Contxto – The future of entrepreneurship in Latin America has officially arrived. As of yesterday, Rappi confirmed a US$1 billion investment from SoftBank. Allegedly, the company’s valuation was determined to be US$2.5 million pre-money.
With the Japanese fund joining the unicorn’s cap table, sources say this is the beginning of a new era for venture capital in the region.
People praise this investment as the largest funding round in the history of Latin America. According to reports, SoftBank Group Corp and Softbank Vision Fund will each invest US$500 million into the scale-up.
The investment will be part of SoftBank’s newly launched Innovation Fund that premiered in March. With around US$5 billion of assets under management, officials launched the fund to galvanize tech startups throughout Latin America.
To date, this is Latin America’s largest tech fund. For the time being, though, the investment remains under the name of SGC and the Vision Fund, until the Innovation Fund’s establishment reaches completion.
“Softbank’s vision of accelerating the technology revolution deeply resonated with our mission of improving how people live through digital payments and a super-app for everything consumers need,” said Simon Borrero, co-founder and CEO of Rappi.
Borrero attributes this milestone to his team’s commitment to transforming the lives of Latin Americans via technological innovations.
“We will continue to focus on building innovations for couriers, restaurants, retailers and startups that translate into new sources of growth. It’s time for a technology-driven Latin America. SoftBank’s support is essential to lead this transformation,” the founder continued.
In 2018 alone, Rappi grew seven-fold in terms of the number of products delivered. This represented a 20 percent monthly growth rate in seven countries where it currently operates.
Keeping this in mind, Rappi’s founders aspire to become the premiere “multi-service super app.” The startup may have existed for less than four years, yet it has become one of the fastest growing startups in Latin America. SoftBank officials now see the potential.
“This rapid growth demonstrates the immense opportunity in the Latin American region. We’re excited to be investing in this passionate team of entrepreneurs and believe Rappi will benefit from being a part of the SoftBank ecosystem,” said Marcelo Claure, Softbank Group’s COO, CEO of SoftBank Group International and CEO of the Innovation Fund.
Both SGC and the Vision Fund will join previous backers. These include DST Global, Delivery Hero, Sequoia Capital, Andreessen Horowitz and Y Combinator, which accelerated Rappi back in 2016.
This isn’t Softbanks’ first investment in Latin America, either. Although it has previously invested into companies like Ayenda and Gympass, this is by far the most significant investment based on the amount of money involved.
Rappi has always been one of my favorite contenders leading the first wave of Latin American tech companies. This is why I’m so pleased to see the company proving its value to significant foreign investors. Not only does Rappi boast impressive growth rates but actually useful services.
Nonetheless, Rappi still has some areas for improvement. Accused of being “spammy” by some users via SMS, Rappi has also been involved in controversial matters. Lately, the startup has gained criticism for not providing proper physical and other legal protections to drivers.
Although Rappi provides employment and flexible work schedules to thousands, the inherently risky nature of being a delivery driver is a point of contention. Specifically, some countries like Argentina are demanding swift labor reforms for sharing economy platforms such as Rappi.
Whatever the end result is, Rappi’s founders are doing an undebatable marvelous job at planning and executing. Obviously, SoftBank wants a piece of that pie, too.