Solving Payments in Emerging Markets with Sebastian Kanovich, CEO & Founder of dLocal
In our latest episode of the Wharton Fintech podcast, Miguel Armaza is joined by Sebastian Kanovich, CEO of dLocal, a 360 payments technology company handling payins and payouts in emerging markets for some of the largest global e-commerce and marketplace companies, including Amazon, Facebook, Netflix, and Google.
Sebastian was born and raised in Montevideo, Uruguay. After a short stint at Santander Bank as an equities and fixed income trader, Sebastian and his friends realized that international companies expanding into emerging markets were struggling to accept payments in these new countries. So they turned around and created a prepaid card to solve this problem. Their solution was so successful that it was noticed by GoDaddy who flew them to their Arizona headquarters and proposed white labeling their technology. This marked dLocal’s transition from B2C into B2B. Six years later, dLocal makes over $120 million in annual revenue, has over 260 employees, and is one of the largest B2B payments companies in the world, serving Amazon, Facebook, Netflix, Google, and many more.
Business Model
Launched initially in Brazil, dLocal is now a global company with a presence in 21 markets. From Mexico to Bangladesh, dlocal has become the go-to payments facilitator for most large companies accepting payments in emerging markets. Although Sebastian and team have global ambitions and plan to continue expanding their geographic footprint, they have made a conscious decision to stay away from the US, Europe, and China, given the competitive nature of these markets. Instead, they are helping US, European, and Chinese companies expand abroad.
dLocal also partners with two types of companies. On one end, they work closely with banks to ensure disbursements (payouts) run smoothly. On the other end, dLocal partners with payment method providers like digital wallets to capture user payments (payins). As Sebastian describes it, they play an agnostic aggregator role and sit in the middle of both sides of a payment.
Funding
dLocal is one of those enviable cases where they’ve been able to scale by pure bootstrapping and cost control. Only after more than six years of operations did they decide to take a check from General Atlantic and bring them on board for a very sizeable investment (undisclosed but rumored in the high millions). This funding will help them turbocharge their ambitious expansion plans and better compete against incumbents and new players alike. However, for Sebastian, the most important reason to partner with GA was to learn from their breadth and depth of experience in the fintech/payments sector.
COVID
By virtue of being a purely digital and internationally distributed company, dLocal has been able to navigate and thrive during COVID times. Their systems helped switch to remote work from one day to another and their productivity is as high as ever. But when it comes to returning to work, Sebastian tells us over 90% of employees want a hybrid model with a flexible work from home and office arrangement. More interestingly, they have scaled back plans to build a development hub in Buenos Aires and have, instead, opted for a decentralized hub that will draw talent from all over the world. This is something Sebastian is particularly excited about and likes the fact that dLocal will be able to open professional opportunities to people around the world that otherwise wouldn’t have them.
As for future builders considering launching a startup, Sebastian argues there’s no one single recipe for entrepreneurship. You just have to make sure you really like what you’re doing and fall in love with the process.
You can find the transcript of this episode here.
Sebastián Kanovich
Sebastián Kanovich is a pioneer in emerging markets payments and the Chief Executive Officer at dLocal. He spun off dLocal from AstroPay in January 2016, creating the only 360 payments technology company which handles payins and payouts in emerging markets for some of the largest global e-commerce and marketplace companies. As the CEO of AstroPay, prior to dLocal, he grew the company into a premier cross-border payment-card provider that processed millions of transactions daily. Sebastián holds a Bachelor degree in Economics from Universidad ORT Uruguay. He also studied Entrepreneurship, Innovation and Management of Technology at Tel Aviv University, and completed a prestigious Endeavor Innovation and Growth Program at Stanford Graduate School of Business. He continues to be fascinated with how payments work around the world.
Additional details: Sebastian is a frequent speaker at industry conferences including Money 2020 US 2017 (Session: The Leapfrog Effect: How LATAM’s Unbanked Might Be Giving Rise to a FinTech Boom), Money 2020 US panelist, Merchant Risk Council, Payments Ed Forum 2017, and MasterCard LAC summit among others. He is also a writer of numerous bylines on cross-border payments in publications such as The Paypers — February 9, 2018, PaymentsJournal — January 8, 2018, The Paypers — August 9, 2017, The Paypers — May 23, 2017, Entrepreneur — March 3, 2017 and Finance Magnates — February 2, 2017
About dLocal
dLocal was born to close the payments innovation gap that exists between developed countries and emerging economies, enabling merchants to offer a flexible, optimized local payment solution that unlocks new revenues and maximizes reach in growth markets. Today, dLocal is an award-winning fintech company that specializes in cross-border payments for emerging markets offering the only 360 payments technology platform for Latin America, EMEA and APAC. Over 450 e-commerce merchants use our 1 API to offer 200+ locally-relevant payment methods to their customers in over 20 markets around the world.
