This morning Plug Pagamentos (Plug) announced a $2.7 million seed round, led by Costanoa Ventures' latest partner, Amy Cheetham. Other investors in the round included Verve Capital and Norte Ventures, among others. [Update: Also QED and Latitud!]
Plug, based in the Brazilian city of Rio de Janeiro, wants to make its home-market more amenable to online commerce. In an interview, the startup described Brazil as a hostile market for payments, with a quarter of transactions failing and merchants paying a multiple of what they pay in other markets to process payments.
The startup -- part of Y Combinator's past Summer 2021 cohort -- offers an array of payment processors via an API, along with a number of payment options. In short, the company wants to make payments in Brazil less onerous, perhaps unlocking economic potential in its market while driving commerce through its developer hook.
Plug told TechCrunch that its product is out in the wild, and is seeing its total payment volume (TPV) and client base double monthly. The company first hit the market in April.
The startup raised its latest capital using a SAFE, or simple agreement for future equity, which featured a cap, though we're not sure how high the conversion ceiling was set.
Cheetham said that she met Plug CEO Alex Vilhena in May, before the company was a part of Y Combinator, but that a deal to put Costanoa's capital into the business didn't come together until months later. Cheetham was already looking into the payments orchestration space, the market where Plug competes, before she met the company. The company fit into her thesis, even if its target market wasn't where she had initially looked for a company to back. Once graduated from its accelerator program, the startup was ready to take on more capital.
For fun, here's how TechCruch covered the company during the August-era Y Combinator demo day cycle:
Plug: One API to process payments across multiple providers. Alex Vilhena says they take a 1% cut while saving teams up to 30% in processing fees and have processed over $230,000 to date.
In our mid-November chat, Vilhena said that the 1% rate was aimed at his company's first customers, and that he wants to get the number down to a median figure of 0.5%. For larger customers, the rate could fall as low as 0.2% he hypothesized.
Plug's round fits neatly into the boom of Latin American fintech investment that we've observed for some time. Its project implies that there is still quite a lot of room in its home region to build. That there is still such large obstacles to online activity in Latin America is notable, given that the region's startup market is about to push a mega-unicorn live on the U.S. public markets in short order. Nubank won't be the last breakout success from the region, investors are betting.