In Summary
The Peruvian startup turned the lights off and exited countries where it was operating including Mexico, Colombia, Chile, and Peru. After six years of operations, the company will be formally over on June 20.
Although Mi Media Manzana was the first Peruvian startup to raise venture capital funds, money still ran out. Liquidity issues, in addition to very low user-retention rates, were the main causes for the demise.
“We ran out of cash before reaching our break-even point,” said CEO Pedro Neira in an interview with Semana Economica.
Originally, the founders aimed at a 40 percent retention rate in any of the three versions of the product to become cashflow positive. In the end, though, the 32 percent it managed to hold on to didn’t suffice in keeping the ship afloat.
In-Depth
“We were looking to increase the retention rate to increase the volume of active users,” said Neira. “Freemium models work thanks to the percentage of paying active users. In order to be successful, though, we needed at least 2 percent of active users to actually switch over to the paid version, but we were in the 0.5 to 1 percent range.”
According to the founder, the timing might not have been his company’s greatest asset. Low banking penetration and an immature Latin American dating market were challenges to overcome after international expansion. Payment options and alternatives were also huge factors to overcome so people could start paying seamlessly.
Founded in 2013, Mi Media Manzana aimed to tackle the dating market from a different perspective. In other words, it sought to foster legitimate relationships. Unlike Tinder and its alleged high rates of cheating, eHarmony served as the inspiration for the startup.
In total, Mi Media Manzana managed to acquire 2.5 million users during its six years of operation. At one point it was also Latin America’s most downloaded Google Play dating app. The startup’s main mission was to “turn single people into happy couples” and help them find a true, meaningful relationship.
After many pivots and change of directions, the company seemed to be doing well. They first transitioned from a premium to a freemium model, one of the company’s first milestones. Then, it scrapped its desktop and iOS platforms to focus solely on Android since 70 percent of users were part of that system.
Mi Media Manzana also raised US$2 million in four different funding rounds, the first one worth US$500 thousand from an angel investor. Eventually, it started experimenting with predictive algorithms and data science in order to enhance its product’s customization and UX.
Neira believes that risk is inherent to startups and entrepreneurship in general, but he has no remorse, particularly because his enterprise operated under a strong business ethics playbook.
“In the industry, you meet people who use fake profiles to increase profitability,” said Neira. “We decided never to develop those practices.”
Users won’t be able to access the app after June 20. Before then, Mi Media Manzana is encouraging subscribers to request alternative means of communication in case anyone is still mingling with their potential “other half.”
However, the startup’s social media accounts will still be publicly available. It invites users to share positive experiences using Mi Media Manzana on the company’s Facebook timeline. Those who have already made payments can also obtain a return by sending an email to [email protected] until June 30.
-VC
