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Latin American entrepreneurs invest in Latino startups

To secure their economic foothold and grow the Latin American economy, Latin American entrepreneurs are investing in Latin American startups.

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Across Latin America, companies started by entrepreneurs are looking to invest in newer companies making their start.

One of the most promising companies that is investing in these new startups is the Colombian on-demand delivery company, Rappi. The company is currently worth an estimated $5.25 billion. Because it rose to $1 billion in value while it was a startup, it became known as a “unicorn” company, those rare startups in the range of Google and Paypal.

Rappi is not just known for its growth. Many alumni employees who worked with the company have gone on to launch their own company.

Currently, there are an estimated 110 companies founded by these alumni which have raised an estimated $2.1 billion in funding. As all these startups came from Rappi employees, this network of businesses is colloquially called a “mafia.”

The term “mafia” in business was coined in 2007 by Fortune magazine to describe how over 300 Paypal employees had left the company to found their own startups since the company’s founding in 1998. These kinds of links between a company and its offshoot companies help create new generations of entrepreneurs building their own businesses.

Rappi isn’t the only company funding startups. Another unicorn company, the Mexican digital-only supermarket Jüsto, has been funding them, as well. Its founder and CEO, Ricardo Weder, mentioned in an interview with Bloomberg Línea that he had already invested in 40 startups as an angel investor, mostly companies in Mexico.

“Imagine, 15% of foreign investment last year was investment in startups, it's crazy, and for those of us who have been in this for longer, five years ago it wouldn't have been 0.1%,” Weder said when describing investment in Mexico. “Two years ago, there were very few of us investing, you could really count us on one hand.”

An angel investor is someone who has high net worth and provides funding for startups, usually at the price of some ownership equity.

Both Weder and Rappi co-founder Sebastian Mejia act as angel investors, investing in startup companies such as Jeeves, an expense management platform active in Mexico, Canada, and the U.S., and Clara, a Latin American end-to-end spend management company. Both companies have broken the $1 billion value mark, becoming unicorn companies as well.

In 2021, Jüsto and Rappi announced a partnership to work together to help expand Jüsto’s markets further into Latin America by using Rappi’s delivery network. Rappi is active in nine countries and 250 cities, while Jüsto will offer Rappi customers a wider range of goods to purchase.

Other companies seeking to invest in Latin American startups include the region’s most valuable unicorn company Kovak, an online market for used cars, and the Mexican investment group Bridge LATAM, alongside a growing number of investors seeking to grow Latin American industries.

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