Five months after raising $9 million in seed funding, Pomelo, a Latin American fintech company, announced today that it will raise $35 million in Series B financing under the direction of Tiger Global Management.
This startup was established earlier in the year to create a fintech as-a-service platform in Latin America. Its infrastructure will allow embedded finance players and fintechs to open virtual accounts and issue credit and prepaid cards through compliant onboarding processes.
It is amazing how many prominent investors this young company managed to attract in such a short time.
Insight Partners and Index Ventures participated in the Series. A few notable angels have invested in the company including Max Levchin, Bizstone, Martin Varsavski and Jackie Reses.
This funding event follows Pomelo's June seed round extension of $1 million. It included participation by Sequoia Capital and Checkouts Guillaume Pousaz as well as GGVs Hans Tung, GoCardless Matt Robinson. After a long hiatus from investing in Latin America, Sequoia made this financing as part of its renewed interest.
Although Pomelo is still seven months old, it has already secured four customers. This includes three embedded finance players and three fintechs. Remote-first fintech was founded in Argentina. It has since opened offices and operations in Brazil and Mexico, with plans to expand to Chile and Colombia. It was granted a Mastercard license and a payments license in Argentina.
Pomelo claims that cards have a $900 billion annual payments volume, yet 95% are processed by local incumbents. This is a problem that the founders of the company have experienced in their previous roles and want to fix by creating a new payment infrastructure.
Based on previous experience, we know that building a fintech and issuing cards in Latin America is difficult. Gaston Irigoyen, Pomelo's co-founder and CEO, stated this at the time of the company's last raise. A simple prepaid card can take anywhere from 12 to 18 month to launch. Companies must also go through the pain of repeating this process in each market they are operating.
Pomelos' goal is to solve this problem by creating a new type of financial infrastructure that allows companies build fintech businesses and launch cards faster in Latin America. Irigoyen stated that Latin America has a very fragmented and outdated financial services infrastructure.
Startup claims its API-driven platform allows companies to create compliant onboarding processes and launch virtual accounts that can be connected to local financial systems. It also offers the ability to issue debit and credit card throughout Latin America.
He said that each market has its own regulations and nuances. Legacy providers also offer poor technology at high prices. Most founders and technical team members are unhappy with the status quo, and they can't scale their products fast enough due to the lack of regional solutions. Pomelo's goal is to make LatAm look more European. This means that we will help our partners unlock multiple markets quickly, allowing them grow their businesses without worrying about regulations, backend integrations, and dozens of contracts.
John Curtius, Tiger Global partner, notes that the LatAms tech scene has exploded and some startups are working to transform whole industries.
Curtius stated in a written statement that they have seen amazing consumer products change consumer banking, lending, and insurance over the past few years. Given their unique view on LatAm and their vision for a regional fintech infrastructure, we are excited to partner Pomelo. They also have a strong team that can execute with the highest standards.
Pomelo currently has 100 employees. This includes people who worked previously at Mercado Pago and Amazon Payments. According to Irigoyen (an early employee of Google LatAm), the company's goal is to hire 150 more employees by 2022. He is also a third time founder with two exits, including one to TripAdvisor, and he was the former CEO of Naranja X (one of Argentina's largest neobanks).
(Side note: Pomelo claims it offers stock options to all employees. This is a rare option in LatAm.
The company plans to also use the new capital to help accelerate its product roadmap and business development efforts.
Its been a week of fintech infrastructure-related investments in Latin America. We covered Brazils Hash (a fintech payment infrastructure) raising $40 million in a Series C round led by QED Investors. Kaszek also participated. Also, we reported on Pismo in So Paulo closing $108 million in Series B funding rounds co-led by SoftBank and Silicon Valley-based venture company Accel.