Ebanx, Frubana Lay Off Staff as LatAm Startups Feel Market Backdrop

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Bloomberg Línea — Advent International-backed cross-border payments unicorn Ebanx is laying off 20% of its 1,700 employees (340 people), the company said. Colombian Frubana, which raised $65 million from GGV, SoftBank and Tiger Global last year, is cutting Brazilian staff by “less than 3%”, the company said.

Ebanx, a rival of Uruguay-based dLocal’s (DLO), had secured a $430 million round from Advent last year aiming for an IPO but gave up to go public in the first half of the year because of market volatility. Still, last month, Advent, a Boston-based private equity firm, manage to raise a new $25 billion fund, the second-biggest private equity fund of all time.

The Brazilian fintech unicorn said in a statement that it is restructuring parts of its business and that some projects will be phased out.

Echoing some of the reasons other Latin American startups have voiced when announcing layoffs, Ebanx said this decision was made on the basis of the current scenario of the technology market which suffers a sudden and deep change in the macroeconomic environment.

In the past few days, Ebanx discontinued its digital wallet product Ebanx Go. Ebanx joins a list of another nine unicorns in LatAm that laid off recently: Kavak, Vtex (VTEX), Olist, Bitso, 2TM, QuintoAndar, Loft, Facily, and Creditas.

Bloomberg Línea sought Advent for comment, but the fund declined to talk about this situation.

Meanwhile, Tiger has suffered big losses and has increasingly moved its venture capital arm into smaller ticket deals. Before this, Frubana and other startups could count on Tiger to back behemoth valuations at a fast deployment pace; however, the money now is scarce and they are being told to cut costs. Brazilian Tiger-backed ZAK also laid off staff in the past months.

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Frubana is an e-commerce platform for restaurants. It was founded in 2018 in Colombia with the aim of reducing intermediaries and costs. In addition to Colombia, the startup has operations in Mexico and Brazil, where it intends to continue operating. “Due to changes in the company’s strategy, there was a reduction in personnel of less than 3% of Brazilian staff”, Frubana said.

While in the United States Crunchbase says more than 21,000 workers have been laid off, approximately 1,600 startup employees were laid off in Brazil in the last three months, according to the website Layoffs Brasil.

LatAm companies retreat expansion, focus on country of origin

As of 2021, Ebanx and other startups in the region enjoyed a so-called “LatAm push;” however, Latin American firms seem to be more conservative regarding their geographic footprint. Colombian companies Merqueo and Tul are pulling off from Mexico and Ecuador, respectively. Merqueo’s communications offices in Colombia and Mexico confirmed that the on-demand grocery delivery app was shut down on June 8.

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Despite having obtained $181 million in a Series B investment round that would allow it to expand in Ecuador and in Brazil, where it already has operations, Tul discontinued its Ecuador’s operations, as reported by Bloomberg Línea.

“It pains us to make this decision, but today we are facing a new reality of having to seek greater efficiencies and focus on other markets to continue,” said Enrique Villamarin Lafaurie, co-founder and CEO of Tul.

Unlike the Peruvian Favo, a social commerce company that recently decided to suspend operations in Brazil due to financial difficulties caused by the macroeconomic scenario, Frubana told Bloomberg Línea its new growth and expansion strategy includes continuing to invest in Brazil and strengthening its presence in the cities where it currently operates: Sao Paulo, Belo Horizonte, Curitiba, and Campinas.

The company led by Fabián Gómez connects producers with restaurant owners and serves as an alternative channel for immediate consumption of products, articles, and supplies for the industry.

Last year the company closed its Series B round to expand in Latin America. In the markets where it operates, Frubana achieved “6x growth in the number of users, tripled sales and expanded its product offering with new categories such as protein, staples and packaged goods throughout 2020 and continuing to the first quarter of 2021″, it said.