- The Seed extension brings Pomelo’s total funding to $10 million;
- The investment is part of Sequoia’s commitment to invest more in Latin America.
Argentina‘s new fintech challenger Pomelo announced it has raised a $1 million Seed round extension led by Silicon Valley VC firm Sequoia and the individual investor Guillaume Pousaz, CEO and founder of Checkout.com, a $15 billion UK-based fintech.
The transaction is Sequoia’s first deal in Latin America since the company’s billionaire managing partner Doug Leone announced the firm would now focus on LatAm.
Even though Sequoia has already invested in regional unicorns Nubank and Rappi, Leone stated that they will now invest from Seed to IPO. A bit delayed, Sequoia may now face some competition in Latin America‘s evolved VC ecosystem with the region’s largest investors such as Kaszek, Monashees, QED Investors, Valor Capital Group, and Canary.
READ ALSO: Latin America has a record of over $6 billion in investments for startups in a half year
“Looking back, the thesis that Nubank‘s founder David Vélez developed for Sequoia a decade ago [about Latin America‘s tech] was spot on — it was just too early. Now, that opportunity is here. Our mission at Sequoia is to help the daring build legendary companies. Now more than ever, we see that opportunity in Latin America,” said Leone. According to him, Sequoia’s next rounds in the region will most likely go to fintech, consumer internet, healthcare, and education-related companies.
In May, Pomelo announced it has raised $9 million led by monashees and Index Ventures, with participation from QED, SciFi VC, Latitud, 20VC, Future Positive, Addition and FJ Labs among other funds and angel investors.
READ ALSO: “We want to build one unique fintech infrastructure for all Latin America”: Pomelo’s CEO
Now, the round extension brings Pomelo’s Seed to $10 million, one of all-time largest seed rounds in Latin America’s tech ecosystem, and includes angels and entrepreneurs like Max Levchin, Biz Stone, Angela Strange, Harry Stebbings, Martin Varsavski and the founders of Marqeta, Rappi, Auth0, Kavak, Loft, GoCardless and RecargaPay.
During the last decade, Latin America had a booming B2C fintech companies market, with the rise of neobanks, e-wallets, and lending platforms. But right now it’s time for the B2B’s fintech infrastructure, according to Pomelo, that wants to be the one to allow any company to be a fintech, i.e to have embedded financial services.
READ ALSO: Ualá to acquire Wilobank: from a digital wallet to main Argentina’s neobank
“All these companies (Nubank, Creditas, Mercado Pago) were creative for customers, but they were creative on top of legacy and old infrastructure; that’s highly fragmented in every market. So now we want to work on that and build one unique fintech infrastructure for all Latin America,” Gastón Irigoyen, co-founder, and CEO of Pomelo told LABS in an interview.
“Pomelo is building a new-age financial services infrastructure that will enable fintech in Latin America,” added Sonya Huang, partner at Sequoia, in a press statement. “Gaston and the Pomelo team are uniquely equipped to solve one of Latin America’s most critical technological problems, and we’re thrilled to partner with them on this journey.”
The faces behind Pomelo’s idea
Irigoyen has been working with technology for 15 years. He was Google‘s employee number 5 for Spanish-speaking Latin America and now is a fourth-time founder, with two exits (one in TripAdvisor).
He launched and was former CEO at Naranja X (a neobank linked to Argentina‘s large banking group Galicia) in 2019. Naranja X’s operates as a wallet, and a bank, a mix of what Brazil‘s Nubank and RecargaPay do since it recently was granted a banking license from Argentina’s Central Bank.
READ ALSO: Hernan Kazah: Critical mass of tech-savvy adopters spurs unicorn builder KASZEK’s deals in Latin America
But then, he saw opportunities around fintech infrastructure and decided to launch Pomelo with two co-founders, Hernan Corral (CPO), which was Naranja X‘s exec and previously spent 12 years building Mercado Pago‘s product for Latin America, and Juan Fantoni (CCO), former director of fintech at Mastercard.
“We did it essentially to solve the problems that companies have when trying to be a fintech, because you have to spend a lot of time working on infrastructure, issuing cards, developing connections with local financial systems, dealing with regulation, and also it’s very different in every market. If you are in Argentina and want to operate in Brazil and Mexico, you will have to do the same thing repeatedly. That takes many years, a lot of money, and huge teams.”
The fintech also announced that Bruno Martucci is Pomelo’s number one employee in Brazil and will lead product management in the country. Experienced in financial services and payments, Martucci led product & digital at Alelo and previously worked at Amazon Payments, Mercado Pago and Sodexo.
“Pomelo was born to create the fintech infrastructure for Brazil and Latin America, allowing any company to offer a digital account and a card with brand new technology and without having to worry about compliance and regulation. Designing Pomelo’s value proposition in Brazil represents a massive opportunity to innovate in a booming market,” stated Martucci.
Currently, the fintech has a team of 50 people and has another 50 open roles for sales, marketing, product management and engineering in Argentina, Brazil and Mexico.