Misery acquaints a man with strange bedfellows
William Shakespeare
Contxto – There’s no denying that coronavirus (Covid-19) is making for unusual partnerships among startups in Latin America. Many of which under “normal circumstances” may not have taken place at all.
The question is, will these matchups live on beyond the pandemic? Or are they just quick hookups to cope and contribute to mitigating its effects?
There are a few possible scenarios as to how these partnerships will play out and they will vary from couple to couple. Depending on how the relationship works out, both within the Covid-19 context and the months thereafter when lockdowns ease up, not to mention the specific problem the alliance seeks to address.
Startup matches made in heaven?
So, who’s buddied up with whom? Let’s review a few examples found throughout the region.
In Mexico, marketplace Canasta Rosa and mass transit startup Urbvan got together. The latter is completing pickups and drop-offs for the entrepreneurs hosted on Canasta Rosa’s platform. But that Urbvan is playing the field. It also partnered with online supermarket Jüsto, to deliver groceries given surges in demand on Jüsto’s site.
However, this team up may have been arranged by these startups’ shared investor, Mountain Nazca. And that’s because it’s not uncommon for investors to encourage their portfolio companies to work together under regular or irregular circumstances.
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Meanwhile, Colombia’s Rappi and robotics startup Kiwibot joined forces to launch semi-autonomous delivery bots in Medellín. The pair state that it’s a measure to deter the spread of Covid-19 from deliverer to user.
Although, in truth, the move is believed to have come from the unicorn’s to protect its turf in Colombia from power couple Domicilios.com and iFood. Meaning, it may be a maneuver that goes beyond the pandemic.
Fintech EBANX and Spanish ride-hailing platform, Cabify, are working together as well. Not too long ago, the Brazilian unicorn launched a free platform for e-commerce businesses to host their products. Now, Cabify will be helping with the logistics end of that operation.
Also in Brazil, Nubank will be providing vouchers for purchases and deliveries related to pet care goods platform, Zee.Dog.
So what’s to become of our lovely couples? There are three basic scenarios.
Scenario #1: Stronger together, bae
It wouldn’t be surprising for startups to learn that there are profitable opportunities to be found in teamwork. Moreover, if users react positively to their service both during self-isolation and after quarantines end, startups may be highly tempted to stick together.
Not till death do them part, mind you, but at least for the medium term.
This may be the case with Rappi and Kiwibot. Since the robot delivery pilot was announced in mid-April, the Colombian unicorn had stated that if it was “succesful” it would further roll it out into other cities where it operates.
Although once again, solidifying its ties to Kiwibot may be a more strategic move in relation to controlling the last-mile delivery market over competitor, iFood.
They may even decide to diversify the products or services they share or explore completely new areas as a result of promising results and great teamwork.
As they say, it’s all about chemistry both within partnerships and with users.
Scenario #2: We are never getting back together
Sometimes, despite the best of intentions, things don’t play out.
coronavirus: tinder for startup power couples. but will they last?
" data-image-caption="coronavirus: tinder for startup power couples. but will they last?
" data-medium-file="https://i0.wp.com/contxto.com/wp-content/uploads/2020/05/NeverBackTogether.gif?fit=300%2C168&ssl=1" data-large-file="https://i0.wp.com/contxto.com/wp-content/uploads/2020/05/NeverBackTogether.gif?fit=498%2C279&ssl=1" decoding="async" >In startups’ case, it can be a matter of poor communication between teams when working together to integrate systems or during the operations themselves. Correspondingly, if these alliances prove to be more trouble than they’re worth, the parties may eagerly await the expiration date on the agreement to roll around to just end it.
But don’t expect the startups to openly state they’ve broken up. Blotched partnerships don’t make for the best PR…
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The union can also be terminated if startups realize that users’ responses weren’t what they expected. By that same token, they may also conclude that the partnership was far too contextualized to Covid-19 and no longer applicable (or profitable) with the new, post-pandemic reality. As a result, the alliance will be simply dissolved on good terms.
This may be the case for Urbvan and its ties to both Canasta Rosa and Jüsto. Simply put, Urbvan’s business model is centered around transporting passengers, not goods. Otherwise, it’s just an additional last-mile delivery startup with some very oversized vehicles.
Despite social-distancing, Urbvan’s value proposition is useful in densely populated areas, as is the case in Mexico City. Therefore, I’d guess it will steadily return to moving people about. If anything, upholding it may just uphold higher sanitation standards and offer free antibacterial gel.
- Related article: Latin American startups versus Covid-19
Another example is Nubank’s provision of “coronavouchers” through the Zee.Dog app, may be good to help pet owners and their furry friends. However, sustaining a freebie like that endlessly may not offer an additional benefit. Nor is it financially sound for Nubank.
In any case, Zee.Dog gains new users for its site, and Nu gets good press for being charitable. But PR for charity has diminishing returns, and unilateral gains aren’t how partnerships work, don’tcha know?
Scenario #3: Friends with benefits?
If anything, my money’s on a “neither here-nor-there” scenario.
Startup partnerships will experiment and closely monitor the impact of their alliance on their internal operations and users’ reactions.
Consequently, they’ll tread carefully as lockdowns relax in the respective countries where they’ve buddied up. If it doesn’t hamper their income or ops, and proves beneficial/profitable for both, they will continue collaborating for an indefinite period of time.
A duo that may fit into this scenario are EBANX and Cabify. The ride-hailing platform already offered users a parcel delivery service known as “Cabify Entrega.” However, Cabify’s team up with the Brazilian unicorn is connecting it with an array of many first-time small e-commerce businesses in need of logistics services.
As these business owners come to realize the need to be online indefinitely, they’ll continue needing help getting their goods to customers.
So both EBANX and Cabify will benefit through the crossover of their products and services. However, it won’t necessarily be an exclusive relationship. Nothing is to stop Cabify from independently carrying out parcel deliveries for e-commerce businesses that contacted it through other means. Likewise, EBANX is free to arrange its own logistics services.
However, the fact that any of the startups we’ve covered “got together” in the first place suggests that there was good chemistry between the pair prior to disclosing their partnership. Therefore, even if they “go their separate ways” in a post-pandemic world, they may continue to promote each other’s products or services.
And who’s to say they won’t team up again further down the line to tackle a different issue?
Related articles: Tech and startups from Colombia!
-ML
