Pomelo Secures $35M Funding Led by Tiger Global

Pomelo Secures $35 Million Series A Funding to Expand Fintech Infrastructure in Latin America

Latin American fintech Pomelo has recently announced a $35 million Series A financing round, spearheaded by Tiger Global Management.

Building a Fintech-as-a-Service Platform

Founded earlier this year, Pomelo is dedicated to constructing a fintech-as-a-service platform specifically tailored for the Latin American market.

The company’s infrastructure is designed to facilitate the launch of virtual accounts and the issuance of both prepaid and credit cards for fintechs and embedded finance companies, all through streamlined and legally compliant onboarding procedures.

Impressive Investor Support

The speed at which Pomelo has attracted significant investment from prominent investors is noteworthy.

In addition to Tiger Global, the Series A round saw participation from a diverse group of venture capital firms, including Insight Partners, Index Ventures, monashees, SciFi, QED Investors, BoxGroup, Greyhound, Gilgamesh Ventures, and Clocktower.

Notable Angel Investors

A number of well-known angel investors have also contributed to the company’s funding, such as Max Levchin, founder of Affirm; Biz Stone; Martin Varsavski; Jackie Reses; Angela Strange from a16z; Max Tayenthal of N26; William Hockey, co-founder of Plaid; Eric Glyman and Karim Atiyeh, co-founders of Ramp; and Itai Damti, co-founder and CEO of Unit.

Recent Funding Extensions

This funding follows a $1 million extension to Pomelo’s seed round in June, which included investments from Sequoia Capital, Guillaume Pousaz of Checkout, Hans Tung of GGV, and Matt Robinson of GoCardless.

Sequoia’s participation marked a return to investment in Latin America, following a period of inactivity and previous backing of companies like Nubank and Rappi.

Early Traction and Expansion

Despite being only seven months old, Pomelo has already secured four customers, encompassing three fintechs and one embedded finance provider.

The company, initially established in Argentina, has expanded its operations to Brazil and Mexico, with future plans to include Chile and Colombia. In Argentina, Pomelo has been granted both a Mastercard license and a payments license.

Addressing a Significant Market Opportunity

Pomelo estimates the annual payments volume at $900 billion, yet asserts that 95% of these transactions are currently processed by established local institutions.

The founders identified this as a challenge based on their prior experiences and are focused on developing a new payments infrastructure to address it.

The Challenges of Fintech in Latin America

“Launching a fintech, and particularly issuing cards, in Latin America is a real nightmare,” explained Gaston Irigoyen, Pomelo’s co-founder and CEO, during the company’s previous funding round.

“It typically takes 12 to 18 months to launch a simple prepaid card, and companies often face repeating this process in each market they enter.”

Pomelo’s Solution: A Modern Infrastructure

Pomelo aims to streamline the process by creating a next-generation financial services infrastructure that enables companies to launch cards “much faster” across Latin America.

Irigoyen highlighted that the region’s financial services infrastructure is “completely obsolete and highly fragmented.”

API-Driven Platform and Compliance

The startup’s API-driven platform provides companies with the tools to establish compliant onboarding processes, launch virtual accounts connected to local financial systems, and issue debit and credit cards throughout Latin America.

“Each market has its own regulation and nuances, and legacy providers offer poor technology at expensive prices,” Irigoyen stated.

“Our goal at Pomelo is to make LatAm look like Europe, helping our partners unlock multiple markets quickly, focusing on growth instead of regulatory hurdles and complex integrations.”

Industry Validation

John Curtius, a partner at Tiger Global, acknowledged the rapid growth of Latin America’s tech sector and the emergence of startups transforming various industries.

“We are excited to partner with Pomelo given their unique perspective about LatAm, their vision for a new regional fintech infrastructure, and a strong team capable of executing with the highest standards,” Curtius said.

Team and Future Plans

Currently, Pomelo employs 100 individuals with prior experience at companies like Mercado Pago, Amazon Payments, Mastercard, Nubank, D-Local, Lime, and N26.

The company intends to add another 150 employees by the end of 2022, according to Irigoyen, who previously held a key role at Google LatAm and has a track record as a third-time founder with successful exits, including one to TripAdvisor, and as former CEO of Naranja X.

(Notably, Pomelo offers stock options to all employees, a relatively uncommon practice in Latin America.)

Capital Allocation

The newly acquired capital will be used to accelerate the company’s product development roadmap and to bolster business development initiatives.

A Wave of Fintech Investment in Latin America

This investment is part of a broader trend of fintech infrastructure investments in Latin America.

Recent examples include Hash, a Brazilian payment infrastructure fintech, raising $40 million in a Series C round, and Pismo, a São Paulo-based company, securing $108 million in a Series B funding round.