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CAPITULO 7: TECNOLATINAS PROFILES

MercadoLibre: Latin America’s Poster Boy

Market Valuation USD$6.3 Billion
Industrial Segment: Software Services
Country: Argentina
CEO: Marcos Galperin
Website:http://mercadolibre.com
HQ: Buenos Aires
Number of full time employees: 2,599
NASDAQ (MELI)

MercadoLibre proved that growing a multi billion-dollar tech giant in Latin America is possible. Founded in 1999, today this company has a USD$6.3 Billion valuation, 2,599 full time employees, and the undisputed leadership in the online marketplace sector in the region. Rated as number 13 in a list of the most innovative technology companies traded on Wall Street, this Argentine corporation is, without a doubt, a world class company that inspires business leaders and entrepreneurs not only in the region and on other emerging markets, but on the entire planet.

According to ComScore, it is the eighth busiest retail site in the world, and the retail platform with the highest numbers of unique visitors in each of the countries where it operates: 12 countries in Latin America, Portugal and the US.

MercadoLibre intermediates between users who buy and sell products online, offering a huge catalogue of goods of every category for shoppers, and exposure to millions of potential buyers for sellers. Users can sell and buy both new and used goods, at a fixed price or in an auction. Addionally, the company owns MercadoPago, the leading payment gateway in many Latin American markets, which has enabled it to monetize the transactions made at its site, and on thousands of online shops in the region, by offering both sellers and buyers the possibility to pay and charge for their products online.

According to Nielsen data, the social impact of MercadoLibre is comparable with any Silicon Valley giant, with more than 52,000 people generating the majority of their revenue through the platform.

Some key factors to MercadoLibre’s growth and consolidation were their ability to synchronize their technological platforms with consumer habits in Latin America, the sleek usability of their product, and an intermediation policy that demonstrated a capacity to build confidence for the demanding Latin American user. In some ways, the history of the company mirrors the penetration of Internet use in Latin America, the adoption of smartphones, and the digitization of payment systems.

One of the company’s most significant milestones, is the fact that it was the first Latin American tech company to list on Wall Street, when it made its IPO in the NASDAQ index in 2007.

Among the funds that have invested in the company are JP Morgan Partners, Flatiron Partners, Hicks Muse Tate & Furst, Goldman Sachs, GE Capital and Banco Santander Central Hispano.

One of MercadoLibre’s most significant achievements has been its capacity to secure its leadership by getting rid of their competitors and potential threats. In 2001 the company sold 19.5% of its shares to ebay, a natural contender which could have had a significant impact in the region had it launched a competing site. Also, between 2005 and 2008 the company acquired the operations of DeRemate, its direct competitor, hence consolidating its place as the undisputed marketplace for the region.

Another important aspect of the company’s history has been its policy of investing in startups that use its API. By so doing the platform managed to improve the quality of its customer service, while speeding up its internal innovative processes. To do this, it launched the MercadoLibre Commerce Fund in 2013, an investment fund of USD$10 million, which has since grown to USD$30 million annually.

Various investments in complementary startups have been made through the aforementioned fund. These include Brazilian investments: Intoo, 00k, AirCRM, also  Argentine investments: las argentinas, Mr Presta, NubiMetrics, Parsimotion, Produteca, and the Mexican startup Ibushakk, among others.

Finally, no MercadoLibre profile is complete without mentioning Kazsek Ventures, the hedge fund for technology startups with a Latin American focus, founded in 2011 by Nicolas Szekasy (its former CFO) and Hernan Kazah (co-founder of the company).

To date Kaszek has created two more funds: KV-I with USD$95 Million, and KV-II with USD$135 Million. They have investments in 32 firms to date, in six nations. This proves that MercadoLibre has done more than building a strong world-class business by focusing primarily on the region, it has also contributed in significant ways to empower entrepreneurs and to fund the next generation of tech startups, creating a sustainable ecosystem in Latin America.

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