Imagine you’re an ecommerce startup in the largest growth market outside of China and 20% of your transactions are declined. Not because the buyer’s credit is bad but because the payments infrastructure is that inefficient and complex. This is the daily reality of every ecommerce startup in Brazil and many across Latin America. It adds up to over $15B in lost sales every year in Brazil alone.
That’s where Plug Pagamentos fits in. Based in Rio de Janeiro, Plug features a great team tackling a huge problem in one of the largest markets on earth. Through a single integration, Plug provides merchants with multiple connections to every necessary payments-related service, from card processing to local payment methods, fraud protection, and reconciliation tools. As important, Plug optimizes payment flows to ensure that ecommerce transactions always work. This is a huge step forward for digital businesses that want and need to offer multiple payment methods but don’t have the engineering resources to make that happen.
This description fits nearly every online merchant in Brazil, a $120B online payments market that’s growing 70%+ YoY. The pandemic forced merchants to turn to online channels to stay afloat, and adoption keeps accelerating. Merchants of all sizes are scrambling to keep up and figure out how to effectively change their payment stacks to retain loyal customers and attract new ones.
That’s why we are thrilled to announce our investment in Plug, where we led their $2.7M Seed round alongside QED, Latitud, Norte, and Verve Capital. Founded by three Brazilian payments alums, Plug has assembled an impressive team that is primed to tackle the huge market and opportunity in front of them. CEO Alex Vilhena spent several years at Braintree and has a deep understanding of the Latin American payments ecosystem and its challenges. Fellow co-founders Marcel Nicolay and Thiago Garuti both have backgrounds working for successful Brazilian startups. Marcel, Plug’s CTO, joined from Gympass and Zoop where he led engineering and product teams and dealt with numerous B2B payments challenges. Thiago, Plug’s COO, previously ran product at Medicinae (acquired by NASDAQ: AFYA), a Brazilian healthcare payments startup. This trio has the perfect combination of technical skills and go-to-market acumen to take advantage of the massive opportunity in front of them.
Since launching earlier this year, the team at Plug has accomplished an incredible amount. We at Costanoa are excited to help Plug build a leading payments orchestration platform that helps merchants across the region increase revenue and customer acquisition by solving their payment problems. We are also excited to take what we’ve learned from US fintech investments to help bring financial innovation and inclusion to Latin America and other emerging markets and to expand opportunity for everyone.