Another Argentine Unicorn on the Horizon? Pomelo’s Plans After Raising US$40 Million

Buenos Aires — Pomelo, an Argentine startup working on technological infrastructure for the issuance, processing, and management of card payments in Latin America, announced its US$40 million Series B round this Wednesday. The investment was led by Kaszek, the largest venture capital fund in Latin America.

“It’s quite unprecedented for Argentina and Latin America. It’s very good news,” said Gastón Irigoyen, CEO and one of the company’s founders, emphasizing the significance of the amount raised in what is still a drier VC market compared to the last few years.

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The Buenos Aires-born company experienced strong growth in its payment volumes in 2023, and recently decided to launch operations in Chile. In 2024, according to its leadership, the goal will be to consolidate expansion into new markets and work toward profitability.

Present in six different Latin American countries and with over 120 clients, Irigoyen says he is optimistic about the possibility of eventually becoming a unicorn, as venture capital investors continue to bet on the company.

Santiago Witis, Country Manager for Argentina and Chile, highlighted that, particularly in Argentina, there are positive expectations regarding the deregulatory measures currently being promoted by the new government of Javier Milei.

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The following conversation has been edited for the sake of brevity and clarity.

What are Pomelo’s plans for 2024 in the region?

Gastón Irigoyen: It’s a year of consolidating our leadership in the markets of Brazil, Mexico, Argentina, Colombia, Peru, and now the new launch in Chile. We are working on technology that allows us to help our clients serve other countries in the region. We have requests from Paraguay, Ecuador, Panama, Costa Rica, and Uruguay. So, we are working on some products that will enable us to expand beyond the borders of these six countries. We aim to deepen the value proposition, especially in all credit card products that are highly local and subject to local regulation. That is, enabling banks and traditional companies to launch a business that is ultimately the most profitable, especially as the scenario of interest rates becomes more regularized.

What types of products are in high demand in Argentina?

Santiago Witis: Without a doubt, products that can hit the market faster, that are flexible and digital. There are some credit card products that are more adaptable, more flexible, like the corporate card, which is a segment that is starting to be targeted with a new value proposition. In terms of banks, we see a significant opportunity to start providing these types of digital and flexible products for young people and digital natives and even to renew the corporate services they have. The credit card becomes one of the most interesting products. In terms of political context, everything related to the DNU [emergency presidential decree] regarding credit cards, if that evolves, we see it as an opportunity for credit cards to regain value.

Are salaries a challenge in such a competitive sector?

Gastón Irigoyen: Today, the world is governed by the competition for talent. Since the pandemic, it has become much more globalized, allowing Argentine and Latin American talent to access opportunities anywhere in the world. We work a lot on that value proposition, which includes compensation, for example, giving company shares to everyone working at Pomelo. Everyone is, to some extent, an owner of the company. There are also benefits and mobility. We have an optional hybrid work system. Offices are optional so that everyone can organize their lives as they see fit. That is our model, and generally, it works well. We have been able to attract people from the best companies in Latin America.

Considering that the package of official measures seems to have a chance to advance in Argentina, what are your expectations for 2024?

Santiago Witis: In general terms, we are paying attention to new measures. Of course, they have to go through their due process, and we are very expectant as well. These are measures that, due to deregulation, programmatically, we are hopeful about what they can generate in terms of economic development and growth. Any measure that promotes competitiveness, investment, and inclusion with clear rules will clearly be a driver for the sector, implying greater adoption of technology to innovate in business models and products. Regarding public policies in general, in Argentina, as long as they support trends that I think are happening in the fintech world, such as interoperability, I think it’s good and will help the entire segment.

So, is 2024 looking promising?

Santiago Witis: I don’t know when we’ll become a unicorn, but we are clear that we are working to be profitable in 2025. In 2024, we think about consolidation and continued growth. In the past year, we multiplied our processed payment volume by seven. There is a certain situation in the countries, not only in Argentina, but we are on a path of accelerated and sustained growth. That macro trend is there, but for the stage we are in, at least we have seen steady month-to-month business growth.

You don’t have a date, but would you say you are on track to become a unicorn?

Santiago Witis: It would be a significant milestone for the company, but it also depends a lot on financing conditions and the global market. We are in Argentina, born here, and the majority of resources and talents are invested in Argentina. That will continue. We have many opportunities, but it will depend on many factors that, in turn, do not depend 100% on us. Argentina makes a very important contribution to the business. Since we have different places to grow, there is a lot of room for that. Inevitably, at some point, we will come across it.