The global agrifoodtech sector has been growing at a CAGR of 42% since 2016, and despite the pandemic, 2020 still became a record year for the sector with total investments globally exceeding USD 17 billion. While global startup hubs like Silicon Valley, London and Israel continue to dominate this sector, new cities are beginning to challenge these incumbents, including Singapore, Paris and Berlin – and in Latin America, Chile has also put itself forth as a strong contender, not only in categories like Food Delivery, Agtech and Next-Gen Food, but also in other areas like Consumer Tech.
TechLATAMAsia asked Sebastián Wilson, CEO and creator of OK to Shop, a Chilean foodtech start-up to share some of his insights as a foodtech entrepreneur in Chile.
The development of the OK to Shop app
OK to Shop is a mobile app that allows people to know – within just a few seconds – whether a product is compatible with their food restrictions or preferences (e.g. vegan, vegetarian, diabetes, celiac disease, allergies, kosher, halal, etc.).
The origin of this application is an experience I had when I bought an instant soup that was supposed to be a vegetable soup. However, I later found out that it contained chicken broth, which was not compatible with my diet as I am vegan.
Disappointed that I had inadvertently bought and consumed this product due to its unclear labelling, I set out to develop a solution to prevent this from happening again. I researched how relevant this problem was for other people and discovered some shocking figures: more than a third of the population in Chile and the world has some kind of dietary restriction (due to health, religion or lifestyle factors) and it is expected that in less than 10 years, half of the population will have some kind of dietary restriction.
For some, consuming a product by mistake could mean nothing more than a stomach ache, but for others, it could have fatal consequences or represent a sin. This confirmed to me that finding a solution to this problem was imperative.
While the incident happened at the end of 2018, it was not until March 2019 that I decided to dedicate myself to developing it fulltime. I incorporated the company in April 2019 and the app was finally launched in September 2019.
Due to the high penetration of internet-connected smartphones in Chile, having an app that displays the content of products seemed like an obvious solution. The principal challenge, however, would not be to develop the app itself, but to obtain all the nutritional information and data required for our app to be useful. Initially, we consulted various private and public institutions, but no one had a database with the level of detail we required, which made us question if we would ever achieve our goal.
Faced with this lack of information, we were confronted with two choices: cancelling the development or building the database we needed ourselves. We opted for the latter, as it would not only be useful for our app, but would also become our main asset, as no one else would have the level of nutritional detail that we would have for each product.
While the initial investment of time, energy and capital was large, this ultimately proved essential to monetising our work, which we did by selling that data to third parties (for use in their own apps or websites), which allowed us to deliver a free yet high-quality service to our users.
This free service also brought with it an unexpected benefit: the users themselves would end up becoming the main contributors of new product photos, which allowed us to increase the breadth and depth of our database even faster, thus attracting more users and generating a virtuous cycel.
Finally, despite the fact that several companies showed significant interest in using our information to enrich their ecommerce product sheets, the sales process was extremely slow due to factors such as the social situation in Chile and the health crisis following COVID-19. Therefore, one of our biggest challenges was to keep operating for almost 18 months with no income other than our own savings and loans from family and friends.
The business model
Our app is 100% free for users and we do not ask for any personal data to use it. However, our community of users is very active in sending us photos of products for us to add to the database so we have built a repository of more than 30,000 products (from Chile and Peru for now) that have been fully analysed by nutritionists and certifying entities. We currently sell this information to supermarkets (such as Walmart Chile, Cencosud, SMU and Tottus) and other e-commerce companies to enrich the product sheets they sell on their sites. This saves them a lot of time analysing that information themselves; they know they will always have it up to date; and, as a result, they provide an unbeatable shopping experience for their customers.
Today we have more than 65,000 users, mainly from Chile and Peru, but we are in an expansion phase so we hope to be in Colombia, Mexico and Argentina in the coming months.
The level of food and nutrition education in Chile and the famous food warning labels
The level of food education in general is very low, not only in Chile but also all over the world. There are many myths about food, people do not know the origin of many ingredients, and those who live in cities abuse ultra-processed foods. In that sense, I think the law on the use of warning labels has been very good. Although there are opportunities to improve it, our evaluation of it is extremely positive (and other countries certainly agree, since it has been replicated in places like Mexico).
Clearly, in some food categories, it has not had a major impact (people are not alarmed to see a “high in sugar” stamp on a chocolate or “high in sodium” on a packaged pizza), but in others, such as cereals and snacks for children, its impact has been felt.
What is relevant about this law is that it not only implements the famous black seals, but also prevents the use of graphics or cartoons in publicity for foods targeted at children as well as commercial establishments close to schools from selling ‘unhealthy’ food, so its scope is much more profound than it seems. It will probably still be some years before we can evaluate with greater certainty the benefit it has had on public health.
Changes in the world of entrepreneurship in the last 3 years
I think the main change, at least locally, is that the first “unicorns” have appeared, which has led many entrepreneurs to see that it is possible to build giant companies in our country and to dare to dream big.
This same fact has also prompted local venture capital funds to dare to bet on the region’s companies, as they know that their rewards can be large; in other words, they are now afraid to regret having missed out on the next Latin American unicorn in its infancy.
Tips for entering the LATAM market
I think the main advice, which in my opinion applies everywhere in the world, is to know whether the solution you are proposing really solves a problem relevant to people. It is possible that some things that are a problem elsewhere may not be so much of a problem here, or we may have a different way of solving it.
Secondly, finding people, companies or governments willing to pay for such a solution is important, because monetising in LATAM is more challenging since there are not as many resources as in other parts of the world, and a high percentage of the population is still unbanked.
As a final piece of advice, it is important to bear in mind that, no matter how many common elements Latin American countries share, we like to be spoken to in “our language”, using country-specific idioms and ways of speaking. Personalising and adapting content is vital to achieve greater market adoption and penetration.