Brazilian food delivery firm iFood has announced today (13) that it has raised $500m in capital in what it claims to be the largest funding round for a tech startup in Latin America.
“In order to keep growing exponentially like we have done, we have to invest like companies in the US and China do – and that’s what we will do over the next 14 months,” said Fabricio Bloisi, founder of iFood’s owner, mobile conglomerate Movile.
With 50 thousand associated restaurants and 120 thousand couriers, the company is a leader in the food delivery segment in Brazil, having processed 10.8 million orders in October alone. According to data from online competitive intelligence tool SimilarWeb, iFood is 16 times bigger that its closest competitor in terms of daily active users.
To illustrate his company’s growth, Bloisi pointed out that US online take-out company Grubhub reports about 416,000 orders a day, with 40 percent quarterly growth, while iFood is doing 390,000 orders a day with a growth rate of 110 percent – so the company is doing even better than global market leaders.
iFood’s latest investment involved existing backers Innova Capital, Naspers and Movile itself. The Movile board is in talks with potential investors who may boost the $500 million figure over the next couple of months. This is iFood’s sixth funding round, which so far had totaled $100 million.
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The new cash will go towards technology – particularly in areas such as artificial intelligence (AI), data analytics and voice recognition. Just as other Brazilian startups have done, the company is also considering setting up an international capability to get access to the talent required to boost its AI set-up.
According to Bloisi, Brazil is lagging behind in terms of AI adoption and resources available: “No one is investing in AI here – as a country we are late in the game, but we have to change that scenario to remain competitive. As a company, we are doing a lot around that and will become a local leader in development of AI-based solutions.”
Other areas that will get additional financial muscle are logistics – the company wants to treble the number of restaurants that use the service and double its courier fleet – and boost its 1200-strong workforce, particularly in tech-related roles.
Mergers and acquisitions will also claim a share of the funding round. The company will chase deals mainly in Brazil but opportunities could also be found in Mexico and Colombia, where iFood also has operations.
According to Bloisi, the food delivery firm has reached unicorn status (the term used to define companies worth over $1 billion) about a year and a half ago.
“iFood could easily do an IPO today. But we currently have better access to capital as a private company with the advantage of not having to tell the world about what we are doing,” Bloisi added.
When questioned whether iFood would follow the footsteps of Nubank – another well-funded startup who has attracted a Chinese mobile giant, Tencent, as a strategic backer – Bloisi did not deny this may be a possibility.
“It is possible to be local with a global mindset and spending time learning with the market leaders is a must,” the executive pointed out, adding that the Movie team spends a great deal outside Brazil, particularly in high-growth markets such as China.
Until now, Bloisi wasn’t much of a talker when it came to figures – but the executive’s enthusiasm is boundless when highlighting his ambitions of turning iFood into a $10 billion business.
“We are seeing a lot of optimism in Brazil again. The recent IPOs of local firms like [payment companies] Stone and PagSeguro attest to the fact that it’s a great moment to invest in Brazilian companies,” Bloisi said.
“It has become fashionable to talk about being a unicorn. While I think that creates a distraction, I am sure that from now on we won’t see just unicorns [companies worth over $1 billion] in Brazil, but many businesses worth a lot more than that,” he added.
Read more about iFood’s innovation strategy.