Rappi mafia: How a delivery startup took over Colombia’s tech scene

Rappi mafia: How a delivery startup took over Colombia’s tech scene

At the start of this year, Ángela Acosta was leading supermarket business units at Rappi, a last-mile delivery startup that became Colombia’s first billion-dollar unicorn. Three months later, the former business unit head of supermarkets became the CEO of Morado, a beauty marketplace she had been working on for five months while still at Rappi, with the CEO’s blessing. Since its launch in March, the same month she left Rappi, her team has raised $5 million — a substantially larger sum of funding than many Colombian startups receive at that stage.

Morado is now one of more than 100 startups forged by former Rappi employees and executives. Acosta’s venture, like approximately half of these startups, received investment from her former bosses and colleagues, joining the ranks of the Rappi “mafia.”

Rest of World spoke to 13 former Rappi employees who are now entrepreneurs, as well as investors and analysts, who say the company has used its unchallenged size and clout to enable its alumni to become new founders, injecting not only money but also a sense of trust that had long been lacking in Colombia’s business scene. Local Colombian angel investor Sergio Zúñiga Bohorquez said that if he were investing in a Rappi mafia company, its founders’ experience at the unicorn would be a “green flag, for sure.”

Startup mafias, like Rappi’s, aren’t new. The term dates back to 2007, when Fortune magazine used it to describe a group of approximately 300 former PayPal employees, according to VC fund Marathon Ventures, who went on to found a number of its own companies. Data from Marathon Ventures shows that the Rappi mafia has created more companies in less time than other Latin American unicorns, including Brazil’s Nubank and Gympass and even U.S. companies, such as SpaceX and Netflix. Founded in 2015, Rappi built its mafia in less than seven years — under half the time it took PayPal to build a similar network.

Without the competition that unicorns in Brazil or Argentina face, analysts say the Rappi mafia has turned into a gatekeeper within the country’s tech scene, creating a rosca (a group of people with power and influence acting for their own benefit) that makes it more difficult for startups that are not part of that club to access funding, talent, and mentorship. Colombia’s smaller market, compared to the likes of Brazil or Mexico, and limited capital mean Rappi acts as a “big fish in a small pond,” according to Erick Behar-Villegas, a professor of economics specializing in Latin America at Berlin International University. “To compete against someone who already has all the network is really complex,” he said.

Some who worked at the startup in its early stages argue it was an intense bonding experience — one alumnus recalls sleeping in a conference room together with the CEO — that created deep connections with their colleagues and bosses. Another former employee, Yerson Cacua, Rappi’s former VP of software engineering, says colleagues and their bosses mentored one another, even after they left Rappi.

These experiences contrast with those of a current Rappi data analyst who asked to remain anonymous for fear of losing their job. They told Rest of World that the intensity and demanding nature of Rappi’s work environment does not allow nonexecutive employees enough time to even think about starting their own ventures.

Rappi founders Simón Borrero, Sebastián Mejía, and Felipe Villamarín rejected several interview requests from Rest of World. A Rappi spokesperson, who asked to not be identified by name, said in a written statement: “We believe our culture incentivizes and inspires an entrepreneurial mentality.”

Despite its approximately 3,500 full-time-employee headcount, the company is run by a group of Colombian friends who met while studying at the same university, and this small-town feel runs throughout its interpersonal network of trusted friends and family members.

Close business relationships are especially crucial in Colombia, where, according to a 2018 World Values Survey, more than 95% of people believe they need to be careful about trusting people. For example, Rappi mafia companies share access to talent within their circles, “which is the most scarce resource,” said Enrique Villamarín, co-founder of Tul, a Rappi-mafia-funded supply chain logistics developer, and the brother of Rappi co-founder Felipe Villamarín.

If Rappi alumni founders hear of local layoffs, they will offer top talent to other mafia members on a WhatsApp group, which — despite members’ protestations against the term “mafia” in public — is called “Rappi mafia,” followed by three rocket emojis.

Many ex-Rappi employees turned founders also received investment from other Rappi founders. Villamarín says he invested between $50,000 and $100,000 in a number of Rappi mafia companies. Recently, mafia members invested approximately $250,000 in Morado, making up 5% of its pre-seed funding round, its founder Acosta said.

“We call it the founder round,” said Daniel Bilbao, co-founder and CEO of fraud-prevention startup Truora, which received funding from Rappi founders, one of whom is his twin brother, Andrés. By creating a group that invests in and supports one another, the founders create a “healthier ecosystem,” he said.

But beyond a healthy ecosystem, “founder round” deals can pay off handsomely. For instance, Bilbao said he gave the Rappi investors discounted rates when they invested in Truora. Zúñiga, the angel investor, agreed that this was a pattern, saying that in Rappi’s case, “most of the early investors were local angels that entered the round at a very good price.”

Andrés Gutiérrez, co-founder and CEO of Tpaga, a Colombian payments provider that is not part of the Rappi mafia, believes the mafia network has not affected other startups’ access to funds so far but worries it could affect founders as investment dries up. “If we were to compete against Rappi mafia [startups], they might have a plus,” he said.

As a low-funding scenario becomes increasingly likely, Francisco Noguera, president of Innpulsa, Colombia’s government agency for innovation, believes his agency should make these circles “more accessible.” Rappi is running an internship initiative to facilitate entry into the ecosystem, and Innpulsa is exploring ways to support it.

Noguera believes the task now is to breed other success stories like Rappi’s, but the bonds many of its alumni formed in the company’s early days don’t appear to be easy for newcomers to replicate. Even though Acosta is now focusing on growing her new venture, Morado, she is still loyal to the mothership. “You never really leave Rappi,” she said.

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