Muni — “De nosotros para tu comunidad.”

When Mercedes Bent and I started meeting startups in Latin America (LATAM) a couple years ago, a few things jumped out immediately.

The first was the size and growth rate of e-commerce in the region. Latin America has a population of 640M, of which 460M are concentrated in the largest 5 countries (Brazil, Mexico, Colombia, Argentina, Peru). Of these, 270M people are connected to the internet, and that number is expected to rise to 350M by 2024.

According to Sacra, the total market size of the grocery and retail markets in LATAM are $540B and $260B, respectively. Statista estimated the e-commerce market in LATAM was $70B in 2019, growing to $116B by 2023. Mexico and Brazil are expected to account for more than 60% of the current e-commerce market. Mexico is also the fastest growing e-commerce market in the world. Mexico earned the #1 spot ahead of India, China, Philippines, and Malaysia. In aggregate, LATAM is the fastest growing e-commerce region in the world.

The second thing we noticed was that the COVID-19 pandemic had accelerated e-commerce growth significantly. In 2020, Brazil and Mexico saw 25% and 31% growth spike in online consumers, respectively. That’s equivalent to 52M new consumers who came online to purchase in that year alone. That accelerated momentum continued throughout 2021.

The third thing we noticed was that, paradoxically, accelerating growth had real constraints due to immature logistics and payments solutions. As a result, e-commerce penetration in LATAM is still one of the lowest in the world at 4.7% vs. 15.5% in the global average. First generation e-commerce companies like MercadoLibre (MELI, $45B market cap) and second generation companies like Rappi ($5B+ market cap) have done much to unlock this growth, but still only serve the top 10% of the economic pyramid — representing 36% of regional consumption. While their customers can afford high average order value and/or delivery fees, delivery platforms like Rappi are fundamentally locked out of a bigger market — the next 40% of LATAM consumers who represent 45% of consumption. This rising middle class consumer doesn’t typically have a credit or debit card, and their average order values are much lower. We concluded that LATAM e-commerce growth would slow meaningfully if no one unlocked access for the rising middle class.

This paradox had been solved before — in China. In the prior decade, China had famously leapfrogged the traditional e-commerce path of developed markets like the US. Companies like Pinduoduo* (PDD, $32B market cap) led the way with an innovative group buying model for consumers. After many failed attempts by other startups, PDD got the model right and became possibly the fastest growing e-commerce company of all time. (For those interested in PDD, check out Turner Novak’s canonical history here.)

Shihuituan started a few years later to adapt the PDD group buying model to focus on communities instead of individuals. The purpose was to open up group buying to an even wider swarth of consumers in less dense cities. In this model, community leaders purchase goods on behalf of end-users, aggregating purchases on their behalf. Creating aggregation points at the community level solves both logistics, payments, and distribution challenges since (a) Shihuituan sends larger shipments to community leaders, who order for multiple end-users, (b) community leaders can effectively collect cash from end-users since they share social ties, and (c) the average community leader connects to over 100 end-users via WeChat, thereby lowering customer acquisition costs significantly. While community group buying in China has recently seen some headwinds from its first generation (Shihuituan, XinShengYouXuan, TongChengShengHuo), a second wave has started backed by the country’s largest e-commerce players: Meituan Youxuan — supported by Meituan), Chengxin Youxuan (supported by DiDi), and DuoDuo MaiCai (supported by PDD). It’s clear the trend is here to stay, and we’ve often thought the business model could work in other emerging markets, like LATAM.

The same insight came to Muni founder María Echeverri Gomez, who studied the models of PDD, Shihuituan, and more during her time at Stanford Graduate School of Business. On multiple trips to China, she sought after a model to bring back to her native Colombia, and LATAM more broadly. What motivated her more than anything else was giving access to new income sources for the rising middle class. The community group buying model, proven in China, was a promising starting point. Much could be adapted in LATAM, where WhatsApp, not WeChat, was a pervasive messaging platform — with over 90% of residents using it in some countries. Moreover, María saw the opportunity to marry the community buying model with her prior operating experience, leading the global grocery business of Rappi.

After graduating from Stanford in summer 2020, María immediately started Muni. At Lightspeed, we first heard about Muni through the founders of Rappi and Frubana*. We heard over and over again — María was someone we had to meet. Indeed, upon hearing her talk about Muni, we knew María was someone we needed to partner with. Last year, Lightspeed led Muni’s $20M Series A, alongside our friend Carlo Dapuzzo at Monashees, who led Muni’s seed round in 2020. We are delighted to be joined in this round by some amazing operators, including some of the founders of Rappi, Affirm*, Habi, Frubana*, and Loft.

Since then, Muni has grown in excess of 20% per month on a compounded monthly growth rate. Muni now serves over 15,000 community leaders across Colombia, Brazil, and Mexico. End-users of Muni enjoy commonly consumed items at prices up to 40% lower than the competition, with no extra shipping or service fees. The team at Muni is now over 500 strong, including 287 in HQ from firms like Rappi, MELI, McKinsey, Bain, and more. Notably, María is one of the few female founder/CEOs in LATAM and has built a 50% female team, actively changing the ratio in the region! The vast majority of Muni’s local community leaders are also women.