Your lunch is someone else’s billion-dollar business

Three. Full. Weeks.

That’s how much time an HR team can save every year by managing employee benefits with iFood Benefícios.

For context, that’s 110 hours.

Not spent recruiting. Not improving culture. Not retaining your best people.

Spent adding employees, managing balances and cards, processing payments, preparing reports and dealing with bureaucracy.

Employee benefits are supposed to help your people. They probably shouldn’t consume three weeks of the HR team’s time.

iFood Benefícios puts all of that administrative plumbing into one management platform—with zero fees for the company.

Your HR team has better things to do.

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One of the things that has always fascinated me about Brazil is the number of gigantic businesses that exist because of how the country works. Understand the local regulations, incentives, and distribution networks, and you can build a company generating billions of dollars in an industry that most foreign investors don’t even know exists.

Banking was the obvious example. When David Vélez started Nubank in 2013, five banks dominated the market. Fees were high, credit was expensive, and customers weren’t exactly thrilled. It was a great business—as long as you were one of the banks.

Nubank went after the consumer. Stone went after the merchant. Both saw room to build enormous companies by giving people a better deal in markets where the incumbents had been very comfortable.

Their success made a compelling case for investing in Brazil: find a concentrated market, figure out why customers put up with it, spot the regulatory tailwinds, and offer customers a better deal.

Which brings me to another Brazilian market with all the same ingredients—and a particularly Brazilian business model: employee meal benefits.

Meal vouchers exist in plenty of countries. What makes Brazil exceptional is the combination: a large formal workforce, a heavy tax burden on salaries, favorable treatment of food benefits, concentrated payment networks, and interest rates that can turn a few weeks of other people’s money into a massive business.

There’s a lot to unpack here.

The story starts in 1976, during Brazil’s military dictatorship. The country’s economic boom had run into the oil crisis, and the government was expanding its efforts to tackle poor nutrition. Feeding workers was part of that agenda: healthier employees meant fewer absences, fewer accidents, and higher productivity.

So the government created the Programa de Alimentação do Trabalhador, or PAT, offering tax incentives to companies that provided food benefits, particularly for lower-income employees. Over time, those benefits became a standard part of compensation across much of the formal economy. Today, PAT alone covers about 22 million workers—roughly the populations of Sweden and Portugal combined.

For employers, the math was attractive. Paying someone an extra R$1,000 (about US$193) in salary could cost roughly R$1,670 (US$323) once payroll charges and related obligations were included. Putting R$1,000 (US$193) toward their food benefit cost roughly R$1,000, plus any administration fee. The exact gap depends on the employer’s tax situation, but you can see the appeal.

There was a catch: employers couldn’t simply give workers cash to buy lunch and get the same treatment. They needed to provide food directly or a benefit restricted to buying it. For companies that didn’t want to run a cafeteria, that created an opening for intermediaries: issue the vouchers, sign up restaurants and supermarkets to accept them, and handle the payments.

Over time, four companies came to dominate the business:

Today, those four account for roughly 80%+ of a market that moves up to ~$40B a year. I put their combined Brazilian benefits revenue for 2025 at around US$1.5 billion—these are my estimates, so don’t hold me to the last decimal.

All this from helping people pay for lunch and groceries.

And the margins give you a sense of why everyone wanted to stay in the middle. Edenred reported a 45.9% EBITDA margin in 2025. Pluxee reported 36.6%. Those are global group margins, rather than Brazil-only figures, but we’re talking about a very profitable business.

You might think: fine, a large Brazilian employer can afford to pay someone to manage its benefits. But the employers choosing the providers weren’t the ones paying much of the bill. The restaurants and supermarkets accepting the paper vouchers—and later the cards—were.

This is what’s called a closed-loop arrangement. The benefits company issued the vouchers, signed up the merchants, and handled the payments. If you wanted access to the workers carrying its vouchers, you had to accept its terms.

And those terms were pretty good for the benefits company. Before the recent reforms, merchants paid fees averaging around 5.2%, reaching 9% in some cases, then waited almost a month to get their money. A painful arrangement for a small business with thin margins and limited cash, if you ask me.

Meanwhile, the benefits company earned interest on the money it held—what’s known as float. In a country where the benchmark rate reached 15% in 2025, you can see how that adds up.

Couldn’t afford to wait? You could pay an extra fee to get your money sooner.

On the other side of the transaction, large employers could receive rebates of 2–5% for choosing a particular provider. An employer might pay R$97 to put R$100 on an employee’s card, with merchant fees and interest income helping fund the difference.

So the employer got a reason to sign the contract. The merchant paid to accept the card, then either waited while the provider earned interest or paid extra to get the money sooner. The worker used whichever card their employer had chosen.

I mean, what a business to be in if you were one of those four.

But a business this good was going to attract attention eventually.

The government had already tried to rein it in. Rebates were banned in 2022, and legislation called for the competing networks to work with each other. But soaring food prices gave the problem a new political urgency. Grocery prices rose 8.2% in 2024, well ahead of inflation. By early 2025, the government was looking for ways to bring them down—and the companies taking a cut of millions of workers’ food budgets were an obvious place to look.

So in November 2025, the government ordered the big closed-loop networks to open up, capped merchant fees, and reinforced the ban on rebates.

Before, benefits companies controlled both sides of the equation: the employers buying the benefits and the merchants accepting them. With open networks, benefits companies can sell to employers and use Visa, Mastercard, or Elo to handle acceptance instead of building their own network of restaurants and supermarkets.

That’s your holy shit regulatory tailwind moment. And with up to $40 billion a year moving through the system, you can see why venture-backed startups, banks, and existing ecosystem players wanted in badly.

The incumbents can adapt, of course. They have the employer relationships, the distribution, and the money. But improving a product is one thing. Getting comfortable with a business that makes less money from the card—and has to earn more by doing something useful for the customer—is another.

Put them aside for a second, and four groups are converging on this market.

First, Flash, Caju, and Swile, the venture-backed challengers. Start with something HR already needs to buy every month: benefits. Make it easier to manage, win the account, and then offer to handle expenses, reimbursements, and employee administration too.

That expansion is already underway at Flash and Caju. Flash just raised another ~$29 million in a round led by Battery Ventures and Kevin Efrusy. Caju raised its $25 million Series B back in 2022, led by K1, with Valor Capital among its backers. Index Ventures-backed Swile entered Brazil by acquiring Vee Benefícios in 2021 and has partnered with TOTVS to reach employers through their existing software.

Then there are the banks.

BTG Pactual has announced its own benefits card. C6 bought Alymente, a benefits startup serving more than 100,000 employees. It will become C6 Benefícios once the deal closes, giving the bank an existing product and employer relationships to build on.

Banks arrive with something the startups have to build or borrow: banking relationships, a balance sheet, and a whole menu of financial products.

For a bank, winning a benefits contract can create an opening with both the employer and its employees. The next conversation might be about payroll, salary accounts, or credit. That gives it room to accept lower returns on the benefits product if the relationship makes money elsewhere.

The third group is the ecosystem players. iFood Benefícios is the clearest example of how this strategy can work, although there are other players like Mercado Pago and PicPay.

iFood is Brazil’s largest food-delivery platform. It already has the consumers, the restaurants, and an obvious interest in where people spend their food budgets. It also has something most benefits companies don’t: the wider iFood and Prosus ecosystem.

Think food discounts, perks at businesses such as travel platform Decolar and ticketing platform Sympla, and health and wellness packages through partners like Wellhub.

Those extras might help iFood win benefits contracts while bringing more spending to businesses connected to it. Cross-selling is already a core part of Prosus’s strategy. Employee benefits give it another way to do it.

Then there’s a fourth group: the HR and payroll software companies, such as Sólides and TOTVS.

Sólides already sells HR and payroll software and offers its own branded benefits card. TOTVS offers benefits through its partnership with Swile, connecting benefit orders and employee information to its HR software.

It’s the reverse of the benefits startups’ strategy. Flash and Caju use the card to win the HR relationship, then sell software. These companies already supply the software. They can add a benefits card to a relationship they’ve already won.

Underneath all of this are the companies selling the infrastructure. Visa, Mastercard, and Elo provide the networks that let benefits cards work at merchants. Processors like Dock handle the technology behind the cards—balances, approvals, and payments.

And the nature of competition is changing too. With rebates banned and merchant acceptance less of a differentiator, providers have more reason to compete on the product: better software, useful bundles, less work for the employer.

And so what, you might ask?

With interchange capped at 2% and a market moving up to $40 billion a year, we’re looking at a maximum annual interchange pool of about $800 million—before network, processing, and operating costs. That’s the whole interchange pie for startups, banks, incumbents, and ecosystem players fighting for it. Not that sexy from a venture capital perspective.

But here are three things that are actually sexy:

One: the market gets bigger. AI could change which customers are worth serving. Automate enough of sales, onboarding, and support, and a ten-person business becomes an account you can profitably pursue. Make the product simple enough for an owner to run without an HR department, and you could bring more employers into benefits for the first time. More customers, more workers, more money moving through the market.

Two: we’ll see a wave of M&A. Banks have distribution. Benefits companies have employer relationships. Software companies already manage the workflows. Ecosystem players have massive network effects and other products to bring to the table. Buying the missing pieces could be faster than building everything from scratch—and make more economic sense than fighting over the same customers on thinner and thinner margins.

Three: someone will build a Gusto-scale business, starting with lunch. That’s my bet. Win the employer through benefits, then earn the right to handle payroll, employee administration, expenses, and financial services. There’s a path here to billions of dollars in annual revenue—and a business that becomes harder to replace with every part of the employer’s operations it takes on.

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Kaszek — is raising a new ~US$600M fund and has brought Nubank’s former CFO on board as a partner.

Kaszek’s seventh venture fund is expected to reach roughly US$600M, exceeding the US$540M raised for its previous early-stage vehicle in 2023. Fundraising began this month, with a close expected by November. Meanwhile, Guilherme Lago, Nubank’s former CFO, is joining as a partner. Kaszek still has roughly half of its previous venture fund and two-thirds of its ~US$500M growth fund available to deploy.

→ A substantial new pool of capital from one of the region's most established investors. And bringing in former CFO of one of the biggest winners adds experience that becomes particularly useful when portfolio companies start thinking about scale, aquisitions, and public markets.

Mercado Libre — is expanding into GLP-1 drugs and antibiotics in Brazil, while adding delivery within 60 minutes.

The company will begin selling medicines that require pharmacies to retain prescriptions, including weight-loss injections. Customers will upload prescriptions for review by a pharmacist before orders are released. Mercado Libre also expects to have 20 pharmacies selling on its marketplace by year-end. Its newly announced Envios Agora service will offer delivery within 60 minutes across categories, including pharmacy products. Brazilian pharmacy stocks fell sharply following the news.

→ Mercado Libre is going after a category that has been driving a disproportionate share of pharmacy growth. Combine that with fast delivery and an existing customer base, and you can see why the incumbents are nervous. Another remainder that the region's largest tech platforms still have plenty of industries left to enter.

Olist — has rebuilt around business software after shutting down the marketplace operation that made it a unicorn.

The SoftBank- and Valor Capital-backed company closed its original marketplace-store business, which represented 30% of revenue, to focus on a platform combining business management, ecommerce, payments, credit, and logistics. Its new core business is growing 65% annually, with gross margins near 70%, roughly twice those of the old operation. Olist reached breakeven in August and plans to invest ~US$97M over the next two years using existing cash.

→ Olist is rebuilding around growth it can finance itself: recurring software revenue, more services sold to each merchant, and AI handling more of the work across sales, support and logistics. That meant shutting down the product that made it a unicorn. A pretty consequential bet that the business worth building next looks different from the one investors originally funded.

Tivit — has earmarked ~US$190M to acquire technology companies across Latin America.

The Brazilian technology company, acquired by Italy’s Almaviva last year, has screened 620 businesses and advanced 15 potential acquisitions into detailed review. It is targeting companies with proprietary software and hardware across sectors including financial services, healthcare, transportation, and government, alongside AI and cybersecurity. Most targets generate roughly US$4M–39M in annual revenue. The first deals are expected in early 2027, funded from Tivit’s own cash generation.

→ This is a concrete buyer from a segment of Latin America tech that rarely gets the headlines: established companies with useful products, paying customers, and profits. Tivit can buy those products and sell them into its existing enterprise accounts. For founders and investors, that creates an exit path that doesn't depend on a IPO.

Listen — Rick Rubin on The Diary of a CEO.

Rubin makes a thought-provoking case for how success can narrow your thinking: you learn what people reward, build an identity around it, and start dismissing ideas that don’t fit. He explains why an audience’s first reaction can be a poor measure of originality, why being able to defend every decision isn’t necessarily a virtue, and why AI makes having your own point of view more interesting. A good listen for anyone who’s become very good at something—and wonders whether that’s starting to get in the way.

Read — Why a16z is building a school.

If AI makes knowledge and the ability to build increasingly accessible, what should you actually go to college for? a16z’s answer involves ambitious peers, real projects, and proximity to people building things that matter. Its new Horowitz Andreessen Academy will bring young people to San Francisco to learn through courses, personal projects, and work inside technology companies. 

Read — AI agents are coming for the middlemen. Who actually loses?

How much of a company’s moat is just customers being too busy to shop around? Thomas Reiner uses online travel to examine what happens when AI removes that friction. Booking and Expedia could lose the customer’s attention while still handling the inventory, payments, and problems that make a booking work. Agents might initially replace expensive Google traffic and improve their economics. The bigger threat comes when they can bypass those businesses entirely. A good read on the difference between losing control of how customers find you and losing the reason they need you.

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