15 portfolio companies on track to break 60 million of combined revenue by December of 2026. This year, if they do that, that would represent a hundred percent year over year growth, which is pretty darn impressive. Luca. Thank you for taking us to the top.

Luca Cartechini

25:49Thank you very much, Nathan, for your time.