Fintech startup Oyster Financial raised $14m in a seed round — the largest in Latin America. The funding will be used to scale its financial services aimed at small and medium-sized businesses in Mexico.
The Silicon Valley and Mexico City-based company is led by PayPal alumnus Vilash Poovala, co-Founder and CEO.
"There are many opportunities here for fintech companies. We are focused on providing bank accounts, and debit cards for businesses, which can take as much as two years or more to arrange," says Poovala.
"Our business is more than two years old and we still have to ask one of our employees to pay some of our utility bills and then we reimburse them because we don't yet have Mexican debit cards."
Oyster claims it can get approval for bank business accounts within 24 to 72 hours by using machine learning data to assess risk. This compares with as long as six months from traditional banks which are highly profitable but very conservative and slow moving.
By handling the business accounts, Oyster's banking technology platform will analyze and predict cash flows and can recommend and pre-approve financial services to business clients, such as credit cards and loans.
"We aren't selling any data to anyone but we'll know which businesses could grow further and faster with a loan or other services, and at much better rates," says Poovala.
This is the second Mexican startup for Poovla. In 2012 he co-founded PayClip, with Adolfo Babatz, also a PayPal alum. People who once worked at PayPal have founded some of Silicon Valley's largest companies, such as LinkedIn, Tesla, SpaceX, YouTube, Palantir, and many more.
The Mexican tech scene has not yet produced a Unicorn — a startup valued by its investors at more than $1 billion. Brazil has 11 Unicorns and is well positioned for more.
However, Mexico is benefiting from an overall rise in Latin American VC investments in startups especially in Fintech -- the largest sector for the past five years. And it is attracting seasoned repeat entrepreneurs as founders.
The lack of Mexican Unicorns has also been blamed on a rise in kidnappings. A Reuters investigation late last year found that startup founders preferred a low-profile and were cautious about attracting attention for their success. Several experts told Reuters that this fear of publicity was holding back tech startups.
Reuters noted that there had been several high profile kidnappings but none involving a tech entrepreneur.