The B2B payments space has been on fire for a while, and the COVID-19 pandemic has only fueled mass adoption of digitizing finances.
In regions like Latin America, the need for innovation in the sector is even more paramount than in the United States with so many people still relying on outdated processes.
One Mexico City-based startup, Higo.io, is out to transform B2B payments for SMBs (small and medium-sized businesses) in Latin America, starting with its home country.
Rodolfo Corcuera, Juan José Fernández and Daniel Tamayo founded the company in January 2020, recognizing that the process of paying vendors for business owners is largely “manual and cumbersome.”
“In Mexico, small businesses mostly handle payables with nothing more than spreadsheets and email and legacy bank accounts,” CEO Corcuera said.
The trio formed Higo to automate processes and provide visibility into cash flow, particularly for small businesses. “Informal” businesses make up about 23% of Mexico’s GDP, according to data from INEGI, the government’s National Institute of Statistics and Geography. Higo launched its SaaS platform last November.
And now the startup has raised $3.3 million from a group of U.S.-based investors including Homebrew (which led the round), Susa Ventures, Haystack and J Ventures. The round is the latest in a string of fintech-related fundings in Mexico that TC has covered as of late.
Higo wants shake up the payments scene in the region by creating an alternative to traditional banking for businesses to pay each other.
“We want to build the Venmo for B2B payments in Latin America,” Corcuera told TC.
Ultimately, the goal is to help SMB owners deal less with tedious tasks and more on generate revenues and profits for their businesses. Customers so far include hundreds of small business owners and the company aims to have “thousands” of customers by year’s end.
“E-invoicing is ubiquitous in the States and in the U.S., receiving a PDF invoice is enough,” Corcuera told TC. “But in Mexico, it has to be electronic to be [tax] deductible by law. With our platform, invoices are automatically populated so businesses can have visibility into what has to be paid, what vendors they owe and when they owe.”
Corcuera is no stranger to running companies, having launched a housecleaning marketplace at the age of 23 in 2013. He also founded Tandem, an office management platform, in 2018, to help office managers streamline their procurement needs. As is often the case for founders, it was during the process of growing that company that Corcuera realized how painful and time consuming it was for businesses to manage their payables and receivables. That led him to come up with the concept behind Higo.io.
Gallardo was previously COO at Swap, a Mexican challenger bank, and also was one of the founding members of Uber’s Mexican operations.
Looking ahead, Higo plans to use its new capital in part to boost its six-person staff, particularly beefing up its engineering team so that it can “scale as fast as possible,” according to Corcuera.
For now, the company’s efforts are focused exclusively on the Mexican market, which in of itself is huge.
“Later we will expand in Latin America. We see a very clear opportunity in similar markets across the region,” Corcuera said.
Homebrew Partner Satya Patel said his San Francisco-based VC firm believes there’s a massive opportunity in Latin America given the move to digital payments. The investment in Higo marks Homebrew’s third in the region in the past 18 months.
“This is an exceptional team focused on a problem that is visceral for businesses in Mexico in particular,” Patel told TC. “They are able to provide businesses with a real-time view of their cash flow and working capital. Without it, they are at risk. So the opportunity is to tackle this acute pain point being felt by a lot of businesses.”
The region’s payments ecosystem, he said, is still very nascent.
“Being the intermediary for B2B tax information gives Higo an opportunity to provide a real alternative to the traditional way Mexicans are used to doing banking and business,” Patel added.