Peruvian online supermarket startup Favo has officially announced in a LinkedIn post the closure of its operations in Peru, ending a five-year journey that included an unsuccessful expansion into Brazil. Despite an ambitious start and significant funding rounds, including a $35 million seed round and a $26.5 million Series A led by Tiger Global, Favo struggled with financial and market challenges, leading to its shutdown on February 29, 2024.
Favo’s innovative platform was designed to empower entrepreneurs by leveraging social commerce online, inspired by successful business models in China. However, its venture into Brazil, led by cofounder Marina Proença in 2020, was short-lived, with operations ceasing in June 2022 due to growing economic difficulties and a lack of further investments. Despite initially serving over 170,000 customers in Brazil with a promise of 24-hour delivery and no minimum order requirement, Favo could not sustain its operations amid increasing interest rates and cash flow challenges.
The decision to cease Favo’s operations was announced on LinkedIn, expressing regret and offering over 90 job recommendations to assist its employees in finding new opportunities. Favo’s closure highlights the competitive pressures from traditional supermarkets and delivery platforms like Rappi and PedidosYa, which have expanded their services to include similar product categories. The end of Favo marks a significant moment in the Peruvian startup ecosystem, reflecting the complexities of competing in the rapidly evolving online grocery market.
