Rappi

Rappi

Rappi is Latin America’s leading on-demand delivery startup. Rappi si considered one of the regions most valuable startups valued at $2.5b+ after a near $1b investment from Softbank in 2019. Soma was an early investor raising subsequent capital from DST Global with more than $200 million financing, with participation from Andreessen Horowitz and Sequoia.

Rappi is an asset-light hyper-local delivery platform, focused on FMCG5 , that leverages existing retailing infrastructure and a proprietary logistics network to serve customers fast and cheap, with a high SLA. It’s a mobile first high-speed service that can be used to deliver virtually anything. It connects users with personal shoppers inside stores and delivery contractors on bikes (“rappitenderos”), who fulfill and deliver their orders on-demand. Rappi is fast, with average delivery times of 19 minutes for convenience (5 or fewer items), 27’ for restaurants, 34’ for fewer than 15 grocery items, and 52’ for more. This is only possible because of Rappi’s unique model, which was designed to take advantage of LatAm’s distinctive urban density and labor markets. Rappi is what Amazon would have been if it had been founded in an emerging market in today’s mobile age. The founders have established one of LatAm’s biggest and most profitable retailer – the next “everything store”.

Rappi focuses on food (US$ 70B), groceries (US$ 564B), and pharmacy (US$ 90B), which together represent about 75% of the total retail market in LatAm. Given the accessible cost of delivery, a penetration of 10% would yield a massive TAM of more than US$ 70B. Because of its innovative product, Rappi managed to effectively translate the offline retail experience that people are familiar with to the mobile setting, thus unlocking an attractive revenue stream – trade marketing. Rappi’s UI is not only beautiful; it changes how brands can advertise on mobile. The app offers advertisement that is non-invasive, targeted, relevant, and closest to the purchase intent. This is a first-of-its-kind on mobile. Trade marketing and slotting fees are where FMCG brands spend the largest portion of their budgets. For traditional retailers, this represents up to 70% of their profits. Existing clients include leading brands such as Unilever, P&G, Colgate, Heineken, AbInbev, Nestle, and Mondelez. Furthermore, as the marketplace continues to grow, Rappi is gathering data on users, shopping habits, segmentation and transactions that it’ll be able to commercialize with FMCG brands. In predominantly unorganize.

Simón Borrero, Sebastian Mejia and Felipe Villamarin launched the company in 2015, graduating from Y Combinator the following year with seed investment from Soma Capital. From there, Rappi quickly captured the attention of American venture capitalists. A16z’s initial investment in July 2016 was the Silicon Valley firm’s first investment in Latin America. Investment in Latin American tech continues to reach new highs. In the first quarter of 2018, more than $600 million was invested. That followed a record 2017, which was the first time VCs funneled more than $1 billion into the continent’s tech ecosystem during a 12-month period.

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