Riding the Entrepreneurial Roller Coaster
By Larry Lindner
May 2024
By the time Guilherme Bonifacio and Diego Libanio joined forces in 2019, each had already proven his entrepreneurial mettle. Guilherme co-founded iFood, Brazil’s largest online food ordering and delivery platform (akin to DoorDash, but with an 80% market share), while Diego co-founded Ze Delivery, Latin America’s largest beverage delivery service.
But timing worked against their efforts to save their joint venture, called Mercê do Bairro (Portuguese for “Neighborhood Market”). Mercê do Bairro was a digital wholesaler that aggregated the buying power of more than 1,000 mom-and-pop grocery stores in São Paulo, Brazil’s largest city.
Having raised $10 million in their Series A effort, the pair was poised to scale the company to a level that would give them the leverage to improve margins and create profitability. But right at that critical juncture, interest rates began rising precipitously. Venture capitalists became jittery, and the lack of liquidity made it impossible to turn the corner.
The two considered every option — improving efficiencies, using the $6.5 million they still had on hand to buy another company that had better margins — but nothing was going to work.
Naturally, both are disappointed. “The business model was great,” Diego says. “But when market conditions change, you need to rethink. Does this make sense?”
Guilherme says that going forward, he will choose a business model that doesn’t start out with such close margins, or recognize up front that market fluctuations may preclude an influx of capital down the line.
It’s not either man’s first rough patch. Guilherme recalls a point when he and his co-founders were trying to get iFood off the ground, and with only two months of cash runway, he was forced to lay off 30–40 percent of the workforce. “So many times we were afraid,” he says. Before Diego found success, he had to walk away from two startups that he couldn’t make sustainable.
"It is better to regret things that you do than things that you don’t do."
The men see such difficulties as part of the process. “Nobody has success on a straight line,” Diego says.
Adds Guilherme, “Shutting down the company is how most startups end. You have to be flexible and willing to take risks. It is better to regret things that you do than things that you don’t do. You also need to be stubborn sometimes. It’s like mining: When you are looking for a diamond, you don’t want to give up when you are just 5 or 10 centimeters away from it.”
True to their spirit of entrepreneurial resilience, both say Brazil is ripe for startup entrepreneurship. “If you are operating here,” Diego says, “for many businesses you can kind of see the future with a crystal ball. You can see trends in business models in the U.S. and Europe, and so you have an understanding of what trends are coming and you try to develop something.” To that end, he says his next venture will have something to do with AI. Guilherme, on the other hand, says he’s going to pause and “make better decisions by taking time to think.”
Different approaches — but no doubt, both will bear fruit.