Since its inception in 2018, the Colombian startup founded by Fabián Gómez Gutiérrez drew attention thanks to the idea of connecting two sectors totally distanced by long supply chains that not only affect prices but also the quality of food reaching the final consumer.
Seven years after launching as an innovative proposal to distribute fruits, vegetables and groceries directly from producers to restaurants and small businesses such as neighborhood stores, Frubana has closed down in its last active market: Brazil.
From what was a good start in Colombia, Frubana managed to enter the prestigious Y Combinator accelerator program in 2019, a year in which it expanded into two key markets such as Mexico and Brazil.
The company went on to raise $271 million thanks to the backing of renowned investors such as SoftBank, DST Global, Tiger Global, Lightspeed Venture Partners and Monashees.
Through a simple and intuitive application, the company was able to connect producers and businesses, reaching over 100,000 customers in the three countries in which it operated, according to figures at the end of 2023. While all projections were aimed at expansion – at least to more cities in the markets where it was already operating – the startup recently announced its farewell.
From promotion to final closure
Despite having reported an operating profitability break-even point at the end of the first quarter of 2023, aiming at the time to reach net profitability in 3 or 4 years, things soon started to change.
In February 2024, it announced it was closing operations in Mexico and Colombia to focus on the Brazilian market, which accounted for 60% of the company’s revenues.
“In the last year, macroeconomic conditions have not been favorable, preventing us from raising the necessary resources to continue operating in Colombia and Mexico,” Frubana explained in the announcement.
“In this context, and after judicious deliberation with our stakeholders, we have decided to focus all our efforts and resources on Brazil. This country represents 60% of our revenues,” it added.
After downsizing to focus on Brazil a year and a half ago, things seemed to be going well. In fact, this year Contxto reported that Frubana expanded its credit line in partnership with Accion and MasterCard to strengthen producers and businesses. This 8-year alliance sought to provide credit to more than 200,000 micro and small businesses, helping them to meet their working capital needs and increase their financial capacity.
The strategy of focusing all its efforts on Brazil raised hopes that Frubana could break even and even resume operations in Colombia or Mexico. Unfortunately, that did not happen.
“Our last delivery was on July 30. Thank you for your trust and for being with us in these five years of history. Each order was part of something bigger,” read the company’s final message after closing its operations in Brazil, its last active market, as reported by Forbes.
According to NeoFeed, the decision to close operations in Brazil was announced to around 500 employees a week earlier. The media outlet contacted an anonymous former Frubana employee, who reportedly said that “demand was already below normal.” The former employee also mentioned that “the main reasons were the past administrations, who did not know how to take care of the resources.”
Despite its unfortunate end, Frubana made history with its passionate attempt to change the way restaurants and local shops obtain raw materials such as fruits, vegetables and groceries. Unfortunately, the struggles of raising capital for startups in Latin America, as well as the challenges of the market and difficulties in adapting ended up sealing its fate.
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