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Startup insurance provider Vouch raises $90M, now valued at $550M
Vouch, a provider of business insurance to startups and high-growth companies, announced today it has raised $90 million in new funding.
The $90 million figure was raised across two rounds: a $60 million Series C co-led by SVB Capital (a subsidiary of Silicon Valley Bank) and Ribbit Capital that values the company at $550 million, and a previously unannounced $30 million Series B1 led by Redpoint Ventures.
With the latest financing, San Francisco-based Vouch has now raised a total of $160 million since its 2018 inception. Other investors include Allegis Group, Sound Ventures and SiriusPoint.
While there are many insurance technology companies out there that serve consumers, there are far fewer that offer it to companies, much less startups. Vouch describes itself as “a new kind of insurance platform” for startups that offers fully digital, “tailored coverage that takes minutes to activate.”
Over the past year, Vouch has seen impressive growth. The company declined to reveal hard revenue figures, but said it saw “7x” increase in its customer base year over year and currently protects over $5.7 billion in risk across thousands of policies. Today, Vouch has more than 1,600 clients, including Pipe, Middesk, Neighbor and Routable. It is also the “preferred” business insurance provider to the customers of Silicon Valley Bank, Brex, Carta and WeWork. Y Combinator too also refers Vouch to its portfolio companies.
To Vouch co-founder and CEO Sam Hodges, the ability to attract some of the highest-profile businesses in the startup world speaks to the company’s understanding of the startup ecosystem.
“It’s our responsibility to meet startup founders where they are, and give startups flexibility as they navigate changing laws, regulations and the virtual and physical locations of their businesses,” he said.
Like many other companies, Vouch had to shift its model during the pandemic to adapt to the different types of emerging risks businesses have faced. For example, last year, Vouch saw a change in where its startup clients’ teams were distributed. Before the pandemic, nearly 30% of the teams were remote. During the pandemic, that figure has shifted to over 53%. As a result, Vouch developed a broader range of insurance coverages to adapt to the “new normal.”
Included in its new line of proprietary products and services aimed at startups are: work from anywhere coverage, broader cyber coverages and embedded insurance. It also expanded its underwriting capabilities to serve early-stage to growth-market startups.
In particular, the work from anywhere coverage is in direct response to the pandemic-related shift in remote work and can insure up to $500,000 per occurrence and can include a specified property owned by a startup regardless of the location of that property.
One major differentiator for Vouch, said Hodges, is that it is now the only business insurance provider for startups that has its own insurance carrier, which means the company backs its own policies.
“This capability means we have a lot of control over how we build and underwrite our policies — which translates into superior coverage and a better experience for our clients,” he said.
Hodges co-founded Vouch with Travis Hedge three years ago after seeing how challenging it could be for a company to get the business insurance it needs to start and then scale.
The goal is to make it as easy as possible to onboard new customers and personalize the coverage as much as possible based on each company’s needs based on what they do, their customer base, stage of growth and the founder’s threshold for risk.
“A typical client can get a quote and bind their coverage online in under 10 minutes, without any phone calls or paperwork,” he told TechCrunch. “Vouch also has many coverage features that are uniquely geared for startups. For example, our directors and officers coverage includes a cap table coverage feature meant specifically to protect startups.”
Vouch looks at startups that need business insurance on a case by case basis, Hodges added.
For example, it asks questions like, “Does an e-commerce company handle a very limited amount of client-sensitive information?” If so, it could make sense that it has a lower cyber insurance coverage limit and pay less for its policy.
Conversely, if a startup is trying to raise money, it might need to invest more in Vouch’s directors and officers insurance to make sure it is covered should disputes arise in the future.
Looking ahead, Hodges said the new capital would go toward continued investment in technical capabilities, an expansion of its product offerings, more hiring and building embedded insurance for its partners.
With regard to the embedded capabilities, within the next 12 months, all of the company’s partners’ customers will be able to purchase Vouch insurance directly from those partners’ websites. Vouch’s headcount has more than doubled, from 55 employees in September 2020 to 125 full-time employees presently, and Hodges expects that will continue to grow.
Greg Becker, president and CEO of SVB Financial Group, said that Vouch’s mission aligns with SVB’s in that they both aim to “empower the innovation economy.”
“That’s what Vouch is doing today, helping startups and tech innovators mitigate their risks as they grow,” he wrote via email. “We are proud to co-lead Vouch’s latest funding round to give startups access to the insurance they need as they add headcount, increase their customer base, or raise funding rounds of their own.”
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Brazilian proptech startup QuintoAndar lands $300M at a $4B valuation
Fintech and proptech are two sectors that are seeing exploding growth in Latin America, as financial services and real estate are two categories in particular dire need of innovation in a region.
Brazil’s QuintoAndar, which has developed a real estate marketplace focused on rentals and sales, has seen impressive growth in recent years. Today, the São Paulo-based proptech has announced it has closed on $300 million in a Series E round of funding that values it at an impressive $4 billion.
The round is notable for a few reasons. For one, the valuation — high by any standards but especially for a LatAm company — represents an increase of four times from when QuintoAndar raised a $250 million Series D in September 2019.
It’s also noteworthy who is backing the company. Silicon Valley-based Ribbit Capital led its Series E financing, which also included participation from SoftBank’s LatAm-focused Innovation Fund, LTS, Maverik, Alta Park, an undisclosed U.S.-based asset manager fund with over $2 trillion in AUM, Kaszek Ventures, Dragoneer and Accel partner Kevin Efrusy.
Having backed the likes of Coinbase, Robinhood and CreditKarma, Ribbit Capital has historically focused on early-stage investments in the fintech space. Its bet on QuintoAndar represents clear faith in what the company is building, as well as its confidence in the startup’s plans to branch out from its current model into a one-stop real estate shop that also offers mortgage, title, insurance and escrow services.
The latest round brings QuintoAndar’s total raised since its 2013 inception to $635 million.
Ribbit Capital Partner Nick Huber said QuintoAndar has over the years built “a unique and trusted brand in Brazil” for those looking for a place to call home.
“Whether you are looking to buy or to rent, QuintoAndar can support customers through the entire transaction process: from browsing verified inventory to signing the final contracts,” Huber told TechCrunch. “The ability to serve customers’ needs through each phase of life and to do so from start to finish is a unique capability, both in Brazil and around the world.”
QuintoAndar describes itself as an “end-to-end solution for long-term rentals” that, among other things, connects potential tenants to landlords and vice versa. Last year, it expanded also into connecting a home buyers to sellers.
Image Credits: QuintoAndar
TechCrunch spoke with co-founder and CEO Gabriel Braga and he shared details around the growth that has attracted such a bevy of high-profile investors.
Like most other businesses around the world, QuintoAndar braced itself for the worst when the COVID-19 pandemic hit last year — especially considering one core piece of its business is to guarantee rents to the landlords on its platform.
“In the beginning, we were afraid of the implications of the crisis but we were able to honor our commitments,” Braga said. “In retrospect, the pandemic was a big test for our business model and it has validated the strength and defensibility of our business on the credit side and reinforced our value proposition to tenants and landlords. So after the initial scary moments, we actually felt even more confident in the business that we are building.”
QuintoAndar describes itself as “a distant market leader” with more than 100,000 rentals under management and about 10,000 new rentals per month. Its rental platform is live in 40 cities across Brazil, while its home-buying marketplace is live in four. Part of its plans with the new capital is to expand into new markets within Brazil, as well as in Latin America as a whole.
The startup claims that, in less than a year, QuintoAndar managed to aggregate the largest inventory among digital transactional platforms. It now offers more than 60,000 properties for sale across Sao Paulo, Rio de Janeiro, Belho Horizonte and Porto Alegre. To give greater context around the company’s growth of that side of its platform: In its first year of operation, QuintoAndar closed more than 1,000 transactions. It has now surpassed the mark of 8,000 transactions in annualized terms, growing between 50% and 100% quarter over quarter.
As for the rentals side of its business, Braga said QuintoAndar has more than 100,000 rentals under management and is closing about 10,000 new rentals per month. The company is not profitable as it’s focused on growth, although it’s unit economics are particularly favorable in certain markets such as Sao Paulo, which is financing some of its growth in other cities, according to Braga.
Now, the 2,000-person company is looking to begin its global expansion with plans to enter the Mexican market later this year. With that, Braga said QuintoAndar is looking to hire “top-tier” talent from all over.
“We want to invest a lot in our product and tech core,” he said. “So we’re trying to bring in more senior people from abroad, on a global basis.”
Some history
CEO Braga and CTO André Penha came up with the idea for QuintoAndar after receiving their MBAs at Stanford University. As many startups do, the company was founded out of Braga’s personal “nightmare” of an experience — in this case, of trying to rent an apartment in Sao Paulo.
The search process, he recalls, was difficult as there was not enough information available online and renters were forced to provide a guarantor, or co-signer, from the same city or pay rent insurance, which Braga described as “very expensive.”
“Overall, I felt it was a very inefficient and fragmented process with no transparency or tech,” Braga told me at the time of the company’s last raise. “There was all this friction and high cost involved, just real tangible problems to solve.”
The concept for QuintoAndar (which can be translated literally to “Fifth Floor” in Portuguese) was born.
“Little by little, we created a platform that consolidated supply and inventory in a uniform way,” Braga said.
The company took the search phase online for the first time, according to Braga. It also eliminated the need for tenants to provide a guarantor, thereby saving them money. On the other side, QuintoAndar also works to help protect the landlord with the guarantee that they will get their rent “on time every month,” Braga said.
It’s been interesting watching the company evolve and grow over time, just as it’s been fascinating seeing the region’s startup scene mature and shine in recent years.
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Ribbit Capital leads $26.7M round for Brazilian fintech Cora
Cora, a São Paulo-based technology-enabled lender to small and-medium-sized businesses, has raised $26.7 million in a Series A round led by Silicon Valley VC firm Ribbit Capital.
Kaszek Ventures, QED Investors and Greenoaks Capital also participated in the financing, which brings the startup’s total raised to $36.7 million since its 2019 inception. Kaszek led Cora’s $10 million seed round (believed at that time to be one of the largest seed investments in LatAm) in December 2019, with Ribbit then following.
Last year, Cora got its license approved from the Central Bank of Brazil, making it a 403 bank. The fintech then launched its product in October 2020 and has since grown to have about 60,000 customers and 110 employees.
Cora offers a variety of solutions, ranging from a digital checking account, Visa debit card and management tools such as an invoice manager and cashflow dashboard. With the checking account, customers have the ability to send and receive money, as well as pay bills, digitally.
This isn’t the first venture for Cora co-founders Igor Senra and Leo Mendes. The pair had worked together before — founding their first online payments company, MOIP, in 2005. That company sold to Germany’s WireCard in 2016 (with a 3 million-strong customer base), and after three years the founders were able to strike out again.
Cora co-founders Leo Mendes and Igor Senra; Image courtesy of Cora
With Cora, the pair’s long-term goal is to “provide everything that a SMB will need in a bank.”
Looking ahead, the pair has the ambitious goal of being “the fastest growing neobank focused on SMBs in the world.” It plans to use the new capital to add new features and improve existing ones; on operations; and launching a portfolio of credit products.
In particular, Cora wants to go even deeper in certain segments, such as B2B professional services such as law and accounting firms, real estate brokerages and education.
Ribbit Capital partner Nikolay Kostov believes that Cora has embarked on “an ambitious mission” to change how small businesses in Brazil are able to access and experience banking.
“While the consumer banking experience has undergone a massive transformation thanks to new digital experiences over the last decade, this is, sadly, still not the case on the small business side,” he said.
For example, Kostov points out, opening a traditional small business bank account in Brazil takes weeks, “reels of paper, and often comes with low limits, poor service and antiquated digital interfaces.”
Meanwhile, the number of new small businesses in the country continues to grow.
“The combination of these factors makes Brazil an especially attractive market for Cora to launch in and disrupt,” Kostov told TechCrunch. “The Cora founding team is uniquely qualified and deeply attuned to the challenges of small businesses in the country, having spent their entire careers building digital products to serve their needs.”
Since Ribbit’s start in 2012, he added, LatAm has been a core focus geography for the firm “given the magnitude of challenges, and opportunities in the region to reinvent financial services and serve customers better.”
Ribbit has invested in 15 companies in the region and continues to look for more to back.
“We fully expect that several fintech companies born in the region will become global champions that serve to inspire other entrepreneurs across the globe,” Kostov said.
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India’s Khatabook raises $60 million to help merchants digitize bookkeeping and accept payments online
Khatabook, a startup that is helping small businesses in India record financial transactions digitally and accept payments online with an app, has raised $60 million in a new financing round as it looks to gain more ground in the world’s second most populous nation.
The new financing round, Series B, was led by Facebook co-founder Eduardo Saverin’s B Capital. A range of other new and existing investors, including Sequoia India, Partners of DST Global, Tencent, GGV Capital, RTP Global, Hummingbird Ventures, Falcon Edge Capital, Rocketship.vc and Unilever Ventures, also participated in the round, as did Facebook’s Kevin Weil, Calm’s Alexander Will, CRED’s Kunal Shah and Snapdeal co-founders Kunal Bahl and Rohit Bansal.
The one-and-a-half-year-old startup, which closed its Series A financing round in October last year and has raised $87 million to date, is now valued between $275 million to $300 million, a person familiar with the matter told TechCrunch.
Hundreds of millions of Indians came online in the last decade, but most merchants — think of neighborhood stores — are still offline in the country. They continue to rely on long notebooks to keep a log of their financial transactions. The process is also time-consuming and prone to errors, which could result in substantial losses.
Khatabook, as well as a handful of young and established players in the country, is attempting to change that by using apps to allow merchants to digitize their bookkeeping and also accept payments.
Today more than 8 million merchants from over 700 districts actively use Khatabook, its co-founder and chief executive Ravish Naresh told TechCrunch in an interview.
“We spent most of last year growing our user base,” said Naresh. And that bet has worked for Khatabook, which today competes with Lightspeed -backed OkCredit, Ribbit Capital-backed BharatPe, Walmart’s PhonePe and Paytm, all of which have raised more money than Khatabook.
The Khatabook team poses for a picture (Khatabook)
According to mobile insight firm AppAnnie, Khatabook had more than 910,000 daily active users as of earlier this month, ahead of Paytm’s merchant app, which is used each day by about 520,000 users, OkCredit with 352,000 users, PhonePe with 231,000 users and BharatPe, with some 120,000 users.
All of these firms have seen a decline in their daily active users base in recent months as India enforced a stay-at-home order for all its citizens and shut most stores and public places. But most of the aforementioned firms have only seen about 10-20% decline in their usage, according to AppAnnie.
Because most of Khatabook’s merchants stay in smaller cities and towns that are away from large cities and operate in grocery stores or work in agritech — areas that are exempted from New Delhi’s stay-at-home orders, they have been less impacted by the coronavirus outbreak, said Naresh.
Naresh declined to comment on AppAnnie’s data, but said merchants on the platform were adding $200 million worth of transactions on the Khatabook app each day.
In a statement, Kabir Narang, a general partner at B Capital who also co-heads the firm’s Asia business, said, “we expect the number of digitally sophisticated MSMEs to double over the next three to five years. Small and medium-sized businesses will drive the Indian economy in the era of COVID-19 and they need digital tools to make their businesses efficient and to grow.”
Khatabook will deploy the new capital to expand the size of its technology team as it looks to build more products. One such product could be online lending for these merchants, Naresh said, with some others exploring to solve other challenges these small businesses face.
Amit Jain, former head of Uber in India and now a partner at Sequoia Capital, said more than 50% of these small businesses are yet to get online. According to government data, there are more than 60 million small and micro-sized businesses in India.
India’s payments market could reach $1 trillion by 2023, according to a report by Credit Suisse .
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Former Google Pay execs raise $13.2M to build neo-banking platform for millennials in India
Two co-founders of Google Pay in India are building a neo-banking platform in the country — and they have already secured backing from three top VC funds.
Sujith Narayanan, a veteran payments executive who co-founded Google Pay in India (formerly known as Google Tez), said on Monday that his startup, epiFi, has raised $13.2 million in its Seed financial round led by Sequoia India and Ribbit Capital. The round valued epiFi at about $50 million.
David Velez, the founder of Brazil-based neo-banking giant Nubank, Kunal Shah, who is building his second payments startup CRED in India, and VC fund Hillhouse Capital also participated in the round.
The eight-month-old startup is working on a neo-banking platform that will focus on serving millennials in India, said Narayanan, in an interview with TechCrunch.
“When we were building Google Tez, we realized that a consumer’s financial journey extends beyond digital payments. They want insurance, lending, investment opportunities and multiple products,” he explained.
The idea, in part, is to also help users better understand how they are spending money, and guide them to make better investments and increase their savings, he said.
At this moment, it is unclear what the convergence of all of these features would look like. But Narayanan said epiFi will release an app in a few months.
Working with Narayanan on epiFi is Sumit Gwalani, who serves as the startup’s co-founder and chief product and technology officer. Gwalani previously worked as a director of product management at Google India and helped conceptualize Google Tez. In a joint interview, Gwalani said the startup currently has about two-dozen employees, some of whom have joined from Netflix, Flipkart, and PayPal.
Shailesh Lakhani, Managing Director of Sequoia Capital India, said some of the fundamental consumer banking products such as savings accounts haven’t seen true innovation in many years. “Their vision to reimagine consumer banking, by providing a modern banking product with epiFi, has the potential to bring a step function change in experience for digitally savvy consumers,” he said.
Cash dominates transactions in India today. But New Delhi’s move to invalidate most paper bills in circulation in late 2016 pushed tens of millions of Indians to explore payments app for the first time.
In recent years, scores of startups and Silicon Valley firms have stepped to help Indians pay digitally and secure a range of financial services. And all signs suggest that a significant number of people are now comfortable with mobile payments: More than 100 million users together made over 1 billion digital payments transaction in October last year — a milestone the nation has sustained in the months since.
A handful of startups are also attempting to address some of the challenges that small and medium sized businesses face. Bangalore-based Open, NiYo, and RazorPay provide a range of features such as corporate credit cards, a single dashboard to manage transactions and the ability to automate recurring payouts that traditional banks don’t currently offer. These platforms are also known as neo-bank or challenger banks or alternative banks. Interestingly, most neo-banking platforms in South Asia today serve startups and businesses — not individuals.
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Brazil’s new fintech startup Cora raised $10 million on the strength of its founding team
It didn’t take much for the founders of Cora, Brazil’s newest startup to tackle some aspect of the broken financial services industry in the country, to raise their first $10 million.
Igor Senra and Leo Mendes had worked together before — founding their first online payments company, MOIP, in 2005. That company sold to WireCard in 2016 and after three years the founders were able to strike out again.
They built their initial business servicing the small and medium-sized businesses that make up roughly two-thirds of the Brazilian economy and represent some trillion dollars’ worth of transactions. But at WireCard, they increasingly were told to approach larger customers that didn’t have the same kind of demand for their services, according to Mendes.
So they built Cora — a technology-enabled lender to the small and medium-sized businesses that they knew so well.
The round was led by Kaszek Ventures, one of Latin America’s largest and most successful investment funds, with participation from Ribbit Capital — one of the most influential early-stage fintech investment firms globally.
“We created Cora to pursue our life purpose, which is to solve the financial problems faced by small and medium businesses. These businesses
The company is currently operating in closed beta and plans to launch its first product, a free SME-only mobile account, in the first half of 2020, according to the statement. Cora will later release a portfolio of payments, credit-related products and financial management tools that are currently being developed.
“So far, large financial institutions have mainly built products that focus either on individuals or on large corporate clients and have totally ignored small and medium sized enterprises, who are the most relevant creators of value in our economies,” said Mendes in a statement. “We want to offer a high-quality, customer-centric suite of financial products that addres
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Latin America Roundup: Uber acquires Cornershop, SoftBank invests in Buser and Olist
Sophia Wood is a principal at Magma Partners, a Latin America-focused seed-stage VC firm with offices in Latin America, Asia and the U.S. Sophia is also the co-founder of LatAm List, an English-language Latin American tech news source.
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Brazil continued to churn out unicorns this month, with Curitiba-based Ebanx becoming the first startup from the southern part of the country to top a $1 billion valuation. U.S.-based FTV Capital provided the investment but did not disclose the amount invested nor the exact valuation of Ebanx after the investment.
Ebanx is an end-to-end payment processor that helps international companies receive payments in the Latin American market, similar to Stripe. Their clients include Airbnb, AliExpress, Pipedrive, Spotify, Uber and Wish, and more than 50 million Latin Americans have conducted transactions with more than 1,000 companies through the Ebanx platform. This investment comes on the heels of exciting partnerships with Uber Pay, Shopify, Spotify and Visa to expand cross-border payment processing across the region.
Ebanx has operations in Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador and Bolivia, and will expand their local payment solution, Ebanx Pay, into Colombia in 2020. The company has grown its user base by offering a full-service product that includes market research, 24/7 customer service and anti-fraud technology.
The Ebanx investment is part of a growing interest in Latin American payments startups. Brazil’s PagSeguro and StoneCo had successful IPOs last year, while Mexico’s Conekta and Ecuador’s Kushki have raised large rounds to try to unite the region under a single processor as Latin America rapidly adopts e-commerce.
Uber acquires Cornershop, takes off where Walmart left off
The acquisition of the Chilean-Mexican grocery delivery startup Cornershop has been an emotional roller coaster for Latin American entrepreneurs and investors throughout 2019. First Walmart announced a $225 million deal that would be one of the bigger exits of the region, then the acquisition was blocked by Mexican antitrust institution COFECE. This announcement dealt a blow to the ecosystem as entrepreneurs and VCs had eagerly awaited this boost in liquidity in the local market.
Last-mile delivery and logistics became a very competitive space in Latin America in 2018.
Then in mid-October 2019, Uber announced it would take a 51% stake in Cornershop for a reported $450 million, quadrupling the startup’s value in the four months since the COFECE decision. This deal will consist of cash, investment in Cornershop’s growth and stock in Uber, which IPO’d earlier this year.
However, this deal must also be approved by the Chilean and Mexican antitrust boards, which are expected to release their decisions within the next two weeks. In the meantime, Cornershop will continue its expansion into the Colombian market after it added Peru and Canada in 2019.
Last-mile delivery and logistics became a very competitive space in Latin America in 2018, and many of the players are sitting on enormous pools of capital. Colombia’s Rappi raised $1 billion from SoftBank in early 2019, breaking records for startup investment for the region. Brazil’s iFood raised $500 million from Naspers at the end of 2018. However, delivery continues to be a cash-intensive business, with many of these companies burning through capital quickly to gain market share. Cornershop was an exception and had raised less than $50 million before the acquisition.
Brazil’s Buser, Olist, raise funding from SoftBank
Despite the WeWork crash, SoftBank has continued investing consistently in Brazilian startups. In early October 2019, the Japanese investor led an undisclosed Series B round for Brazilian collaborative bus chartering startup Buser. Buser’s team will invest more than $73 million in growth over the next 12 months to create new alliances for their network of operating partners.
Buser helps coordinate groups of people to charter buses at convenient times and lower prices, disrupting the bureaucratic, anti-competitive and inefficient bus system. The company has grown 1,500% over the past nine months and serves more than 3,000 people per day. While Buser has been popular with locals, traditional bus drivers are calling for regulation to slow the company’s meteoric growth. Buser plans to add more than 100 direct jobs in 200 cities over the next 12 months, and SoftBank’s most recent investment will help power this growth.
Brazil’s e-commerce marketplace integrator Olist also received investment from SoftBank for its Series C, coming in around $46 million. Redpoint eVentures and Valor Capital also participated in the round.
This investment signals the increased interest by traditional retailers in startups that are slowly chipping away at their market share across the region.
Olist connects small businesses to larger product marketplaces to help entrepreneurs sell their products to a larger customer base. They will reportedly use this investment to investigate the development of financial products and look for collaboration with SoftBank’s other companies, like Rappi and Loggi. Based in Curitiba, Olist was founded in 2015 to help small merchants gain market share across the country through a SaaS licensing model to small brick and mortar businesses.
Today, Olist has more than 7,000 customers and uses a drop-shipping model to send products directly from stores to clients around the country, allowing them to grow with a capital-light model. They will use the investment to add up to 100 new employees.
Carrefour Brazil acquires 49% of Ewally
Grocery chain Carrefour acquired a large stake in Brazil-based Ewally after it completed Village Capital’s first regional acceleration program.
Ewally improves financial inclusion in Brazil through a mobile wallet app that allows unbanked clients to pay bills and make purchases online through the blockchain. Carrefour will reportedly use the acquisition to accelerate digital transformation and improve online payment mechanisms throughout Brazil.
Carrefour did not disclose the amount invested and the deal is still subject to approval by Brazilian financial regulation authorities. However, this investment signals the increased interest by traditional retailers in startups that are slowly chipping away at their market share across the region.
News and Notes: Early-stage rounds are getting bigger
Startups in Brazil, Colombia and Argentina raised several rounds this month, ranging from $1.5 million to $13 million. Brazil’s Xerpa, Colombia’s Sempli, Brazil’s Gorilla and Argentina’s Bitso and Worcket were among those that raised capital from local and international investors in October 2019.
Brazilian human resource management platform Xerpa raised $13 million from Vostok Emerging Finance to continue to help companies like MercadoLibre, iFood and QuintoAndar provide benefits for their employees. Previous investors include Nubank’s David Velez, Kaszek Ventures and QED Investors.
Sempli, an online lending platform for small businesses in Colombia, raised an $8 million Series A from new investors Oikocredit and Incofin CVSO, as well as previous investors BID LAB, XTPI Fund, Generación Exponencial, and Impulsum Ventures. To date, Sempli has raised more than $24 million in equity funding. The founders will use this round to grow their portfolio and improve their risk assessment technology to provide more small business loans in Colombia.
Brazil’s Quicko, an alternative mobility startup that uses big data, raised $10 million in October from Brazilian transport company CCR. Quicko’s technology integrates all mobility options — from bicycles to Uber and 99 — to help people get where they need to go as quickly and inexpensively as possible.
Also in Brazil, startup Gorilla Invest raised $8.4 million from Ribbit Capital, Monashees and Iporanga. Gorilla aggregates financial assets so that investors can review all their commitments in one place, and currently manages more than $1.2 billion for 40,000 clients.
Mexican cryptocurrency exchange Bitso raised an undisclosed round from Argentine startup Ripple to expand into the Southern Cone, especially Argentina and Brazil. Other investors in the round included Pantera Capital, Digital Currency Group, Jump Capital and Coinbase.
Looking ahead to November, with unsettled politics in several countries across the region, tech startups are growing despite governmental changes. Some of these changes will likely have a positive effect on the regional ecosystem as people push for more sustainable and equal economic growth.
What to watch next? Last year, Q4 was marked by a wave of large investments as funds and startups look to end the year strong. IFood raised its record-breaking $500 million round in December 2018. We may well see a similar uptick this year as mega-funds like SoftBank have been consistently investing multi-million dollar rounds since June. There is no sign international investment in Latin America will slow through the end of the year, so we can likely look forward to several more growth-stage rounds before the year is out.
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Groww, an investment app for millennials in India, raises $21.4M
Of the 1.3 billion people who live in India, more than 100 million of whom are using digital payment apps each day, only about 20 million today invest in mutual funds and stocks. An Indian startup that is betting on changing that figure by courting millennials has just received a big backing.
Groww, a Bangalore-based startup, said today it has raised $21.4 million in a Series B financing round that was led by U.S.-based VC firm Ribbit Capital. Existing investors Sequoia India and Y Combinator also participated in the round, said the two-year-old startup that has raised about $29 million to date.
Groww allows users to invest in mutual funds, including systematic investment planning (SIP) and equity-linked savings. The app, which maintains a very simplified user interface to make it easier for its largely millennial customer base to comprehend the investment world, offers every fund that is currently available in India.
Lalit Keshre, co-founder and CEO of Groww, told TechCrunch in an interview earlier this week that the market of mutual funds is increasingly widening in India and the startup is hoping to accelerate its growth with the fresh capital. Other than that, he plans to double Groww’s headcount to 200 in the coming months.
Groww has amassed about 2.5 million registered users, two-thirds of whom are first-time investors, Keshre said. Groww is currently free to use and does not charge any commission on transactions. The startup eventually plans to offer a paid service as it looks to monetize its user base, but Keshre declined to share a timeline on how soon that would happen.
Groww will also soon begin to offer the ability to purchase stocks from its eponymous app, said Keshre, a former executive at Flipkart who co-founded Groww with three other Flipkart colleagues (Harsh Jain, Neeraj Singh and Ishan Bansal).
In a statement, Micky Malka, founder of Ribbit Capital, said, “We backed the Groww team because we believe in their mission. They have built the most trusted product in this space and are on the path to create a category-defining product.”
Ribbit Capital has made a number of investments in India in recent months. Last month, it invested in Cred, a startup that is trying to improve the financial behavior of credit card holders, and BharatPe, a payments solution for businesses.
In recent years, a number of startups such as INDWealth and Cube Wealth have emerged in India to offer wealth management platforms to the country’s growing internet population. Many established financial firms such as Paytm have also expanded their offerings to include investments in mutual funds.
Ashish Agarwal, a principal partner at Sequoia Capital India, said, “Investment products such as mutual funds and stocks were traditionally sold offline through financial advisors, who were mis-incentivized to sell high-commission products. Groww is taking a refreshing approach with a zero-commission mobile first model, enabling investors to make their own investment choices through a slick and easy user interface.”
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India’s 9-month-old CRED raises $120M to help people improve their financial behavior
Many Silicon Valley companies and fintech startups in India today share a common mission: They all want to bring their financial services to the next billion users. Dozens of fintech startups that we have spoken to in recent months have told us that they all want to address much of India, one of the last great growth markets globally, in the next few years.
So you can imagine our excitement when we learned there is at least one startup that is going after just a few million users in the immediate future. We’re talking about CRED, a nine-month-old, Bangalore-based startup that is building solutions to incentivize credit card users in India to become more responsible with money and thereby improve their credit score.
CRED has raised $120 million in a Series B financing round, Kunal Shah, founder and CEO of the startup, told TechCrunch on Monday. He declined to share more information. The startup, which has raised about $145 million to date, is now valued between $430 million to $450 million, a person familiar with the matter told TechCrunch.
According to a regulatory filing, existing investors Sequoia Capital, Ribbit Capital and DST Global’s Gemini Investments led the round, with participation from Tiger Global, Hillhouse Capital, General Catalyst, Greenoaks Capital and Dragoneer.
Hundreds of millions of Indians today don’t have a credit score because they have never taken a loan from a recognized entity nor owned a credit card. According to the government’s official figures, fewer than 50 million credit cards are in circulation in India currently, with industry reports suggesting that the actual number of unique credit card holders is about half of that.
“Nobody taught us about how to use money,” Shah told TechCrunch in a recent interview. “This has created a huge trust gap in India. If you look at developed markets, systematic trust is very high between all the entities. Members don’t have to rely on third-parties. In India, even if you wanted to rent a flat, you look for brokers, for instance.”
You can build that trust when you know how someone handles their money, and how they have handled it in recent history. “Our aim is to create a big membership community with high credit worthiness, therefore open up more opportunities for them,” Shah explained.
Shah is not going after the masses. He wants to focus on just the credit card users for now, and if he could win the trust of just half of those plastic card holders in India, he would consider it a success.
“Instead of chasing the mythological mass customers who are currently useful only on paper if you wanted to boast about your daily active user or monthly active user metric, our goal is to serve the existing users,” he said.
On CRED, users are offered a range of features, including the ability to better track their spending, get reminders and check their credit score, but more importantly, access to a range of lofty offers such as membership to a gym at a discounted price, access to good restaurants at low prices and subscription to various services at little to no charge. Users can access these features by earning points, which they can secure every time they pay their credit card bills on time.
Varun Krishnan, editor of technology news site FoneArena, told TechCrunch that he has found CRED useful in getting reminders to pay his bills and likes that he can pay them through a range of payment options, including UPI apps and debit cards. “I have several cards and it is hard to track amounts and due dates of payment for each one. They send all these alerts on WhatsApp, which is a blessing,” he said.
These are the reasons that attracted many people like Krishnan to join CRED. That, and some incentive to pay his bills — though he hopes that CRED expands the range of offers it currently provides to customers.
That wish may soon come true. In the coming months, CRED will enable these highly sought-after customers to access some financial services from banks in a single-click. Additionally, it is also exploring expansion to some international markets, the aforementioned source said.
CRED does not charge users any money for joining its platform, nor for availing any of the features it offers. But it is generating revenue from some of the partners that are supplying offers on the app.
It’s not a surprise that Shah, an industry veteran known for speaking the uncomfortable truths at conferences, has won the trust of so many investors already. He built one of the biggest payment apps in India, Freecharge, and sold it to e-commerce giant Snapdeal for a whopping $400 million in one of the increasingly rare exits that India’s fintech market has seen to date.
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India’s BharatPe raises $50M to help merchants accept digital payments and secure working capital
BharatPe, a New Delhi-based firm that is enabling hundreds of thousands of merchants to start accepting digital payments for the first time, and is also giving them access to working capital, has raised $50 million as it looks to scale its business in the nation.
The Series B round for the one-year-old startup was led by San Francisco-headquartered VC firm Ribbit Capital and London-based Steadview Capital, both of which have previously invested in a number of financial services in India.
Existing investors Sequoia Capital, Beenext Capital and Insight Partners also participated in the round, pushing BharatPe’s all-time raise to $65 million. The new round valued the startup at $225 million, Ashneer Grover, co-founder and CEO of BharatPe, told TechCrunch in an interview.
Google and Amazon, both of which offer payment services in India, were also in advanced stages of talks to fund BharatPe’s Series B financing round, but the startup’s founding team was not keen on diluting their stakes, especially in the wake of BharatPe’s recent growth, a person familiar with the matter told TechCrunch.
BharatPe operates an eponymous service to help offline merchants accept digital payments. Even as India has already emerged as the second largest internet market, with more than 500 million users, much of the country remains offline. Among those outside of the reach of the internet are merchants running small businesses, such as roadside tea stalls.
To make these merchants comfortable in accepting digital payments, BharatPe relies on QR codes built as part of government-backed UPI payments infrastructure. “We get them to put up a QR code in their shops, and any customer that uses a UPI-powered payments app — which is now supported by nearly every payments app in India — can pay these shop owners digitally,” said Grover.
Through BharatPe, these merchants also get access to a simplified dashboard on their phones to track the customers who owe them money and get periodic reminders.
BharatPe has amassed more than 1.5 million merchants on its platform. It processes more than 21 million transactions a month, worth more than $83 million, Grover said.
BharatPe also allows merchants to secure short-term loans. New merchants can secure about $500 for a period of three months from BharatPe. As merchants spend more time on BharatPe, the firm increases the amount to about $2,000.
The lending business is crucial to BharatPe. Payment apps make little to no money through making transactions on their platforms. Those processing UPI payments can not even charge a small commission to merchants. “There is no money to be made in doing payments in India,” Grover said. So you charge small interest on loans.
Access to working capital is a major challenge in developed markets such as India. According to a World Bank report, more than 2 billion people globally do not have access to working capital.
Grover said BharatPe aims to use the fund to add about 3.5 million merchants in the next 12 months. The firm has more than 2,000 sales people who are adding 400,000 new merchants to BharatPe each month, he said.
The rest of the money will go into financing the loans on the platform and building new solutions. Later today, BharatPe will launch a new service to connect suppliers and merchants through BharatPe so that their accounts are in sync.
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