Ep. 35: Funding rounds are getting bigger, Mexican cities are competing to become Tech Hubs, and Mexico ranks number 2 in the world of Remittance.
Welcome to Scenius Mexico: Your weekly newsletter on technology, innovation, and startups in Mexico.
This week's funding rounds are getting bigger. Not as much as what we used to see a year ago, but Beek and Minu successfully closed two important Series A. A confirmation that Startups with strong financial and business models still attract investors’ attention and maybe an early sign of renewed confidence in the space.
The region of Nuevo León not only wants to steal Elon Musk’s investment from Mexico city, but it is going after its tech and startup scene too. The new initiative is called StartUp Powered by Nuevo León and will consist of two innovation programs.
Keep reading to learn about Swedish unicorn Klarna’s plan to go after the Mexican Market and Mercado Pago partnership with Xoom to surf the remittance wave.
Equity Funding Rounds
Audiobooks Startup Beek raised a US$13 million Series A
With Beek, Mexican creators now have a new space to express themselves other than TikTok and Instagram. Based on a marketplace business model, the founding team wants to become the ‘super app’ for audio. With a paying subscriber base growing by 18x over the last 2 years on one side and 35% of the content creators earning more than their local minimum wage on the other side, the bet seems to be paying off.
The new capital will be used to build more tools to produce content at scale so that creators can launch more content on the platform while providing a more engaging user experience. When Audible meets Netflix you have the next big thing in Mexico - Beek.
Sector: Marketplace - Audio
Total raised to date: US$20 million
Founders: Pamela Valdes Esteva, Guillermo Sequeira
Investors: Accel, Outbound Ventures, Lightspeed Venture Partners, Greylock Partners
Employee wellness startup Minu raised an US$30 million new funding
Founded as an employee wage on-demand, the team recently pivoted to an employee wellness company building out gamified and rewards features, including saving or completing financial education courses, while improving retention for employers.
With the ultimate goal to monitor the stress of employees and have mechanisms in place to help them, Minu was boosted in its growth by the Mexican legislation known as Nom 35 that mandates companies to do just that. And, finance is the most common source of stress for most Mexican employees.
The new capital is a combination of a US$10 million bridge round and $20 million of debt. The team will use the new capital to continue growing its customer base and the continued development of its platform to include more modules for human resources and chief financial officers.
Sector: FinTech - Employee Wellness
Total Raised to date: US$30 million in Equity + US$20 million in Debt
Founders: Nima Pourshasb, Rafael Niell, Paolo Rizzi
Investors: Fintech Collective, Village Global, Coppel Capital, Besant Capital, QED Investors, Salkantay, Accial Capital
Getin closed a US$750 thousand Seed round
This technology startup helps retail-focused companies to improve their competitiveness by using Artificial Intelligence to gather more precise indicators about their in-store customer base.
The Getin platform can optimize the development of physical stores by analyzing the space capacity, density and permanence of people with the goal of better understanding the customer’s behavior. Nonetheless, the technology is still very early and Getin will use the new capital to work on its platform and AI model.
Sector: Marketing - Business Intelligence
Total Raised to date: US$0.75 million
Founders: Anabell Trejo, Francisco Alvarez
Investors: LDM Capital
Startups News
Mexican Group Invex launches its FinTech - Now
The company specialized in traditional finance, with services ranging from a private bank to payment cards, is jumping on the FinTech bandwagon with Now, a digital bank - also called neo bank - for the Mexican market.
Its director, Luis Pineda, laid down their plan last week. The new company will be working on offering a multi-products offer to its users beginning with debit account and payment. A pretty classic move so far. While competing with many established pure players in the market, Now hopes to convince potential customers that they might find it reassuring to be backed by an established brand. Still, it is not very clear how they will differentiate from the many spin-offs launched by traditional banks recently.
VC - Accelerators News
Nuevo León wants to be the new Tech Hub of Mexico
The region featuring the city of Monterrey has always been an economic center, but mainly for traditional businesses. Now, it aims to enter the raging competition to be the place to be for talent and technology startups in Latin America.
Fostered by Peak NL and Startup México, the initiative called StartUp Powered by Nuevo León will consist of two programs: incubation for early stage companies and acceleration for SMBs willing to work on their growth and digitalization.
Village Capital is launching a new program
Village Capital is a VC firm that finds, trains, and invests in early-stage ventures solving major global problems in agriculture, education, energy, financial inclusion, and health. The programs use a model referred to as peer-selection, in which the entrepreneurs themselves choose the companies in the program that receive pre-committed investments.
For its newest program, the firm has partnered with the Posner Foundation to specifically focus on reducing food waste. Deadline to apply is February 17th and can be done here.
Rest of the World
Unicorn BNPL startup Klarna is coming to Mexico
The Swedish-based buy now, pay later outfit backed by Softbank is setting its eyes on the Mexican, and probably Latin American, market for its next move. The last few weeks have been rough for the pioneer of the BNPL model with a down round dropping its valuation from US$45.6 billion to US$6.7 billion and letting go 1,000 employees in the aftermath.
Still, the company sees a risk worth taking in expanding to the Mexican market and has opened a dedicated website to find local talents willing to help them build a presence here and compete against the likes of Kueski, Nelo, Aplazo, Graviti and Atrato.
Mercado Pago and Xoom partners on a better remittance offer
In 2022, Mexico broke another record for the amount of dollars sent from the US to the country, reaching US$58.5 billion for the first time and making it the second biggest remittance corridor in the world. When I covered it at the end of last year in a special Deep Dive edition, Mexico ranked third. In this analysis I dove into the important role that FinTech can play and it seems to have inspired Mercado Pago and Xoom to work together - or maybe it is pure coincidence. In any case, there’s a growing opportunity to seize while having a positive impact on the life of millions of Mexicans relying on this money flow to sustain their families.
Alfonso is the co-founder and co-CEO of Hilos, a startup that empowers companies to organize and automate WhatsApp conversations with their customers. Before this he was Head of Engineering at Flat as well as a Software Engineer for Stripe, having worked at several Mexican startups before that.
What would you have liked to know before starting your company/career?
I was fortunate to have gotten into the startup ecosystem while I was still mid major at college. That enabled me to see first hand the challenges of starting a company and growing it, but it was always from the technical side.
Now that I really appreciate how hard it is not just to build a good product, but to find a suitable and scalable distribution channel, I wish I had spent more time asking the people I worked with previously what their thought process was about this. It’s almost like running a second startup.
What do outsiders often fail to understand about your company?
I think WhatsApp is still underutilized as a channel for doing business programmatically. It’s no secret that LATAM runs on WhatsApp, but doing so at scale is a lot different than messaging your favorite taco place for an order.
The companies that use WhatsApp started out by using it for support or sales operations, but we can go a lot further. What if WhatsApp was your company’s frontend? Just like WeChat in China, there’s a lot of potential to deliver an amazing experience for your customers without the headaches of prompting them to install another app or learn a different platform.
Chat might be limited as a medium, but I believe we’ll see a lot of advances and new UXs being built on top of chat with AI advances like ChatGPT. It’s a great time to be a builder.
What's one thing you can keep talking about for hours?
Processes and first principles thinking: I’d love to break the idea that to be a successful founder means working 20-hour days. I believe people assume that hard work is necessarily time-consuming, but really it’s about the depth that you can go when figuring out something that makes the difference.
It’s much harder to move fast when everything’s changing all the time because you didn’t think things through. Making the right abstractions from the start is a competitive advantage.
What’s the weirdest job you’ve ever had to do?
My first job ever was in a social media startup. My boss would sleep at the office, which was basically a half-finished house that was in the middle of a legal dispute by one of the startup’s investors. I remember fondly trying to live up to the Silicon Valley startup experience by having expensive cereal in the kitchen and a sleeping bag in the pantry.
What makes you bullish on the Mexican startup ecosystem?
One of the reasons I decided to move back to Mexico was that I felt that the opportunities for change and the ability to do so had reached a certain momentum: finally there was a lot more funding coming to LATAM, and more experienced operators coming from the US.
Smart people that can execute will find people that understand how markets and users behave in LATAM, and from there a ton of new and interesting startups will be born.
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