Tiger Global Invests in Favo: Online Grocery Delivery in Latin America

Favo Secures $26.5 Million in Series A Funding

Favo, a social commerce platform originating in Brazil, has successfully completed a $26.5 million Series A funding round. This investment will be used to further develop the company’s application, which facilitates grocery ordering through established local social networks.

Investment Details

Tiger Global Management spearheaded the funding round, with participation from existing investors including GFC, Elevar Equity, Kevin Efrusy, David Velez, FJ Labs, and H2O. Since its inception in 2019 by Alejandro Ponce and Marina Proença, Favo has now raised approximately $37 million in total funding.

Market Opportunity and Favo’s Approach

Brazilian families allocate, on average, $118 monthly to food expenses. Data from IBGE indicates that groceries can represent up to 22% of a household’s total budget. Favo empowers individuals with limited employment opportunities to generate income through consistent sales commissions within their communities.

Customers place grocery orders via the Favo app. The platform’s logistics network then consolidates and delivers these orders to local entrepreneurs the following day. These entrepreneurs then handle the final stage of delivery directly to the consumer.

The Founding Story

Alejandro Ponce, prior to founding Favo, had already established another company. However, he felt a lack of fulfillment in his work. He discovered the Japanese concept of “ikigai,” which emphasizes finding purpose by pursuing what one loves and what sustains them.

After learning about the potential of social commerce, Ponce traveled to China in 2019 to observe it firsthand.

Building a Company with Purpose

“Upon my return, I was certain this was the venture I wanted to pursue,” Ponce stated.

He subsequently connected with Marina Proença, who brings expertise in marketing and user experience. Their shared backgrounds and aspirations led them to create a company focused on bringing e-commerce accessibility to families throughout Latin America, extending beyond just affluent consumers.

Empowering Entrepreneurs

“We are fostering a new generation of entrepreneurs,” Ponce explained. “We equip unemployed individuals, particularly mothers, with the technology and logistical support needed to become business owners and supplement household income. This has the potential to become one of the largest e-commerce platforms in Latin America by making it accessible to all.”

Addressing Trust and Accessibility

Proença highlighted that by utilizing local entrepreneurs as points of contact, Favo overcomes the common hesitation associated with online grocery shopping. This includes concerns about receiving orders and the desire for direct communication with a representative.

Furthermore, there are no upfront costs for entrepreneurs to collaborate with Favo.

Bridging the E-commerce Gap

“Unlike many direct sales organizations that require initial purchases, our entrepreneurs face no such obligation,” Ponce clarified. “Latin America is approximately 20 years behind the United States in e-commerce adoption, and for many, Favo represents their very first experience with online shopping.”

Expansion Plans

Favo initially launched in Peru in 2020 before expanding into Brazil. The newly acquired funding will be allocated to enhancing logistics and fulfillment capabilities, as well as broadening its reach within Brazil and extending into Mexico.

Ponce anticipates operating in 20 cities within the coming months.

Current Performance

The company currently serves 160,000 buyers and is experiencing a 30% month-over-month revenue increase. Customers have access to a selection of over 3,000 products, with delivery completed within 24 hours.

Strategic Partnership

Ponce indicated that Favo strategically partnered with the current investors due to their proven track record of supporting expansion initiatives. He further noted that Tiger Global has already provided valuable guidance to the company.

Investor Perspective

“Favo’s innovative social commerce business model and its rapidly expanding logistics platform represent significant advancements in the purchasing and distribution of goods across Latin America,” stated Griffin Schroeder, partner at Tiger Global Management. “We are enthusiastic about supporting Favo’s mission to democratize e-commerce and collaborating with Alejandro and Marina as they rapidly expand into new markets.”