INSUBCONTINENT EXCLUSIVE:
Latin America leading legacy food delivery company iFood and Delivery Hero-owned Domicilios.com are merging in a bid to take on the food
startup Rappi on its home turf.
The price of the transaction was undisclosed, but will result in iFood holding a 51% equity stake in the
partnership, while Delivery Hero will hold the remaining 49%.
Domicilios, the Colombian online food ordering startup, raised $47.7 million
before it exited to Berlin-headquartered Delivery Hero for an undisclosed price in 2014
And while iFood has operations in Colombia and Mexico in addition to Brazil, it hasn&t achieved the same kind of market penetration outside
of its home country — where it serves 147,000+ restaurants registered in more than 1,000 cities.
iFood says the combined companies will
have the largest geographic presence in Colombia, with more than 12,000 restaurants in more than 30 cities across the country
With the merger, iFood inches closer to overtaking the top-spot in the Colombian market, behind the Bogota-based billion-dollar-valued
hometown hero, Rappi.
Rappi has raised a total of $1.4 billion in funding over eight rounds, including a $1 billion injection from SoftBank
in 2019 that marked the largest single investment into a Latin American startup
Despite that capital, Rappi was hit with a wave of layoffs in January 2020, cutting 6% of staff, amounting to roughly 300 employees.
We&re
not certain whether the layoffs had any effect on the company valuation, which has been estimated at $3.5 billion.
Since its launch, Rappi
has expanded its delivery portfolio to pharmaceuticals, banking services and furniture, in addition to groceries and restaurant delivery
Investors in the Latin American market speculate that Rappi is burning money as it battles Uber Eats and Didi (also both heavily backed by
SoftBank)
iFood hopes the acquisition will boost business growth for restaurant and delivery partners in the region, while generating more
competitive delivery products and services for Colombians.
iFood prides itself on business intelligence and management solutions, and is
backed by Movile Group and Just Eat, a leading global hybrid marketplace for online food delivery.
The coronavirus pandemic is expected to
hit Brazilian retailers and restaurants hard, as zero-tech restaurants are forced to enable digital delivery to stay in business
In response, iFood announced a $9.8 million fund to help sustain restaurants within its network.
