CHAPTER 7: TECNOLATINAS PROFILES
Industry: E-commerce, Food Delivery
CEO: Felipe Ramos Fioravante
HQ: Sao Paulo
Offices: Sao Paulo
iFood is the undisputed leader in the Latin American food delivery market. Founded in 2011, this startup allows its hungry users to find restaurants in their vicinity, browse their menus, and place an order straight from the web or a mobile application, and get it delivered right to their doors.
The history of the company, however, goes way back. In 1997 Patrick Sigrist, and engineer from the Sao Paulo, started Disk Cook, a company that acted as a call center that took orders for different restaurants in the Sao Paulo and Rio de Janeiro regions, and actually handled the delivery service. 14 years later, current CEO Felipe Fioravante, along with Guilherme Bonifácio, and Eduardo Baer joined the company with the promise they would equity if they met certain goals. And they did. iFood was a spin off of that project, for which they managed to get an initial $1.6 million investment from Warehouse investimentos in order to start building its business and reputation.
Today iFood has a portfolio of more than 10 thousand restaurant partners, which deliver 2.1 million orders through its platform, which has become one of the largest food delivery networks in the region, serving the Argentine, Brazilian, Colombian, and Mexican markets.
While iFood’s product may seem unoriginal, through its great customer service, the company has managed to grow beyond any of its rivals, helping it become a leader both in terms of listed restaurants, and on orders placed. Yet, its market is a competitive one, with rival PedidosYa, an Uruguayan startup with a staggering performance in the same markets, having been acquired by Delivery Hero, the world leader in the segment in 2014.
iFood, however, is no stranger to strategic partnerships with global players. Also in 2014, the British delivery site Just Eat invested $5.7 million dollars in the company’s Series D round, and accompanied Movile in a subsequent $50 million dollars series E round a few months later in 2015. Overall iFood has raised a total of $91.86 million dollars in six different rounds. And while Fioravante remains at the helm as CEO, his and his former partners’ stake in the company has been mostly diluted.
Today, 60% of iFood’s equity belongs to Movile, a Naspers subsidiary, which is one of Latin America´s largest mobile commerce players, with investments in several of the region’s hottest startups. Another 40% belongs to Just Eat.
The massive availability of funds, and the backing of these two juggernauts, has allowed iFood to strengthen its position through the purchase of several smaller competitors. Among them are the Brazilian startups Central do Delivery, Papa Rango, and Alakarte, which were acquired by the company in 2014. That year, iFood also merged with RestauranteWeb, another site previously backed by Just Eat.
But that is not it. In 2016, the company absorbed Hellofood Brazil, the second largest food delivery application in the Brazilian market, and Devorando, another competitor. Additionally, iFood launched its operations in Mexico through the acquisition of a 49% stake at SinDelantal.mx, which was also merged with the Mexican version of Hellofood, turning it into the market leader in the North American country.
All these operations allowed the company to capture more than 80% of Brazil’s market share in the segment, thus consolidating the market behind it.
In order to grow further, the company is now working on improving its mobile experience. With over 283 million active cellular lines, and over 60 million smartphones, Brazil is one of the largest mobile markets in the world. And these users are essential to the company. Already in 2015, roughly 75% of all the orders processed by the platform came from mobile users. The adoption of this technology by new segments of consumers, especially in the lower middle class, will probably keep boosting iFood’s growth, which has expanded 350% in 2014, and has continued to do so throughout the following years. The startup, however, is barely starting to scratch its potential volume, as there are still millions of consumers who are not aware of the service’s existence, or that they can even order food online.
The company will most likely keep up its regional expansion in the upcoming years, but its home market still represents some attractive opportunities. Brazil’s culture of same-day delivery, with everything from pharmaceutical products to dog food being delivered by bike or motorcycle in the country’s major cities, pose an opportunity for the startup to eventually widen its scope and start including other categories.
Having captured such an amazing market share, and yet having enormous growth potential in its home market and the entire region, iFood is a company that is worth watching, and that will most likely keep making headlines in the years to come.
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