Team Frubana and their favorite fruits.

Frubana — the “everything store” for LATAM’s restaurant industry.

Announcing Lightspeed’s participation in Frubana’s $65M Series B financing, alongside GGV, Tiger, Softbank, and Monashees.

Alex Taussig
Jun 1 · 6 min read

Latin America (LATAM) is the fastest growing e-commerce market in the world. It has 640M residents with $5.8T of GDP (6–7% growth). GDP per capita is $9K, or roughly the same as China. The region has near ubiquitous mobile and internet penetration, yet it has a fraction of the tech investment dollars of comparable developing regions like Southeast Asia. One sign that capital is flowing into the region now is the meteoric rise of MercadoLibre (MELI), which has increased its stock price by 4x in the last 3 years, buoyed by LATAM’s digital transformation during COVID.

Private capital flows have accelerated too. 2021 is tracking to an all-time high of ~$15B of venture capital in LATAM companies, a 3x increase since 2018. The secret is getting out that LATAM will be the next global region for breakout tech startup growth.

VC deal activity in LATAM. Note: 2021 figures are YTD Apr-21.

While the macro factors are attractive, one of the more practical aspects that makes me bullish on LATAM is a new generation of experienced talent emerging to start their own companies. MercadoLibre (founded in 1999) is the poster child of the 1st generation. Companies like Nubank (founded in 2013) and Rappi (founded in 2015) exemplify the 2nd. This 3rd generation cut their teeth at these foundational startups and got an invaluable, real-world education in company building. Their market timing is even better than that of their predecessors.

In late 2019, I met a compelling founder from this 3rd LATAM generation. Fabián Gómez was one of Rappi’s earliest employees and top performers. He had recently founded Frubana — a wholesale marketplace for local restaurants. In our initial meeting, I was blown away by Fabián’s incredible passion, market knowledge, hustle, and attention to detail. I had some good context for his business since I led Lightspeed’s initial investment in Faire in 2018. My experience with Faire, as well as our portfolio companies Udaan (India) and Ula (Indonesia), informed my belief that B2B/wholesale would be the next wave of online marketplaces.

While we weren’t prepared to invest in Frubana at that time, my partner Mercedes Bent and I set out on a mission to map the LATAM ecosystem and build relationships with entrepreneurs and investors in the region. We met hundreds of companies in the following 18 months. In early 2021, we finally decided the timing was right to make our first few investments.

We happily announced our first LATAM investment in Stori a few months ago. Today we’re announcing that our second is Frubana!

Fabián Gómez, CEO and founder of Frubana.

Frubana is a wholesale marketplace serving the restaurant industry in LATAM. 1.5M restaurants in LATAM spend over $100B procuring goods each year. The market is transacted today through a complex supply chain of middlemen in local stalls in town plazas. The below is a typical produce market in Mexico City, for example. Farmers and restaurant owners meet at these markets several times a week to exchange goods and money. To reach these markets, product passes through multiple layers of middlemen in a highly inefficient process with little transparency or consistency.

A typical farmer’s market in a plaza in Mexico City.

Frubana has vertically integrated the supply chain for produce, giving farmers more value for their products, reducing waste, and delivering transparent pricing to restaurants. Frubana purchases directly from farmers, aggregates produce in regional distribution centers, and fulfills deliveries using intelligent routing. While building a produce supply chain is no easy task, doing so has enabled Frubana to create a highly recurring purchase behavior with its customers, leading to best-in-class retention for a wholesale marketplace.

Frubana employees in the warehouse, fulfilling an order.

Frubana also sells proteins and packaged goods through a 3rd party marketplace where sellers compete for Frubana’s customers. While most customers start buying produce from Frubana, over time they grow their “share of wallet” by adding the other categories to their deliveries. Frubana has some of the best retention we’ve seen in the wholesale category. In cities like Bogotá, Mexico City, and São Paulo, tens of thousands of restaurants essentially run on Frubana.

A happy Frubana customer receiving his delivery!

Compared to in the US, the restaurant industry in LATAM is significantly more fragmented. 86% of restaurants are independently owned, similar to developing nations like China (81%) and India (81%). The US restaurant industry is only 47% independent, and as such large food distributors (Sysco, US Foods, Performance Food Group — in aggregate, $59B market cap) have grown to serve corporate restaurant chains. Because of their local economies of scale in distribution and ability to cross-sell, these distributors are incredibly hard to disintermediate in the US. However, in LATAM, no such oligopoly exists. By building a supply chain for produce first, Frubana has a unique opportunity to aggregate LATAM’s restaurant market.

COVID hit the restaurant industry hard in LATAM. Approximately 70% of establishments shut down or slowed operations. Despite these headwinds, Frubana grew active customers 6x and sales 3x in the last year — establishing its position as the “everything store” for the LATAM restaurant industry. This resilience in the face of adversity demonstrated how capable Fabián and his team truly are. With little digital penetration in local restaurants, we think Frubana will be well positioned to bring these businesses online, help facilitate a transition to electronic payments, provide working capital, and in general drive efficiencies throughout the entire food ecosystem.

Frubana’s mission is to make food cheaper and more accessible in LATAM. It reduces food waste thanks to its innovative supply chain. Frubana only looses 1–2% of tonnage to waste compared with over 50% in the existing supply chain. That means more money in the pockets of farmers, more efficiencies for the restaurant owner, and cheaper end-product for consumers. Any great platform gives away more value than it captures, and that’s certainly the case for Frubana.

Lightspeed is delighted to partner with Fabián and the Frubana team to build a category defining company in LATAM. We’re really excited to co-invest with friends at Carlo Dapuzzo at Monashees, Hans Tung at GGV, Tiger, Softbank, and more. If you’re interested in hearing more of my thoughts on Frubana’s market opportunity and global wholesale marketplaces in general, check out this interview I did last week at a virtual customer event for Frubana. It’s even translated into Spanish!

And, if you’re interested in working for Frubana and reside in Bogotá, Mexico City, Buenos Aires, or São Paulo, check out their careers page below:

Team Frubana hanging out at the office.

Alex Taussig is a Partner at Lightspeed in Silicon Valley, a global venture capital firm with over $10B under management. He invests predominately in online marketplaces and is responsible for the Lightspeed’s investments in Daily Harvest, Faire, Flockjay, Frubana, Outschool, Zola, and more. At his prior firm, Alex was involved with foundational investments in 2U ($TWOU) and thredUP ($TDUP), among others. Alex publishes a weekly(ish) newsletter called “Drinking from the Firehose”, where he shares insights on commerce, media, technology, science, pop culture and more.

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating…

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the enterprise and consumer sectors. In the past two decades, Lightspeed has backed 400 companies and currently manages $10.5B across the global Lightspeed platform.

Alex Taussig

Written by

Partner at Lightspeed. Current: AWA, Daily Harvest, Faire, Forage, Flockjay, Frubana, Outschool, Zola. Past: $TDUP, $TWOU, $CBLK. Writes firehose.vc.

Lightspeed Venture Partners

Lightspeed is a multi-stage VC firm focused on accelerating disruptive innovations and trends in the enterprise and consumer sectors. In the past two decades, Lightspeed has backed 400 companies and currently manages $10.5B across the global Lightspeed platform.

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