VEMO: The Vertical Integrators of Clean Mobility in Latin America
Welcome to Scenius Deep Dive Series, where I tell the story of promising Latin American startups. Today I am diving into VEMO, a Mexican cleantech startup revolutionizing mobility.
Strolling through Mexico City, you might've noticed something among the usual traffic chaos - sleek white futuristic BYD D1 mini SUV with sliding doors. Maybe you even got picked-up by one when ordering an Uber to go to your favorite tacos place. (Tacos El Güero in San Rafael neighborhood, you can thank me later).
Next time it happens, enjoy the ride knowing you’re part of one of the most disruptive startups in the region. If you happen to be with a friend, feel free to share the story of VEMO with them.
When the copycat model doesn’t work
VEMO is a Mexican startup with an innovative model that integrates the entire clean mobility ecosystem.
That’s the simplest one-liner I could come with. Describing VEMO is not an easy task, and I can feel the pain of the VEMO team when they have to pitch it to their tias at a family dinner.
Unfortunately (or should I say, fortunately), VEMO is not a copycat of a successful startup from the US or Europe. So the Stripe for Latin America, the Uber for EV cars or even the Tesla of Mexico doesn’t work here. Its complex and unique business model blends electric vehicles in ride hailing platforms (Uber, DiDi), a corporate fleet end-to-end electrification solution, and an EV charging network business.
All of that, done in a market way behind most countries in terms of renewable energy and electric infrastructure investment.
You know how every wild startup story has those slightly mad geniuses behind it? Well, VEMO's got two: Roberto Rocha and Germán Losada. Buckle up, because their story is about to take us for a ride.
Although both Roberto and German came from backgrounds in Private Equity, they had never worked together before. They were introduced through former colleagues and quickly connected over a shared vision: to build and lead a business that not only helps solve an important problem but also has the potential to scale up significantly and sustainably. With a genuine passion for climate and complementary skillsets, they found a strong foundation for collaboration.
Allow me to start with Roberto Rocha, Co-Founder and CEO at VEMO. Roberto grew up in the Veracruz region of Mexico. His father had an accounting and tax consulting firm, and over time became a serial entrepreneur. At just 12 years old, Roberto recalls accompanying his father on his regular visits and meetings with his business partners. During these trips, he had the opportunity to understand firsthand the challenges of entrepreneurship, while leveraging his father’s experience. He witnessed firsthand the difficulties of running a business, yet something within him became captivated by the challenges and the excitement of it all… with the seed of entrepreneurship being planted in him.
When the time came to choose university, he went to study at ITAM, a prestigious institution in Mexico City known for its academic rigor. Specializing in finance, he connected his interest in businesses with finance, realizing the latter is an important enabler for business (raising equity and debt, M&A). And decided he wanted to focus on corporate finance right after graduation.
He began his career in corporate finance at a local investment bank, quickly realizing that to play in the major league, he needed to move to New York. He joined UBS’ Investment Banking division in New York City, and after an intense period, he decided his next move was to pursue an MBA at NYU Stern. Armed with his MBA, he joined JPMorgan's Industrial & Transportation US Investment Banking team and was involved in several multi-billion transactions (here’s where he first got close to the transport sector!). After several years immersed in the fast-paced life of New York, he chose to refocus his career in his homeland, returning to join Morgan Stanley's Mexico team.
Later, after a long and successful career in banking, Roberto was ready to move onto the buyside, and joined Temasek to build from scratch the Spanish Latin America presence. For those unfamiliar, Temasek is a top-tier global investment firm headquartered in Singapore, managing a portfolio valued at US$390 billion—making it one of the largest investment firms in the world. During his 13-year tenure, Roberto led more than US$1 billion in investments, through the creation of new platform companies and the scale up of growing businesses across multiple sectors, including financial services, consumer and retail, healthcare, telecom and technology.
Around that time, he sat in the Investment Committee of Nazca, one of the top VC funds in Mexico. Plus, he began investing as an angel, providing seed funding to several companies, including Financiera Contigo, where he played an active role in its creation and growth, helping it become one of the three largest microfinance group lending companies in Mexico, with over 3,000 employees and hundreds of thousands of underbanked female clients. This experience was a pivotal moment for Roberto, inspiring him to realize that he not only wanted to create new businesses but also to ensure they had a meaningful impact. Ultimately, this played a big role in his feet getting itchy and, a few years later, decided it was time to take a leap of faith.
Now it’s time to talk about Germán Losada, Co-Founder, Chairman and COO.
Taking a quick scroll through Germán Losada's LinkedIn makes you a) feel you haven’t done much with your life, and b) realize that if there’s someone capable of such an ambitious project, he’s certainly one of the few people on this planet to make it happen. This is a guy that, at the age of 12, went against his father’s will (and behind his back for several months) to change school, searching for the best education possible to become his best version.
After graduating from the University of San Andrés in Argentina, Germán joined the investment banking division of Goldman Sachs, first in Buenos Aires, then in New York City working within the Global Natural Resources team, where he worked on multi-billion cross-border M&A and financings in over 10 countries. From there, he decided to move to London to work for First Reserve Corporation, a global private equity investment firm exclusively focused on the energy sector, with US$32 billion AUM.
He would later join Riverstone’s European team, another global private equity firm that invests in the private markets primarily within energy, power and infrastructure and manages over US$45 billion of capital, where he learned from many of the energy and power global heavyweights, including Lord Browne, Miguel Galuccio, Chris Hunt, and Jim Hackett. But hold on, we’re now coming to the best part.
At Riverstone he decided to come back and be part of the founding team in LATAM, raising US$2 billion in just 4 years, plus creating one of the largest energy and infrastructure portfolios in the region (including companies such as Sierra, who made a massive offshore oil discovery with US$30 billion in royalties for Mexico, or Vista, one of the few successful SPACs globally, 5x up in stock price and >US$1 billion EBITDA… in Argentina!). He ended up leading the decarbonization growth equity and infrastructure investment efforts in LATAM, developing the largest solar PV distributed generation and storage play (Energia Real) and one of the largest utility-scale renewable portfolios in Mexico. German has a particular expertise in creating companies from scratch, both organically or through buy-and-build strategies. Coincidence? I think not.
Obviously, one of these companies was VEMO, where, tired of cutting the umbilical cord every time he created a new company, he took the leap, left Riverstone, and dedicated all his time and focus on VEMO as Co-Founder, Chairman and Chief Operating Officer.
Both Roberto and German had a strong track record building new companies and supporting businesses to scale up fast and healthily. However, their complementary industry backgrounds proved to be a critical edge for the creation of an electromobility ecosystem play, with both B2B and B2C exposure, but also with the need of expertise in financial services, technology, power infrastructure and hard-core operations. All this said, they believe that what made the biggest difference was the fact they shared similar values, which transpired in a strong culture, with an obsession for winning, surrounded by people “with their hearts in the right place”. A Mexican and an Argentinean… coming from the two extremes of LATAM, partnering up for a historical ride against all odds.
Breaking free from the golden cage
What drives two successful men to depart from dream jobs and leave behind their comfort zones? A crystal clear trend and a deep sense of responsibility for the planet and its inhabitants.
Working in today’s most sought-after investment firms, Roberto and Germán had a front-row seat to the latest trends in the world. The climate and electromobility industry growth globally was one of those trends, but Mexico was seriously lagging behind the rest of the world. After careful analysis they found out that the main reasons were, a) limited government support with no subsidies for EVs, b) a lack of charging infrastructure for EVs, and c) no clear regulatory framework.
Where most people would have seen overwhelming obstacles, VEMO founders saw a once-in-a-lifetime opportunity. They knew Mexico would catch up eventually. And when a 127 million people market worth US$1.4 trillion GDP wakes up, the return can be huge.
Still, the challenges and the risks are as big as the opportunity. The most obvious risk is one that all innovative startups face. Being too early. You know the wave is coming, but how long can you stay in the cold water waiting for it?
Now, let’s say you happen to have the timing right. You’re then faced with another challenge - having too many pieces of the puzzle to solve at the same time.
For context, 1,4 million light and heavy vehicles were sold in Mexico in 2023. Of these, 19,487 were EVs (up 94% YoY), representing a 1.4% market share and signaling a lot of room for growth.
Mexico is attracting a significant Chinese influx of EVs (some of which are exploring investments locally), who are rapidly ramping up sales with competitive prices and technology. As reference, when the VEMO founders started incubating the idea in 2020, only 450 EVs had been sold and there were 10 EV models with an average price of MXN$2.1 million. Today, the market is targeting EV sales above 40,000 units for 2024 and there are already 80 EV models in the market, with an average price 52% lower, and with 8 models already below MXN$500k (a quite mass production worthy price). If this trend persists, the EV segment in Mexico could very likely surpass in 2025 the 5% annual sales adoption, which is widely considered as the tipping point beyond which EVs become mainstream.
Problem solved? Not so fast, we’re talking about an emerging market here. Founders are playing the business game in hardcore mode. Even if Mexicans started buying electric vehicles en masse, there would be few spots available to charge them. The underdeveloped infrastructure is a recurring bottleneck in many industries willing to operate in Mexico, and the EV industry is no exception.
Confronted with a classic chicken and egg problem, against all odds, our two founders chose to solve everything all at once.
Unfortunately, copy pasting what worked in Europe or the US can’t work in Mexico because the government support will probably never happen. The founders recall a time when a famous investor from the US told them “You either have the best business model in the EV industry I ever see, or you’re crazy”, and he invested.
It’s hard to do everything at the same time but it’s an opportunity to build an edge over future competitors and create synergies between your units.
One can reasonably ask: is VEMO’s risk / reward ratio worth it?
VEMO’s napkin legend - a clean flywheel
So here we are. It’s July 2021 and our two bold founders are enjoying some tacos al pastor at El Güero in Mexico City when they grab a napkin and start sketching out a diagram of how the startup's various business components interconnect and reinforce each other. VEMO’s growth flywheel is born.
(Editor's Note: Names, characters, places and incidents might be either products of the author's imagination or used fictitiously. Any resemblance to real persons, living or dead, is not purely coincidental.)
As you can see, VEMO developed an integral business model that comprises a) electric vehicles, b) charging infrastructure, and c) technology and data intelligence platform for an optimal EV ecosystem management.
However, they didn’t do it alone. Instead, convinced the time to market was critical, they decided to execute on a roll-up strategy and acquired four companies within the first 3 months since inception to kick start the project without having to reinvent the wheel. Their credibility in the market was fundamental for many entrepreneurs to tag along into an integrated and much more ambitious play.
They acquired Fimeco (the largest local lease-to-own company for ride-hailing, fully focused on ICEs), AuHaus (the largest local EPC and O&M charging company), French utility Engie’s electromobility arm (local pioneer in fleet-as-a-service solutions), and 35South (a LATAM electromobility ecosystem designer with an interesting but still nascent IoT platform, based out of Argentina).
In parallel, they also convinced key people from eight countries and different major companies (PepsiCo, Schlumberger, Fedex, JP Morgan, Haynes & Boone, etc.), to join and build the foundation of a high-growth ecosystem play, only of its kind globally, to make history together.
Plus recognizing the ambition was so large, as complement to their board, they brought together a group of world-class businesspeople as advisory board members to ensure they minimized the likelihood of having any loophole. Some of them included Miguel Galuccio (founder of Vista Energy and board member at SLB), Carlos Rojas (founder of Rotoplas), Guido Mitrani (founder of Asterion Industrial), Patricio Rocca (former VP of Engineering at Nubank) and Cynthia Kueppers (Partner at Novo Holdings).
To accelerate clean mobility in a sustainable way, this world-class team is focusing on large transportation markets with high utilization levels where clean mobility is economically advantaged by its total cost of ownership (e.g., ride hailing and commercial fleets), with the added benefit of generating synergistic, and high utilization demand on its charging network.
Let’s break it down!
Business #1: VEMO Conduce, the EV ride-hailing fleet
The business line you most likely know them for. VEMO developed this model from scratch, with the purpose of electrifying the ride-hailing sector not in 2030… but immediately.
Instead of building a mobile app to compete for the streets of Mexico City with the likes of Uber, DiDi, and InDrive, VEMO partnered up with Uber signing a strategic alliance with Uber to deal with the demand side of the business and bring them more supply, in line with Uber’s commitment to become fully electric by 2040.
How did they do it? They developed a fleet of EVs, with charging superhubs deployed in strategic locations, and around 1,600 drivers on their payroll, giving a differentiated service with quality and safety, such that they could control and optimize the hours of utilization to have a shot at making the economics work.
Today, VEMO Conduce is the largest EV fleet in Latin America’s ride hailing segment and one of the most experienced and impactful EV fleets outside of China, having already surpassed the 100m electric kms to date, with the extra complexity of each shift being a new adventure with new and unpredictable routes for the drivers.
I like to think this has been VEMO’s trojan horse, which allowed the company to get going and start developing its whole ecosystem play when no one had a clue what to start with.
Business #2: VEMO Impulso (financing)
Few people are aware of it, but the ride-hailing market faces a lack of supply. When you complain about waiting too long because there’s not enough Ubers around you, having to pay an exorbitant price or when a driver cancels your trips, it’s actually due to a lack of supply. In Mexico and Latin America, this problem doesn’t stem from a lack of drivers willing to work, but instead is due to the fact that few of them own a car or have access to a car-financing option to buy one. Many banks and financial institutions tried to lend them in the past, but they failed.
VEMO Impulso offers a financing program for underbanked ride-hailing app drivers to acquire their own vehicle and help them transition to owning their own vehicles, increasing their earning potential and independence. The offer, which they refer as lease-to-own, is aimed at active Uber or DiDi drivers.
The program offers leasing facilities with the following benefits: a) no credit history and flexible credit bureau requirements, b) no down payment, c) opening commission starting from 5,000 Mexican pesos.
A little bit of history, VEMO acquired the largest lease-to-own player for ride-hailing in Mexico back in 2021, but it was focused on conventional vehicles because there were i) no decently-priced EVs with sufficient battery size to cope with ride-hailing intensive utilization, ii) no independent EV workshops to guarantee quick and cheap service, and iii) no public charging network (>80% of ride hailing drivers don’t have the ability to install a charger in their homes).
Starting off from those capabilities, it took VEMO more than 2 years to build the puzzle and develop all the missing ingredients to make the first EV lease-to-own product work in Latin America. Today i) there are much cheaper EVs with sufficient battery sizes, ii) it owns the largest network of multipurpose charging superhubs in Mexico, iii) it has the only independent EV workshops in Mexico, iv) it has a unique technology (ZEE for Zero Emission Ecosystem) to preserve the useful life of the batteries, and v) secured partnerships like the ones with Uber and DiDi with economic incentives that result in 20% more money on pocket than a combustion engine option, resulting in a superior, very hard to replicate, and scalable product. This seems to be the biggest example of VEMO’s integrated play flywheel.
Now that the puzzle is in place, let’s all fasten our seatbelts because this business is about to explode, especially after DiDi announcing a target of 100,000 EVs within its platform by 2030 (possibly the largest in ride-hailing outside of China to date), where VEMO is a core partner for them to deliver on such ambitious plan. Just imagine the high positive impact potential it will have on the lives of thousands of people that will have the chance to ultimately become owners!
Business #3: Corporate EV Fleet management
This business line is to address corporate needs by offering comprehensive solutions to accelerate their transition to electromobility. It includes three main components:
VEMO Fleet as a Service (FaaS): An integrated solution that provides leasing of electric vehicles, smart chargers, and a specialized IoT platform.
Charging as a Service (ChaaS): A tailored smart charging solution for customers' electric vehicle fleets, offering engineering design, construction, and mission-critical maintenance, supported by its specialized IoT platform.
ZEE as a Service (Zero Emissions Ecosystem, ZaaS): A specialized data intelligence platform that allows clients to monitor all components of the ecosystem (battery, charger, vehicle, driver's performance, etc.) and ensure the long-term efficiency and functionality of the entire solution.
By contracting their electric fleet solutions, customers can gain access to a team of experts that give them peace of mind while they transition from thinking in liters to kwh, especially since they walk their talk, leveraging its best-in-class operational, technical and technological track record.
To date, VEMO has leased light vehicles, trucks, and buses, and installed more than 60 MW of charging infra to more than 40 corporate clients in Mexico. Some of their most iconic projects include: the first public transport BRT system in LATAM with Metrobus in Mexico City, the development of the first charging hub for AB InBev in Monterrey, and the electrification of 100% of distribution centers electrified by Coca Cola Femsa in 2023.
More recently, they partnered with Banco Santander to be able to offer competitive financing options to their triple A clients. I would love to see a partnership serving middle market customers soon too!
I wouldn’t be surprised if this becomes a big cash flow generation machine for VEMO, once corporations accelerate their transition with multi-annual large investments. This is a matter of when rather than if, especially in a market with so many major corporations, and with such significant materiality (around 800k vehicles per year, even larger than Brazil).
Business #4: VEMO Charging Network
In my opinion, this is their “Moonshot” business line and is where the magic of VEMO’s ecosystem play happens. VEMO aims to accelerate electric vehicle adoption in the country by building Mexico's most robust and reliable electric vehicle charging network, while generating economic benefits.
Their strategy breaks down in 3-parts:
Securing strategic real estate locations with long-term contracts.
Developing high-utilization networks backed by its integrated model.
Optimizing costs and improving profitability through key partnerships.
VEMO's network today represents around 500 chargers, 7,600 kW installed and more than 45,000 registered users in its app, Watts by VEMO, the first charging monetization app in Mexico. VEMO charging network’s is already the most experienced in LATAM, with 40,000 charging sessions per month, mostly coming from its multipurpose charging superhubs leveraging demand from ride-hailing drivers, corporate clients and the B2C users in general. They also have a strong edge on the costs side, as they internalize margins from their engineering, procurement, construction, operation & maintenance, and monetization app, hence, needing less utilization to make their economics work. Smart, right?
To keep growing, they also recently signed new partnerships with many OEMs like BYD, BMW, GAC, Zeekr, Volvo, and Siemens to build and grow their charging network capacity. But what is most striking is they will support DiDi on the development of new charging superhubs across Mexico to help them deliver on their ambition of adding 100,000 EVs to its platform by 2030.
Collaboration is a strong pillar of VEMO’s culture and way of doing business, and VEMO Charging Network seems to be the unit where most of their new partnerships will concentrate. This wouldn’t be a surprise, considering the big edge they managed to consolidate.
An impactful company at heart
VEMO hardwired ESG values into its corporate culture from day one. They see themselves as a force for good, who has the power to be bold and take risks and show the way to many other companies looking to make an impact.
Yes, its integrated play has lots of complexity, but such vision and architecture is also showing significant business synergies and ESG impact across multiple dimensions. They are not only reducing CO2 emissions (~67% in urban areas) and improving the air quality (EVs have no exhaust pipe) in several of the most polluting cities in LATAM but are also creating decent work opportunities (especially through VEMO Conduce) and financial inclusion (via VEMO Impulso’s lease-to-own product), seeking to leave no one behind.
This is a source of huge motivation for this multi-disciplinary team that is doing its very best to take ownership and build, rather than simply finger-pointing others for absent solutions. If you want to dive a little deeper into VEMO’s first 2 years of existence and the impact vision behind the company culture you can check on HBO Max for the Discovery documentary called “Ciudades en Terapia”.
Enjoy the journey, because it will be a long trip
Not only each business unit could be a startup on its own, but each of them would be heavy on Capital Expenditures (CapEx) and require a high level of capital allocation optimization.
While the details of the funding round made by VEMO aren’t fully disclosed, we can confidently assume that the launch of VEMO in partnership with Riverstone involved a consequent sum of initial capital injection. At least a few millions dollars from Riverstone’s US$45 billion of AUM, which helped with the initial acquisition of the 4 companies, as seen previously.
When funded in 2021 VEMO was originally earmarked to operate in Mexico and Latin America. So, when Viral Code, the holding company of Beat announced it would withdraw from Mexico and Colombia to focus on the European market, the founding team saw an opportunity to expand.
Since then, VEMO’s strategy has evolved, and the team now plans to invest up to US$1 billion capex through 2028 to build up its Mexican operations only. As a matter of fact, 50% should go to developing charging infrastructure alone. The team estimates that demand for electricity for EVs within their network will rise to +600MW.
Crushing milestones to make history
Since its inception in 2021, VEMO has made significant strides:
Acquired 4 operating companies to kickstart operations
Completed over 8 million electric ride-hailing trips
Built the first EV lease-to-own product in LATAM
Installed more than 60MW in chargers across Mexico for major corporations
Partnered with multiple international companies like Uber, DiDi, Santander, BYD and BMW
To keep fueling that growth on many front at the same time, they closed in February of 2024 a strategic capital partnership of up to US$60 million with the sustainable infrastructure investment firm Orion Infrastructure Capital (OIC), as well as raised an additional US$40 million from a number of private local lenders during the year.
I won’t write a 120-pages business plan on VEMO business model and strategic planning for the future, which the founding team have probably already done, and better than me. I prefer to head towards the last part of the story where we will see why Packy McCormick recently conceptualized Vertical Integrator theory perfectly explains why VEMO might be one of the biggest winners of the next Techno-Industrial Revolution.
The Vertical Integrator Opportunity
As I was writing this long-form analysis, I thought to take inspiration from the very same newsletter that created this new genre of storytelling startup analysis -
. More than inspiration, gave me a new lens through which analyze VEMO disrupting potential. He calls it Vertical Integrators.To cite him, Vertical Integrators are companies that:
Integrate multiple cutting-edge-but-proven technologies.
Develop significant in-house capabilities across their stack.
Modularize commoditized components while controlling overall system integration.
Compete directly with incumbents.
Offer products that are better, faster, or cheaper (often all three).
And add that “Aggregators won the Internet by leaning as hard to one side of the business model spectrum as possible; Vertical Integrators will win the physical world by leaning as hard to the opposite side as they can.” His article is so good that I am tempted to copy-paste everything, but you better check it out yourself here.
It happens to be a definition perfectly fitting VEMO’s case.
The theory’s most successful examples of the power of Vertical Integrators are brand names like NVIDIA, SpaceX, and more recently Hadrian in the U.S. All of them recently gained massive market share on markets said to be too hard to compete.
If the theory is correct, VEMO could be one of the most promising and underrated companies of the region. Proof is, the few massive successes in the region have so far come from Vertical Integrators of their own - NuBank, Mercado Libre, dLocal, etc. I will keep the detailed explanation for a dedicated article about the Vertical Integrators of Latin America.
But for the theory to hold true, a sine qua non condition is a shift of the current techno-economic paradigms for the incumbents to be replaced by a new generation of startups in a classical Schumpeter’s Creative Destruction style. Several indicators suggesting the approach of the end of a Techno-Economic Paradigm are: Market Saturation, Diminishing Returns, Emergence of New Technologies, Financial Instability, Socio-Economic Tensions, Regulatory Challenges, and Crisis or Recession. Sounds familiar?
So in the end, maybe VEMO is not the Tesla of Mexico but more a SpaceX for Latin America. Bold? Absolutely. Crazy? Maybe. But hey, that's how you make history.
What a great story of two visionary co-founders!