Mexican startup Jüsto was founded in 2019 and is one of Mexico’s first vertically integrated, online grocery platforms. Since its inception the business has raised around US$100m in investments.
Its founder and CEO Ricardo Weber previously commented that Jüsto would disrupt the grocery industry in Latin America. Seven months on from our coverage of this, we caught up with Manolo Fernandez (Head of Planning at Jüsto) to discuss how things have progressed.
Jüsto raises the largest Series A investment in Latin American history
In February 2021, Jüsto raised a US$65m Series A investment, led by General Atlantic (a global growth equity firm), with further participation from existing investors including Foundation Capital and Mountain Nazca. This was Jüsto’s third round of capital raising in less than a year and represents the largest Series A investment in Latin America’s history.
The Series A round came just months after a US$27m seed round in 2020, led by Foundation Capital, alongside Mountain Nazca and with participation from FEMSA Ventures, S7V, Elevar Equity, Bimbo Ventures, Quiet Capital, Sweet Capital, H2O Capital, and SV LatAm Capital, among others.
Why has Mexico become such a hot spot for venture capitalists?
Until recently, Mexico was an untapped market. Entrepreneurs were coming out of Guadalajara, Mexico’s Silicon Valley; launching their own startup businesses, but with low capital to invest.
“We know that this is a very competitive industry, but we believe that in the country there is a lot of talent to develop technology that allows companies like Jüsto to compete with the big players in this industry”. Ricardo Weber.
VC’s have seized on this opportunity, perceiving Mexico as providing large-scale, short term opportunities. There is a particular interest in last-mile businesses, perhaps as VC’s see the potential to replicate the success last milers have had in Asia and other parts of Latin America, such as Colombia. Mexico is also attractive due to its comparatively low labour costs, versus North America or Europe.
Not only do VC’s contribute financially, they bring vast amounts of knowledge, such as how to expand into new markets.
General Atlantic will help Jüsto grow
Following its recent investment, General Atlantic’s Managing Director (Luis Cervantes) and Vice President (Zeey Thepris) joined Jüsto’s Board of Directors. The business said it will leverage its ‘deep expertise’ to help Jüsto scale across Latin America.
“Under Ricardo’s leadership, we believe Jüsto is positioned for significant expansion as it disrupts and transforms the legacy grocery value chain.” Cervantes.
General Atlantic typically invests in more mature businesses. It is uncommon for it to participate in a Series A round or invest in a company at the early stages of growth. This demonstrates their confidence in Jüsto, a business that is less than two years old.
Source: General Atlantic
Investment being used to strengthen operations and expand in new markets
Jüsto will use the funding to strengthen technology, improve operational efficiencies, and enhance its last-mile logistics infrastructure. It will also invest in expanding its footprint, both in Mexico and to new Latin American markets.
Expanding in Mexico
Jüsto started its operations in Mexico City. As the fifth most populous city in the world, this provided the perfect testing ground for it as it looked to learn and adapt. It also operates in Querétaro, which is close enough to Mexico City that it can use its largest fulfilment centre to meet demand in both cities.
By the end of Q3 2021, Jüsto will expand in Mexico, prioritising the major cities of Monterrey and Guadalajara. Later in the year, it will expand in the country’s tier two cities, including Peubla, Tijuana, and Cancun.
Plans to enter new Latin American markets
After September 2021, Jüsto aims to expand into new markets in Latin America, including Colombia, Chile, Peru, and Brazil. However, it does see the expansion as a race, as Jüsto does not want to lose focus on doing things well in its domestic market. It recognises it takes time to build strong relationships with suppliers, which will remain front of mind.
Exceptional growth in 2020
The pandemic has changed consumption habits in Mexico, with many shoppers migrating their spending online. This created a significant shift in volumes for Jüsto and enabled it to grow its revenue by 16 times in 2020 versus 2019.
Jüsto was able to gather and use 18 months of customer data to refine its offer and improve its service. This led to positive increases in shopping frequency and retention.
Jüsto is growing at impressive pace. The continuous stream of investment it is accumulating clearly demonstrates global investors’ confidence in the business. General Atlantic’s experience will be invaluable as it begins to expand into new markets.
Despite being a relatively new business, it has been widely touted as one of Mexico’s leading startup’s. We see the potential for it to meet its aim of disrupting the grocery industry, particularly now many customers have become accustomed to the convenience and time saving that online shopping provides them.
For more information on Jüsto, see our article covering how the retailer stands out in Mexico’s competitive grocery market.
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