IDB Invest Promotes Innovation Through Merqueo Investment
IDB Invest has provided a $10 million equity investment to Merqueo, the first and largest full-stack grocery delivery player in Latin America. The investment is part of a $50 million series C round led by IDC Ventures and IDB Invest. The round was also supported by MGM Innova Group, Celtic House Venture Partners, Digital Bridge, Fuel Venture Capital and previous shareholders.
The funds will help the company in its expansion plans in the region as well as to continue developing its technological platform. This transaction builds upon IDB Invest’s continued effort to promote alternative sources of growth capital to strategically important economic sectors.
The COVID-19 pandemic has altered consumer habits all around the world. The relationship between grocery shoppers and food retailers changed drastically as millions of households started buying groceries online for home delivery. COVID-19 has not only accelerated the conversion of new online shoppers, but it has convinced a large majority to continue to purchase online. Through this deal, IDB Invest reinforces Merqueo's expansion plans and at the same time promotes the access to a wider range of products and prices via e-grocery platforms and supports growth and job creation through the company's suppliers, mainly small and medium-sized companies and farmers.
By owning and controlling the entire vertical supply chain, relying exclusively on proprietary technology, Merqueo can obtain better margins, offer competitive pricing, and achieve healthy unit economics. Its disintermediation-based model and the use of in-house technology reduces the cost of fulfillment, allows for control of the entire customer experience, and makes the service more accessible to a broader number of people, who are not willing or able to pay for high delivery fees or markups on their products. This by itself offers a window of opportunity to a $700 billion market in LatAm alone.
The transaction consists of a $7 million IDB Invest equity investment plus a $3 million blended finance equity investment from the Clean Technology Fund (CTF). The CTF contribution will support and incentivize a corporate climate action plan to include actionable and measurable commitments towards innovation in last-mile electric mobility; greater use of clean energy; and improvements in energy efficiency schemes.
This deal is expected to contribute to four United Nations Sustainable Development Goals (SDGs): Decent Work and Economic Growth (SDG 8), Industry, Innovation and Infrastructure (SDG 9), Reduced Inequalities (SDG 10), and Responsible consumption and production (SDG 12).
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $13.1 billion in assets under management and 385 clients in 26 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
Merqueo is building the largest dark store logistics network in Latin America to deliver groceries faster and cheaper. Its catalog encompasses up to 10,000 products including fresh fruits and vegetables, imported products, liquors, household items, personal care goods, and more. Currently, the company operates in Mexico, Colombia and Brazil.
About the Climate Investment Funds (CIF)
With more than ten years of climate action, the $8.3 billion Climate Invest Funds is one of the world's largest multilateral climate finance instruments. CIF provides developing countries with climate-resilient, low-carbon development finance. These grants, concessional loans, risk mitigation instruments, and capitalization leverage significant additional financing from the private sector, multilateral development banks (MDBs), and other sources. Five MDBs – the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IDB) and the World Bank Group (WBG) – implement CIF-financed projects and programs. The Clean Technology Fund (CTF) is one of the funds of the CIF.