Kushki Raises $86M to Expand LatAm Financial Infrastructure

Kushki Secures $86 Million Series B Funding

While substantial funding rounds frequently emerge from South America, certain nations like Ecuador have maintained a lower profile. However, Kushki, a fintech company headquartered in Quito, is drawing significant attention with the announcement of its $86 million Series B funding round, resulting in a $600 million valuation.

Founders' Journey and Vision

Aron Schwarzkopf, CEO and co-founder of Kushki, expressed surprise at their success, stating, “We never anticipated returning home [from the U.S.] and establishing a company with a greater valuation in Ecuador than what we achieved in the U.S.”

Schwarzkopf, alongside his partner Sebastián Castro, previously founded and sold a fintech venture named Leaf in the United States in 2014. Both originally hail from Ecuador but pursued their higher education in Boston, where their partnership began while sharing a passion for soccer.

Focus on Payment Infrastructure

Unlike many Latin American fintechs concentrating on financial inclusion for the unbanked population, Kushki operates as a foundational technology provider. They develop the infrastructure utilized by companies such as Nubank to facilitate money transfers.

Their functionalities empower both domestic and international payment providers, supporting transactions via credit and debit cards, bank transfers, digital currencies, mobile wallets, and various alternative payment solutions.

Expansion Plans and Market Challenges

“We identified a substantial opportunity to democratize and establish infrastructure for the movement of funds,” Schwarzkopf explained to TechCrunch.

Established in 2017, the company currently operates in Mexico, Colombia, Ecuador, Peru, and Chile. The newly acquired Series B funding will be allocated to accelerate growth and extend operations into Brazil and nine additional Central American markets.

Expanding into Brazil presents considerable financial challenges, making it an undertaking not feasible for all companies, despite its potential for high profitability when executed effectively. These hurdles include the necessity of translating materials into Portuguese and navigating diverse financial regulations.

A Customized Approach to Market Entry

Consequently, Kushki adopts a tailored strategy for each country it enters.

“Our approach involves entering markets and essentially reconstructing an entire infrastructure, consolidating everything into a single API,” Schwarzkopf clarified.

Global Parallels and Funding Details

Similar business models to Kushki have proven successful in other regions globally, such as Pine Labs in India, Flutterwave and Checkout.com in Africa – the latter now boasting 15 international offices.

To date, Kushki, whose name translates to “cash” in an indigenous Andes language, has raised a total of $100 million. This includes investments from SoftBank, an undisclosed global growth equity firm, and previous backers like DILA Capital, Kaszek Ventures, Clocktower Ventures, and Magma Partners.

Long-Term Vision

“Looking ahead to 2060, the need for servers and efficient methods for transferring money will persist, and we recognized that the existing payment infrastructure was inadequate to meet those demands,” Schwarzkopf concluded.