Andres Sucre, Co-Founder of Mexican online bus booking engine, Reserbus, spoke with LAVCA about the opportunities and challenges for creating and growing a business in Mexico, including raising capital and finding the right talent.
LAVCA: Please summarize your business. Where is Reserbus headquartered? When and how did the company get started?
Sucre: Reserbus is an online booking engine for bus tickets in Mexico. The limited travel alternatives (rail and air) in the country make bus travel the main method of transportation. In 2013, 550M passengers traveled by bus in Mexico with gross sales of 10+Bn USD. This is a big number when compared to the 58M passengers who traveled by air. Around 90% of bus tickets were bought offline in the terminal counters, where there are long wait lines, no seat security and a lack of transparent information to compare travel options.
Reserbus launched in December 2013 with two bus lines and a small dedicated team. Currently, we work with 36 bus lines that cover 12K routes between Mexico and the U.S. In terms of demand, we grew 90% MoM of ticket sales in 2014. Last year we sold almost 50K tickets for gross bookings of close to $2M USD.
The company currently has two offices; one in Mexico City (business) and another in Monterrey (tech).
LAVCA: What is your background and the background of the other founders? How did you end up working together to found Reserbus?
Sucre: We are three co-founders in the company: Adrian Cuadros, Sebastian Gomez and myself.
Adrian Cuadros: He is Bolivian but moved to Mexico almost 10 years ago to pursue his Computer Science degree in Tech de Monterrey. He has developed his career in building technology platforms in Monterrey. Before Reserbus, he was a founder of Rutanet, a platform that connected trucks with cargo in Mexico.
Sebastian Gomez: Colombian born. He studied Industrial Engineering and Economics in Renseleer Polytechnic Institute (RPI). Sebastian went on to become a Management Consultant at Accenture, where he focused on Financial and Technology projects. Before Reserbus, Sebastian completed his MBA at MIT.
Andres Sucre: Venezuelan. Similar to Sebastian, I studied Management Engineering at Worcester Polytechnic Institute (WPI). I later spent 4 years at Deutsche Bank in NY, focusing on portfolio management for their Latin American Private Wealth Management division. Before Reserbus, I was also completing my MBA at MIT.
Sebastian and I began looking at potential e-commerce business models early into our MBA. We spent our summer internship in 2012 at Linio (Rocket Internet company), where we got a sense of the local market environment and its opportunities. When we went back for our last year of the MBA, we decided to pursue Reserbus as a business idea. Shortly after, we started working on an initial product prototype with Adrian.
LAVCA: In your experience, what are the biggest opportunities and challenges for creating and growing a business in Mexico?
Sucre: The biggest opportunity that we see in Mexico is the market; there are 110 million Mexicans that are improving their quality of life everyday. Mexico is seen as the sleeping giant in e-commerce in Latin America but a lot has changed in recent years. The entry of international players such as Amazon and Just-Eat in the past year, the evolution of the Venture Capital landscape, growing Internet & Mobile penetrations, all form part of an improving trend that will bring interesting opportunities for years to come.
However, there some clear challenges as we are still in the early stages of development. There are a number of industries where there is high concentration of players that control the market. In terms of the funding environment, even though it has improved dramatically, there are still gaps in the market, particularly for companies that need 1M-10M USD in funding. Finally, structural challenges exist in payments, logistics, fraud rates, and many others that should improve in the next few years.
LAVCA: What is the talent pool like in Mexico/Latin America for a technology startup? Are there certain roles that are harder to hire for than others? Why?
Sucre: The talent pool for tech startups in Mexico is improving. There are a number of strong universities like Tech de Monterrey and IBERO that are training qualified professionals for the market. There are also strong graduate programs like MIB (Master in Internet Business) and IPADE, which are having a good impact, particularly in the entrepreneurship and technology industries. Finally, there is a positive inflow of international entrepreneurs and talent coming to Mexico from abroad.
The roles that are harder to fill in tech startups are the ones that are most specific in terms of responsibility. In marketing and technology development, there is a big gap of technical talent to fill the necessities of growing startups.
LAVCA: Have you received any financing to start/grow Reserbus?
Sucre: We raised an initial round ($750K USD) with eight angel investors from Mexico, U.S. and Europe. We focused on having value add investors that have experience, not only investing in tech startups, but also are available to dedicate time out of their busy schedules to help create value for the business. We have been lucky to have hands-on investors from the beginning!
When we started out, the seed investing landscape in Mexico was a lot less developed. Today, there are a number of resources of funds – angel investors, accelerators – that are helpful for entrepreneurs in their early stage of the company.
LAVCA: Do you have plans to raise capital? How much and for what? Please describe your ideal partner.
Sucre: We are currently closing our fundraising process at the moment. The details will come out soon.
We have applied the same approach in this round since the beginning; we look to have investors that are willing to take time to help us grow the business in the right way. We also look for complimentary skills within our investors. For example; one of our investors may be an expert in the travel space, and another investor can have strong experience growing tech platforms in Mexico. The combination of having these complimentary skills can be quite powerful. The most important value for us as a company is that investors believe in the company’s vision and are involved in supporting us to get to the next level.
LAVCA: Do you have any advice for future investors interested in Reserbus?
Sucre: Even though we are well funded at the moment, we are always open to discussing opportunities with potential investors. As mentioned before, our interest is that investors are active in adding value to the business through their experience and connections. In addition, one common trait that our investors share is the belief in our vision to build a great company that is helping travelers improve their experience through technology. It is a massive market with a lot of potential for disruption and we will need all the help we can get to make it a reality!
LAVCA: Where do you see your company in five years? Any plans to expand internationally?
Sucre: In five years, we expect to be doing the same things we have been doing to date, only better and hopefully bigger. The focus is to create great products/solutions that enable travelers to have a better experience.
Right now our objective is to continue and consolidate Reserbus as the leading booking platform for bus travelers in Mexico. We still have a lot of work ahead of us as we incentivize the transition from offline to online bookings.
In the next five years, we believe that there are a number of opportunities that will be important to consider as we grow the business. These include mobile, b2b, internationalization and other travel verticals. However, we will monitor all of these opportunities closely with the trends we see in our users.