Why we invested in Swap

Bruno Yoshimura
Jul 7 · 7 min read

ONEVC led Swap’s Seed Round, with the participation of GFC, SOMA Capital, Brad Flora (Y Combinator Partner), a.b.seed, Flourish Ventures, Rhombuz, Patrick Sigrist (Co-founder of iFood), and others. We are excited to partner with the team and support the company’s mission to develop the basic infrastructure for fintechs on an API.

The rise of fintechs and new regulations by the Central Bank have accelerated the need for basic infrastructure for banking, transfer, lending, and payment processing (also known as BaaS, or, Banking-As-A-Service). We believe the incumbents are underserving the market with outdated solutions, long implementation cycles, and high costs. In this post, we will share why we are excited to partner with Swap.

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How Swap was started:

Doug and Ury were in leadership positions at 99 when they envisioned Swap. By that time, they were trying to find a partner that could help 99 pay the drivers on a debit card and provide better integration for payments. As Doug Storf describes:

Looking at the ecosystem around, Ury Rappaport realized that 99 was not the only player demanding better infrastructure for fintechs and marketplaces.

With this, they decide to create Swap and bring an incredible tech team around them.

Why ONEVC loves API/Infrastructure businesses:

ONEVC likes to invest in basic infrastructure based on APIs for three reasons.

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.

However, we are very confident that the fintech category will thrive. By investing in the basic infrastructure for fintechs, we are not betting on a specific fintech player, but on the tailwind of the entire category.

As a side note, we already saw the potential of good tailwinds on APIs. ONEVC’s portfolio also includes Idwall, which provides background checks as a service, and Rightfoot, which offers APIs for student debt payments in the United States.

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API Documentation for Swap: Easy to integrate!

Others reasons that got us excited:

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1) An amazing team with complementary knowledge: Among the founding team and senior management, we saw a mix of skills that is top in the category: (1) knowledge on the client-side at 99; (2) six years as a technical co-founder of GuiaBolso; (3) knowledge on the incumbent side having served similar clients; (4) knowledge on the regulatory side, having participated on regulations for Stone and integrations with Visa/Amex/Mastercard; (5) former Chief Security Officer on a public financial company. Additionally, Alexandre Takinami, the third co-founder and CTO at Swap, understands the needs of the DevOps on the client-side.

"At Guiabolso we had to integrate with many players in the Brazilian Fintech industry. Some of them had good API, and others did not. For every integration, we had to go through a lot of discoveries, tests, and careful development because most of those weren’t following best practices. What I learned is that the software engineer on the client-side is king and understanding him/her help us build a better product."

2) A clear “Why Now”: Open Banking and PIX (instant payments system) are coming this year, leveling the playfield for new fintechs to grow and accelerating, even more, their rise.

During our diligence process, we consulted with the major regulations fintech specialist in Brazil, Bruno Balduccini. He saw an increase in the number of fintechs:

3) We understand APIs and can add real value: We invest in inevitable founders that don’t need us, but by partnering with us, they can have our help to accelerate their journey. My experience as a co-founding CTO having already implemented APIs (Sendgrid, AWS, Adyen, Stripe) and Pedro Sorrentino’s experience in go-to-market for APIs businesses as the first business development person at Sengrid are relevant for Swap.

4) The market need was validated by specialists and clients during our diligence process: Patrick Sigrist, who is the co-founder at Nomad, iFood, and a board member at Neon, understands deeply the need and is a relevant investor on this round. In his current project (Nomad) he uses a similar US-based solution. Also, as a board member at Neon he saw how latent is the problem. In his own words:

Bruno Yoshimura — General Partner at ONEVC

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Bruno Yoshimura is a Co-founder and General Partner at ONEVC. Bruno has accumulated 15 years of experience as a tech founder with extensive involvement in product development, sales, and marketing. Before pursuing an MBA at Stanford, he launched Kekanto, an online guide based on users’ reviews backed by Accel Partner and Kaszek Ventures, and Delivery Direto, a white-label platform for restaurants doing delivery sold to Locaweb (BVMF:LWSA3) in 2019. Bruno holds a major in computer science from the University of Sao Paulo.

ONEVC

ONEVC is a Silicon Valley and Brazil-based early stage…

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