Favo, a Brazilian social commerce platform, closed on $26.5 million in Series A funding to continue developing its app that takes grocery orders through local social networks.
Tiger Global Management led the round, with existing investors GFC, Elevar Equity, Kevin Efrusy, David Velez, FJ Labs and H2O participating. The latest round gives the company about $37 million in total funding since the company was started in 2019 by Alejandro Ponce and Marina Proença.
Families in Brazil spend, on average, $118 a month on food. According to IBGE data, they spend up to 22% of their budget on groceries. Favo enables under-employed entrepreneurs to create new income streams through steady sales commissions from their own local network. People order groceries through the Favo app, and the logistics system fills the order and arranges delivery, in bulk, to the entrepreneur the next day. The entrepreneur completes the last-mile delivery.
Ponce was previously the founder of another company, but felt he was not fulfilling his purpose. He was introduced to “ikigai,” the Japanese concept for finding your purpose, which he explained says to do what you love and what keeps you going. When he learned about social commerce from a friend, he traveled to China in 2019 to see it firsthand.
“I came back and knew that this is what I wanted to build,” Ponce said.
He met Proença, who has a marketing and user experience background. They bonded over their humble beginnings and set out to build a company for families just like theirs that would bring e-commerce to all consumers across Latin America, not just for the wealthy.
“We are creating a new class of entrepreneurs,” he added. “We empower unemployed people, mainly moms, with technology and logistics to become owners and generate extra income for households. This could be one of the largest e-commerce platforms in LatAm because we are democratizing it.”
By having entrepreneurs be the contacts for the shoppers, Proença said Favo is removing the lack of trust for buying groceries online, which included the fear of not receiving their goods because they didn’t have a human to talk to.
It also doesn’t cost entrepreneurs any money to work with Favo.
“Many direct sales organizations force people to buy things, but in our case, they don’t have to do anything,” Ponce said. “Latin America is 20 years behind the United States, and in most cases, we are the first-time introduction a client has to e-commerce in their lives.”
Favo launched in Peru in 2020 and then Brazil. The co-founders plan to focus the new funding on logistics and fulfillment operations, as well as expansion in Brazil and into Mexico. Ponce expects to be in 20 cities in the following months.
The company is working with 160,000 buyers and seeing revenue increase 30% month over month. Buyers can choose from over 3,000 products that are delivered to them within 24 hours.
Meanwhile, Ponce said Favo partnered with this round of investors because they are known for helping with expansion. He added that Tiger Global has already helped put the company on the right path.
“Favo’s innovative social commerce business model and rapidly growing logistics platform are transformative developments for the purchase and distribution of goods in Latin America,” said Griffin Schroeder, partner at Tiger Global Management, in a written statement. “We are excited to support Favo’s mission to democratize e-commerce and to partner with Alejandro and Marina as they quickly expand across new markets.”
Source Link Tiger Global backs Favo, which is building an easier way for Latin Americans to order groceries online
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