This morning Clara, a corporate spend-management startup focused on the Latin American market, announced its product launch and a $3.5 million pre-seed round led by General Catalyst.
The company’s funding caught TechCrunch’s eye as there has been a flurry of funding for related companies serving the United States market. From Divvy to Brex to Ramp to Airbase to Teampay, investors have poured capital into startups working to help companies better track and manage their spend.
Companies working in the fintech niche tend to monetize in one of two ways, namely interchange revenues and software incomes. Or more simply, some in the corporate spend category generate revenues when users swipe cards, earning a slice of the transaction. And some also charge for the software that they have wrapped around their cards and other methods of payment.
Clara is in the first camp, making its revenues today from interchange incomes, according to Gerry Giacomán Colyer and Diego Iván García Escobedo, the company’s co-founders. Colyer is the company’s CEO, while García Escobedo heads its product and tech work.
The pair told TechCrunch that the Mexican interchange market is more akin to the United States’ own (lucrative) than Europe’s own (less lucrative), meaning that if the company can sign up a host of customers for its free service — empieza hoy – sin costo, its website intones — it could post the same sort of revenue growth that has spurred some of its American comps to huge venture capital raises.
The startup’s potential has caught the eye of more than General Catalyst, a well-known venture capital firm. The two co-founders of Ramp are also investors in Clara. The startup’s round also included funds from a host of smaller firms and angels, including Canary Ventures, Adapt Ventures and Picus Capital, among others.
The co-founders want to bridge the gap in technology-enabled financial services that they found in Mexico. Colyer worked for G2 after a stint at Stanford, eventually moving back to Mexico and working on a micromobility startup called Uva Scooters. He discovered during the process that Mexican and other Latin American firms lacked some digital tools, like low- and zero-cost corporate spend software, to which American companies had ample access.
So, the pair of founders, who met at Grin Scooters, which had acquired Uva, set out to build Clara, tuning a model with proven success in America to work in Mexico. What sort of tweaking was needed? Local compliance to ensure high-levels of card acceptance, support for local tax law and receipt management, the pair said.
Thus far the company has only worked with around 100 customers, with the co-founders telling TechCrunch they have seen traction with high-growth companies, some of which are startups. That echoes what Brex tapped into when it was a more youthful upstart itself.
Today the company operates in Mexico only, but intends to support other markets over time.
Regarding the company’s $3.5 million raise, like many pre-seed and seed deals, the funds were acquired in a few tranches, including one in May of 2020. The rest of the capital came later in the year.
Seeing successful startup models that are familiar in the United States pop up in Latin America is a regular trend. Belvo, for example, is following in the tracks that Plaid laid down, bringing fintech APIs to the LatAm market. Given rising smartphone penetration, and rising card usage, perhaps Clara will find a good fit in its home market.
Looking ahead, TechCrunch is curious how quickly Clara can accrete new customer companies now that it has formally launched. If it can, and the interchange game proves successful, expect to hear from it again soon.
