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Rappi logo

Rappi, an on-demand delivery startup operating in Latin America, this week laid off hundreds of employees, Axios has learned.

Why it matters: On-demand delivery of meals and other products is coming under increased financial pressure, as no one has managed to make the model profitable.

By the numbers: Rappi told a Brazilian media outlet that it's laying off around 6% of its workforce, which would come out to over 300 people.

  • Rappi has raised nearly $1.5 billion in venture capital funding, most recently at a $3.5 billion post-money valuation in a SoftBank-led deal. Other investors include Andreessen Horowitz and Sequoia Capital.
  • The startup is one of several SoftBank-backed companies to endure layoffs recently, including pizza-making robot company Zume.

What they're saying:

"In 2020 we have decided to double down on our technology team and to focus on our user experience. In order to achieve this vision, we made the decision to reduce some areas and increase the size of others to achieve our goal for the present year and deliver an even better experience for our users. In total, the number of people who were impacted by the decision across [Latin America] was about 6% of the people in the company. This decision is not a reflection of our growth plans, and we are in fact actively hiring a large number of people in our areas of focus for 2020."
— a Rappi spokesperson

The big picture: On-demand delivery companies, including DoorDash, Postmates and Uber Eats, have become notorious cash-burners, using venture capital to subsidize their losses.

  • GrubHub has generated past profits, but most of that was as an enabling platform through which restaurants themselves provide the meal deliveries. The Chicago-based company is begrudgingly switching to a newer model because of competitive pressures and is reportedly seeking a buyer.

Bogota-based Rappi operates in nine Latin American countries, including Colombia, Brazil, Mexico, Peru and Argentina.

Go deeper

Anti-Trump lawmakers' private security expenses ballooned after Jan. 6 riot

Sen. Mitt Romney (R-Utah) speaking to reporters on Capitol Hill on April 14. Photo: Kent Nishimura/Los Angeles Times via Getty Image

Members of Congress are spending tens of thousands of dollars on personal security for them and their families in the wake of the Jan. 6 riot, according to an analysis of first-quarter Federal Election Commission reports by Punchbowl News.

Between the lines: Private security expenditures were especially common among anti-Trump Republicans and high-profile Democrats who earlier this year voted to impeach and convict the former president for inciting the deadly Jan. 6 Capitol riot, signaling they fear for the safety of themselves and their families.

1 hour ago - World

Jimmy Lai among Hong Kong pro-democracy leaders sentenced to prison

Students standing under a banner during a flag raising ceremony on the first annual National Security Education Day in Hong Kong. Photo: Vernon Yuen/NurPhoto via Getty Images

A Hong Kong court sentenced a group of the city's most prominent pro-democracy activists to up to 18 months in prison Friday for organizing a massive unauthorized protest in August 2019 that drew an estimated 1.7 million people, AP reports.

Why it matters: Critics say the sentences send the message that even peaceful pro-democracy activism will be severely punished. They mark a continuation of Beijing's overhaul of Hong Kong's political structure, designed to crack down opposition to the Chinese Communist Party.

Local news moves to the inbox

Illustration: Annelise Capossela/Axios

A slew of new companies are launching platforms for local newsletters, a shift that could help finally bring the local news industry into the digital era.

Driving the news: Substack, the email publishing platform for independent journalists, on Thursday announced a new local news platform.