Miami — As digitization in LatAm increases, we see more and more companies taking sectors that were largely fragmented before, and creating an online marketplace so users can find everything in one place. One area that’s lagged behind, however, is wholesale shopping for restaurants. That’s where Cayena comes in.
Cayena is a B2B marketplace for groceries and other supplies that restaurants need on a weekly basis. The São Paulo-based company which launched with a minimum viable product (MVP) in September 2019, today announced the close of its $3.5 million Series A round bringing the total raised to date to $4 million.
While Cayena says they don’t have direct competition - as in, another online wholesale marketplace - wholesalers in the region have been rapidly moving to digitization and have also reported lower sales as a result of the pandemic.
In fact, a July 2020 study concluded that, in an attempt to adapt to complications resulting from the pandemic, “73% of the wholesale markets in Latin America and the Caribbean are using digital applications or platforms to market their food…” The survey also revealed that “92% of wholesale markets reported a decrease in purchases by hotels, restaurants, and other types of services.”
One thing that Cayena can bet on is the fact that, “Here in Brazil, and LatAm as a whole, you have extreme price volatility and little price transparency,” said Pedro Carvalho, co-founder and CEO of Cayena. As a digital marketplace, the company makes it easy to compare prices.
The platform contains over 20,000 products from multiple categories, including packaged goods, dairy products, proteins, beverages, cleaning materials, fruits and vegetables, among others, and offer next day delivery throughout the largest cities in the state of São Paulo. Cayena plans to use the funds from this raise to further grow deliveries through-out the state.
Traditionally, restaurant owners had to order food and supplies from various different suppliers, often making orders via WhatsApp or over the phone. Each supplier sells certain minimum quantities and at a certain price, so it’s a weekly challenge for restauranteurs to determine where to buy from.
“They [restaurant owners] go to a wholesaler or go to a local distributor and both experiences are extremely offline,” said Carvalho.
In addition to the convenience that Cayena offers, Carvalho says they’ve been able to save users, on average, about 15% on each sale, and the company said they have about 2000 restaurant clients.
The marketplace, which is going after the $100 billion wholesale food industry in LatAm, created an algorithm that optimizes for minimum quantities, price, and suppliers, so users don’t end up buying one item from each supplier, and so they can get the best price available within the other parameters.
“It consolidates everything,” said Raymond Shayo, co-founder of Cayena. The marketplace makes money through a take-rate, but the company said the rate varies and that they are still refining their monetization model.
The trio that founded Cayena bet on each other first, and on a business idea after. They met while in college and later all three worked in finance. They decided to start something together and began looking for gaps in the market and they found one in wholesale. Carvalho’s family owned a Japanese restaurant while he was growing up, so he was familiar with the restaurant business. They started Cayena with their own money and then raised a $550,000 Seed round, which they used to develop product market fit.
“Being completely honest, it took hundreds of rides in our cars to suppliers and restaurants to fight inertia. We started making ourselves the suppliers and on-boarding customers,” said Shayo.
Marketplaces are notoriously hard because startups have to sell to both sides, and show both sides that they create value for them. It’s often the chicken and egg dilemma, where one side only wants to join if the other is already there.
“We would go door to door to restaurants and would try to close deals with the whole street and then we’d say to the supplier ‘hey, we have all these restaurants in a concentrated area, do you want to be a supplier?’” said Shayo.
This round was led by Picus Capital, with participation from Astella Investimentos, FEMSA, MSA Capital, Canary Ventures, Grão VC, NOA Capital, TAP Development, FJ Labs and Norte Ventures.