FinTech gained great momentum globally with investments into the industry reaching almost $50 billion. Emerging markets are particularly interesting as the growing number of startups there demonstrate international success.
One of the most recent examples is Mexican startup Clip, a mobile payments company that raised $8 million in its Series A round, signifying one of the largest investments in early-stage companies in the country. The round was led by Mexican venture capital firm Alta Ventures with participation from Amex Ventures, Sierra Ventures, Endeavor Catalyst along with Mexican investors Fondo de Fondos and Angel Ventures Mexico.
The company was launched in 2013 by Adolfo Babatz and Vilash Poovala, two former PayPal employees and. The company set a goal to become the Mexican equivalent of Square, enabling merchants to accept credit and debit cards along with online payments.
Interestingly, history could have been reversed if the founders were able to sell the idea while working at PayPal. Adolfo said to TechCrunch, “We were very bad at selling this internally about how big this could become. Nine months later Square came out.”
Clip’s first partner American Express is responsible for 30% of the total payment volume in Mexico, but only has 3 million of the roughly 30 million credit and debit cards in the country. As Adolfo shared, Clip later added Banorte, Banamex and Bancomed to its list of partners.
Clip is based in Mexico City, but the development team is settled in Menlo Park, California. While the Silicon Valley base for developers is preserving the company's culture and spirit, Clip is looking forward to a massive opportunity in the Mexican market with 11 million businesses that could potentially use Clip’s payment services. An outstanding opportunity is also indicated by the card payments systems penetration at a level of just 9% with iZettle being the only strong competitor while the same statistic in the US is 50%, as reported by TechCrunch.
Moreover, the timing for Clip couldn't be better with statistics on credit card rollout in Mexico with only 400,000 merchants out of a total 5.5 million accepting cards due to cumbersome paperwork, high fees and the need to develop multiple acquiring relationships in order to accept different payment methods.
The opportunity for Clip is backed by the established dominance of cash transactions in the Mexican market. In addition, the country’s compound annual growth rate until 2016 is 25% and is the highest rate in Latin America, which promises a great growth trend for the company.
Clip's funding round indicates a global trend of the growing number of international investments. Two years ago, Clip raised $1.5 million from 500 Startups, Alta Ventures, ACCION and Karl Mehta. For the startups ecosystem in Mexico, the investments in Clip indicate a growth of international opportunities for tech companies in the country. Adolfo added, “In the last few years, there has been an explosion of funds and companies. And all of the basic building blocks for entrepreneurs are getting better.”