Across Latin America, entrepreneur-started companies are looking to invest in newer startups.
One of the most promising companies investing in these new startups is the Colombian on-demand delivery company, Rappi. The company is currently worth $5.25 billion. Having grown to $1 billion as a startup, it has become known as a “unicorn” company, one of the rare startups on the same level as Google and Paypal.
Rappi is not only known for his height. Many former employees who worked with the company have started their own companies.
There are currently about 110 companies founded by these alumni that have raised an estimated $2.1 billion in funding. As all these startups originated from Rappi employees, this network of companies is colloquially referred to as the “mafia”.
The term “mob” in business was coined in 2007 by Fortune magazine to describe how more than 300 Paypal employees have left the company to found their own startups since the company was founded in 1998. These types of connections between the company and its affiliates are helping to create a new generation of entrepreneurs building their own businesses.
Rappi is not the only company that finances startups. Another unicorn company, Mexican digital supermarket Jüsto, also funded them. Its founder and CEO, Ricardo Weder, mentioned in an interview with Bloomberg Line that he has already invested in 40 startups as an angel investor, mostly in companies in Mexico.
“Imagine, 15% of foreign investment last year was investing in startups, that’s crazy, and for those of us who have been in this longer, five years ago it wouldn’t have been 0.1%,” Weder said, describing the investment in Mexico. “Two years ago there were very few of us investing, you could really count us on one hand.”
An angel investor is someone who has a high net worth and provides funding to startups, usually at the cost of some equity capital.
Both Weder and Rappi co-founder Sebastian Mejia act as angel investors, investing in startups such as Jeeves, an expense management platform active in Mexico, Canada and the US, and Clara, a Latin American end-to-end spend management company. . Both companies broke the billion dollar mark, becoming unicorn companies as well.
In 2021, Jüsto and Rappi announced a partnership to work together to help expand the Jüsto market in Latin America using Rappi’s delivery network. Rappi is active in nine countries and 250 cities, while Jüsto will offer Rappi customers a wider range of goods to buy.
Other companies looking to invest in Latin American startups include the region’s most valuable unicorn company Kovak, an online used car marketplace, and Mexican investment group Bridge LATAM, along with a growing number of investors looking to grow Latin American industries.