Bloomberg Línea — Peruvian social commerce startup Favo is ceasing operations indefinitely in Brazil and laying off 170 employees. The company will continue to operate in Peru, however.
“Even though we have tried to find the most diverse paths for our operation in Brazil, regrettably we are faced with a scenario of increasing difficulty,” the company said in a press statement.
Favo is yet another startup to be affected by the wave of layoffs as a consequence of a scenario of high interest rates imposed to control inflation following the global economic recovery, while a lack of investments and cash flow challenges weigh on companies after the euphoria generated by last year’s record investment rounds for Latin America.
Founded in 2019, Favo landed in Brazil a year later. According to the company, 40 employees will be kept in the country to restructure the operation and to think up new formats for Brazil.
The platform said it has communicated to entrepreneurs and the logistics ecosystem that “Favo stores will remain open until June 30”, and that it “will deliver all orders made until that date in the normal term”.
The startup also said it is negotiating the relocation of entrepreneurs and drivers to other social commerce companies along the lines of Favo.
“We regret having to pause the Brazilian operation, but we believe we will re-establish our business in the country soon, as soon as macroeconomic conditions allow. We hope that this moment happens as soon as possible,” the company said in a statement.
So far, layoffs wave hit startups in Latin America such as Argentina-based Buenbit (which cut half of its staff), Brazilian foodtech Liv Up, Tiger Global-backed Zak, and even Latin American unicorns such as Vtex (193 people laid off), Bitso (which has laid off between 80 and 100 people), Olist (which let go at least 60 employees), 2TM (which cut 90 people), QuintoAndar (where 160 employees were laid off), Loft (159), Facily (about 139) and Creditas (which made 11 people redundant).