In the wake of the $5.3 billion sale of banking API provider Plaid to Visa — a deal generally lauded as intelligent for the larger company — fintech became an even hotter part of the venture capital and startup landscape.
While companies in the broad fintech and finservices spaces were already attractive bets for private investors, Visa made them all the more attractive — a facet of the market that we presume has a great impact on startups that are working along similar lines to Plaid . Startups like Belvo, a Y Combinator-backed company that is part of the accelerator’s current, Winter 2020 batch.
TechCrunch got in touch with Belvo because its model is interesting, as are the bones of the company’s organization itself. Let’s explore.
Hello, Belvo
To understand what Belvo is building, TechCrunch caught up with the Pablo Viguera, one of the company’s co-founders, to chat about his startup and its goals.
Noting that his company’s aims are “similar to the overarching goal[s] of Plaid,” Viguera told TechCrunch that Belvo is not merely building a banking API business hoping to connect apps to financial accounts. Instead, Belvo wants to build a finance API, which takes in more information than is normally collected by such systems. Why take in more data from more sources? Because, Viguera said, only 50% of individuals at most have a bank account in Latin America, his company’s target market.
But that doesn’t mean the underbanked population isn’t financially active. Indeed, Belvo wants to link all sorts of accounts together. For example, Viguera told TechCrunch that some gig-economy companies in Latin America are issuing their own cards that allow workers to cash out at small local shops. In time, all those transactions are data that could be linked up using Belvo, casting a far wider net than what we’re used to domestically.
The company’s work to connect banks and non-banks together is key to the company’s goal of allowing “any fintech or any developer to access and interpret user financial data,” according to Viguera.
So we might consider Belvo to be similar to Plaid, but tuned for the Latin American market so it can take in a more diverse set of data to better meet the local market’s needs. As far as goals go, providing better financial services to the underbanked is something I can get behind.
Where is home?
Belvo is a fun company in that it has two hubs, or headquarters, today. One of its nexuses is in Mexico City, Mexico, focused on “sales, operations, [and] biz dev,” according to Viguera. Its other home is in Barcelona, Spain, where it has its product and tech teams. Such multi-hub companies are becoming more common, as are, I suspect, smaller companies starting life as effective multinationals.
The startup intends to expand its engineering staff in Mexico in time.
Today Belvo is 15 people, the company told TechCrunch, a figure that it expects to rise to between 20 and 25 people by the end of Q1 2020. (Demo day is in late March, for reference.)
Money
Belvo has a business model that investors can understand. Similar to other players in the API-space, Belvo charges for each API call that its customers use. We can compare the model to Twilio’s, I reckon.
The company is focused on the Mexican market first, something that I was curious about. According to Belvo, Mexico is home to a host of fintech companies it can partner with — 450 to 500 by Viguera’s estimation — with more being founded each quarter. That makes the country fertile ground for Belvo, given the nascency of its product and business.
Regarding growth, Belvo is coy, saying only that traction is “very strong” today, having added “dozens of developers” since it launched its platform about a month ago. Viguera did disclose that his company has “signed contracts with some of the most relevant fintechs in Mexico” and has seen “interest from other countries in Latin America.”
Belvo will move into the Colombian and Brazilian markets this year.
What’s next?
Belvo will present to a crowded room of investors in a little over a month’s time. How much revenue growth it can demonstrate will help price the company, and attract or disinterest capital. But given the mechanics of fundraising at Y Combinator today, who wants to bet that Belvo will close more capital ahead of the big day?