Global Founders Capital, ONEVC, and Flourish Ventures made an undisclosed investment in Swap, a Brazilian fintech services provider for enterprises. Y Combinator Partner Brad Flora and iFood Cofounder Patrick Sigrist also invested.
(Press Release) As we close in on almost two years since our first investment, we begin to have the benefit of some hindsight and, as a result, two particular points become apparent to us: (1) we appreciate the opportunity to invest in second-time founders and, (2) the ecosystem in Brazil (and Latin America, more broadly) offers us an ever-increasing number of special companies founded by these resilient and more experienced second-timers.
In that context, we are happy to announce that we have recently invested in Swap, a Brazilian fintech founded by a team of seasoned co-founders, with previous startup experience. Swap is a payment solution integrator that offers a basic infrastructure for fintechs via a set of APIs (Banking as a Service, or BaaS). Swap’s co-founders, Ury Rappaport and Doug Storf, were part of the senior management team at 99 while Alexandre Takinamini, also a co-founder, was previously a technical co-founder at GuiaBolso.
Over the years, we have had the privilege of backing exceptional second-time founders such as Lincoln Ando from Idwall and Alessio Alionço from Pipefy. We have also sought to invest in entrepreneurs who had significant previous operating experience, such as Adhemar Costa (founder of Kovi, previously at 99) and Vinicius Correa (co-founder of Pipo Saúde, previously at Nubank). Our recent investment in Swap carries us forward in our commitment to backing exceptional, resilient entrepreneurs whom we believe have the potential to build category-defining companies.
New Investment: Swap
The four main reasons we think infrastructure APIs make great businesses are as follows:
1) APIs are easy to sell and implement: it is often the case that APIs will be adopted by the tech team on the client side, without the need for so much a phone call or visit from a sales representative. Once the customer’s development implements the solution, which can sometimes happen in as little as a few hours, usage begins and revenues can start slowly trickling in. The fact that APIs can be easy sell and implement also makes for a low cost of acquiring customers.
2) Go to market is simple: selling into other tech startups are a great go-to-market strategy for an early-stage infrastructure player. From the customer side (fintechs), a fast implementation without upfront costs and transparent billing “on-demand” is the only choice. Incumbents largely miss the boat on the opportunity to serve small, scrappy tech teams that need things to “just work” and be affordable before scaling. Being able to meet these needs opens up an attractive and overlooked segment of the market.
3) API companies tend to scale quickly: the compounding effect of being able to acquire lots of small customers who are high growth companies in their own right cannot be understated.
4) An API is an index: By investing in the basic infrastructure for fintechs, we are not betting on a specific fintech player, but on the growth of an entire category that has strong tailwinds. Since we believe many technology companies in LATAM will ultimately turn into fintech companies (or at least have a very significant fintech component), investing in a finance infrastructure API is a great way to tie your success to the success of the ecosystem as a whole.