Rappi Inc., a delivery app backed by SoftBank that has grown into one of Latin America’s most-valuable startups, will begin lending to restaurants in Mexico and Colombia.
(Bloomberg) — Rappi Inc., a delivery app backed by SoftBank that has grown into one of Latin America’s most-valuable startups, will begin lending to restaurants in Mexico and Colombia.
The Bogota-based company plans to offer loans to restaurants that have been selling via the app for at least three months, said Alejandro Solis, senior vice president for Rappi’s operations in Spanish-speaking Latin America.
“Our goal isn’t to get the margin, but to allow restaurants to expand, change their menu, boost their teams,” he said from the company’s offices in Mexico City. “We win through commissions on the sales. So we gain if they sell more.”
The foray into commercial lending shows how Rappi has adapted its business model to add more revenue streams in the eight years since it was started as a grocery delivery business. Facing stiff competition for the likes of Naspers Ltd’s iFood and UberEats, Rappi has increasingly embraced financial technology as it expands in the region.
In its latest push, Rappi is targeting $60 million in loans across the two countries in a partnership with fintech R2, which will provide the credits. The move takes a page from some of the largest delivery services, including US leader DoorDash Inc., which launched a financing arm last year.
Rappi didn’t disclose terms of the loans it will offer. The credits will be repaid through the restaurants’ sales via the app, which helps curb the risk of delinquencies, Solis said. It is eyeing its pool of 50,000 restaurants in Mexico and 30,000 in Colombia as possible clients of this new service.
The company could expand the loan business to some of the other nine countries where it has operations as soon as this year, Solis added.
Rappi was valued at $5.25 billion as of July 2021 after numerous fundraising rounds that included Sequoia Capital, T. Rowe Price and SoftBank Group Corp., which made a $1 billion investment in 2019, according to data from CB Insights.
Read more: SoftBank Sees Year-End IPO Window for Latin American Companies
Solis said Rappi doesn’t have plans to pursue an initial public offering but remains open to funding opportunities. The company expects to be profitable this year, he said.
Other key points from the interview:
- As pandemic growth eases, the company is focusing on improving the quality for users, merchants and its last-mile drivers to boost retention
- Rappi is working to expand services in the cities where it operates, as well as add new cities
- Its alliances with banks in Colombia and Mexico have also seen high growth levels
- The company has around 4,200 employees
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