Floki, a marketplace that connects restaurants to suppliers, has just closed its first funding round, a BRL 50 million Seed, one of the largest Seed rounds ever raised by a Brazilian startup – last year, fintech TruePay took the title after tapped BRL 45 million. Floki’s funding round was led by NFX and Valor Capital Group funds and followed by Latitud, Iporanga, and angel investors such as Ralf Wenzel (founder of JOKR) and Andres Bilbao (founder at Rappi).
“The funding round size says a lot about the opportunity that Floki is addressing. There is a huge gap when it comes to digitization and the use of intelligence in the buying process for food sector companies. So the opportunity is there, it was much more a matter of understanding what is the right approach and the right team. Once we were able to set a growth path and add value to the operation, the funding made sense. I think we were very happy in that regard,” said Luigi Rodrigues, co-founder of Floki.
Founded in March 2020 by Rodrigues and Marcelo Espiga, the startup works as a marketplace to connect foodservice businesses – from restaurants and pubs to dark kitchens and dark stores – to suppliers of all kinds of products, such as food, beverages, and cleaning items. According to the startup, restaurants spend about two hours a day searching for products, pricing with suppliers, or managing the logistics of order delivery.
“We want to reduce the friction and inefficiency of the buying and selling flow for both sides of the chain, the retailers and the suppliers,” Espiga said.
And how is it works? Floki’s ace in the hole is the in-house developed platform that uses artificial intelligence to automate the buying and selling process for its customers.
Through a monthly subscription model starting at BRL 150, the startup gathers and analyzes data provided by customers to understand the demand, periodicity, and ideal purchase logistics. From there, Floki finds the best prices and makes shopping recommendations from a base of more than 700 suppliers, reducing the cost of purchases by up to 30%. The full subscription plan also includes services such as monitoring inventory and delivery, payment planning, and post-purchase support. Delivery and payment are handled directly with the suppliers.
In two years of operating in São Paulo, Floki reports a 20-fold growth and an average transaction volume of BRL 3 million per month. The startup does not disclose the total number of companies served but states that the clientele is made up of businesses that buy between BRL 80,000 and BRL 200,000 per month via Floki platform.
The newly injected capital will be used to scale up operations, customer acquisition, and increase the technology and product teams to improve the platform’s artificial intelligence and the features offered to customers. Floki’s goal is to become the largest operational buying system for retailers and suppliers in the foodservice sector, not only enabling the purchasing process but also offering access to financial products (Floki wants, for example, to bring the checkout procedure into the platform) and insights into buying trends. Expanding the value for suppliers, by the way, is one of the main focuses in 2022.
Trying out the hypothesis
The embryo of Floki emerged almost ten years ago when Rodrigues worked at McKinsey consulting firm and developed a series of projects focused on the retail and consumer goods industry. “I had a lot of contact with small pubs and restaurants and saw the dimension of the buying issue. It was one of the main bottlenecks of the operation and was far from being solved,” he said.
To mature the idea and build Floki’s business and value proposition, Rodrigues decided to test his hypothesis hands-on: for a period, he was the buyer of five restaurants in São Paulo city to identify all the inefficiencies in the purchasing process and find out what solutions he could develop to both improve and add value to it. “Everything we do today is coming from the learnings of that experience. I think the best way to define ourselves is as a kind of B2B Mercado Libre for the foodservice segment,” he said.