The latest technological unicorn of Latin America has an ambitious goal. The delivery the next day to almost anyone in Brazil. It is not an easy feat in the fifth largest country in the world, where infrastructure networks are much lower than those of more developed countries.
Loggi is now valued at US $ 1 billion, having raised US $ 100 million this month in a financing round led by the Vision Fund of SoftBank Group Corp, the company said on Wednesday. The cash injection comes along with a US $ 100 million investment that Vision Fund made at the company at the end of last year.
Building a logistics service throughout Brazil
The startup, whose launch was in 2014 with the delivery of documents in the chaotic streets of Sao Paulo, is using the investment to form a team of more than 1,000 engineers while building a logistics service throughout Brazil. Currently, the company covers approximately 35% of the population and makes approximately 100,000 daily deliveries to customers, including French retailer Carrefour SA, e-commerce giant MercadoLibre Inc. and fast food restaurants such as McDonald’s Corp. and Burger King. Fabien Mendez, executive director, said the company’s goal is to increase its coverage to 95% of the country by the end of next year and increase its delivery frequency to approximately 5 million per day in five years.
“Our philosophy is that we deliver anything to anyone,” Mendez said in an interview. “By the end of 2020, we want to connect all Brazilian cities, the idea is to offer a delivery the next day to all Brazilians.”
Loggi will have to overcome the obstacles
Loggi will have to overcome the obstacles that have made Brazil a country known for the difficulty for transporters, for the deficient infrastructure, crime, bureaucracy and its large size. Brazil is larger than the continental United States, but its transport infrastructure is close to that of Rwanda, according to the World Economic Forum.
“In Brazil, operating in logistics is a slow death,” said Mendez. “The only way to overcome structural barriers is through the use of technology.”
The company is opening a network of distribution centers throughout the country, consisting of small stores in the neighborhoods. He says that it relies heavily on robotics, artificial intelligence and algorithms to find the most efficient route for the air shipment of packages to these centers. The system alerts a nearby independent messenger – around 25,000 couriers deliver packages to Loggi to make the final delivery. The goal is that the effort be minimal, that only a couple of human hands touch the package at each step of the delivery process, Mendez said.
Attraction of other startups
The company is betting that the country of 209 million people will quickly adopt electronic commerce. Sales in the sector are expected to increase 15% this year to approximately US $ 15,500 million, after having increased 12% last year, according to Ebit Nielsen, a research firm.
This growth has attracted other startups, including CargoX, supported by Goldman Sachs Group Inc. Delivery companies such as Rappi de Colombia and iFood of Brazil are also expanding in the country.
But instead of competing with other existing players, Mendez said Loggi is working with them, providing delivery services for both Rappi and iFood, as well as retailers such as Amazon.com Inc. “Loggi is becoming a key enabler for Brazil’s growing informal economy and the electronic commerce sector, “said Akshay Naheta, managing partner of SoftBank.
GGV Capital, Microsoft Corp, Fifth Wall Ventures and Velt Partners joined Vision Fund in the last round of Loggi. The SoftBank fund for Latin America, which launched a US $ 5 billion technology fund for the region this year, is considering a new investment, the company said. Nothing more this year, SoftBank agreed to invest US $ 1,000 million in Rappi, and is said to be in talks with Creditas, a Brazilian lender.
Venture capital financing in Latin America has doubled in each of the last two years and is about to surpass the 2018 record of US $ 2 billion. More than half of this funding last year went to Brazilian companies, according to the Association for Private Equity Investments in Latin America.
Also published on Medium.