Daniel Undurraga never thought he would sell even one Latin American company to a company in the US market, but with the recent US$225M acquisition of Cornershop, a grocery-delivery app he has officially sold two startups to US companies. His first startup, Needish, was the basis for Clan Descuento, a Chilean Groupon clone that was acquired by Groupon in 2010. Clandescuento's acquistion was before most people in Chile had heard of startups!
Daniel is a lifelong entrepreneur with his share of failed projects, but ever since he and his business partner Oskar Hjertonsson found their niche in Latin American e-commerce, they’ve become an example for the whole ecosystem.
I sat down with Daniel on this episode of Crossing Borders to talk about the Latin American startup ecosystem, living and working across borders, and advice for founders who are launching and scaling in Latin America. We also discuss the backstory behind Cornershop’s decision to not raise capital in Chile and their experience raising money from funds across in Latin America.
Daniel Undurraga knows what it takes to scale a company from a small country like Chile to the rest of Latin America. Cornershop launched in Chile and Mexico simultaneously because the founders realized dominating only the Chilean market wouldn’t create a company with scale. Rather than consolidating in their first market, then expanding, Cornershop took a global approach from the first day by creating processes that were “multi-currency, multi-language, and multi-time zone.”
For startups just starting to consider scaling, Undurraga suggests incorporating outside your home country, such as in the US, UK or Cayman Islands. It can make expanding easier, plus make you act like a global startup from the beginning. Check out the rest of Daniel’s tips for scaling in the Latin American market in this episode of Crossing Borders.
Having already closed an acquisition from Groupon in 20010, Daniel knew how complicated selling Cornershop could be. The whole process took almost a year and they couldn’t tell anyone about what was happening until they closed the deal.
Find out how Daniel handled the Cornershop acquisition, and why the team continues to operate independently, in the rest of this episode.
Both Cornershop founders took to Twitter after the exit to discuss the role of Latin American funds in supporting Cornershop. In particular, many people speculated why Chilean VCs hadn’t invested; their only Latin American VC investor was Mexican firm ALLVP. To learn more about ALLVP, you can listen to my recent podcast with the fund’s cofounder, Federico Antoni.
Daniel’s explanation for the lack of Chilean investment is one that we discuss frequently at Magma Partners. Between timing, CORFO restrictions and mandate, most Chilean funds would not have been able to get into the deal. However, Cornershop’s and Clan Descuento’s first angel investors were the founders' Chilean friends and family. Learn more about how Cornershop’s founders have handled this debate since the acquisition in this episode of Crossing Borders.
[1:21] - Nathan introduces Daniel Undurraga
[2:02] - Inside the acquisition process
[5:07] - How has living in different places influenced your life?
[6:06] - What do you see in the Chilean ecosystem now?
[9:14] - Did you always know you wanted to be an entrepreneur?
[12:00] - What was it like trying to raise money in 2007 in Chile?
[14:12] - The background on Needish
[21:02] - Why did you decide to go to San Francisco?
[24:58] - VCs in LatAm or US?
[26:22] - What was your experience with Chilean funds?
[28:00] - Advice for founders on raising money
[29:50] - How can copycat companies be successful in LatAm?
[31:00] - Why launch in two countries at once?
[32:40] - Stay in one country or target the region?
[34:15] - When did you know the company would succeed?
[36:00] - If you could make one change to the LatAm ecosystem, what would it be?
[38:10] - What’s next for you and Cornershop?
[39:15] - Daniels advice to his younger self