YC-backed Heru Raises $ 1.7 Million to Build Software Services for Latin American Workers – TechCrunch
Given the attention TechCrunch gives to the Y Combinator Demo Days, we also try to keep an eye on the same startups as they scale and raise more capital. Yesterday we covered the YC Winter 2020 BuildBuddy participant, for example. Today we take a look at Heru, a Mexico City-based startup that is announcing a raise of $ 1.7 million after attending YC’s summer 2019 session.
The pre-seed round was led by Mountain Nazca and involved Magma Partners, Xtraordinary Venture Partners, Flourish Ventures, YC himself and a handful of angels. The investment was raised in two parts: a check for $ 500,000 in February and the other $ 1.2 million that closed a few weeks ago.
Heru wishes to provide software-based services for concert workers in Mexico, and possibly other countries. Its founders, Mateo Jaramillo and Stiven RodrÃguez SÃ¡nchez, are both former Uber employees, so they ended up in Mexico from their native Colombia.
But Heru had no direct path to existence. The founding duo told TechCrunch that their original idea, something similar to OYO, was what they went through Y Combinator for and initially raised money. But after finding OYO already in its target market, the company took three months to rethink and, keeping investors on board, turned to Heru.
Heru is a collection of software products for delivery drivers and others, helping to provide assistance with insurance, credit and tax preparation. The tax element is critical, as the founders of the company told TechCrunch that Mexico now expects self-employed workers to file their taxes on a monthly basis. People need help with this, so Heru has built a tool for them to do it.
There is competition for this element of his product, Heru said, noting that there are accountants in the market who will do the job for $ 25 to $ 30. Heru’s tax service, on the other hand, costs less than $ 5 per month (100 pesos). Insurance costs an additional $ 5 per month for accident coverage. The startup worked with an insurance provider to craft what it describes as a âtailor-madeâ policy for gig workers who need low-cost coverage.
However, Heru isn’t just targeting Uber drivers and their ilk. The company has indicated that it also wants to support the self-employed more broadly, a population much larger than the three million workers it has in the Mexican market.
The company’s app has been smoothly launching into the market for a few weeks, with the startup now making more noise about its existence. According to its founders, around 1,200 users were accepted during its testing period. 20,000 more are online.
Among its first user base, customers buy an average of 1.2 Heru products, a number that I will follow as the startup evolves.
Heru’s application is neat, her market is large and the material she serves is needed. But at the back of software history is a brick and mortar story. The startup, in addition to creating its app, has set up a number of so-called âHeru Casasâ, places where concert workers can charge their phones and use a bathroom. You need the app to enter a Heru Casa, helping the startup find the first users.
Currently all Heru Casas are located in Mexico City. The startup is not sure whether to expand this part of its efforts to more cities where its app could attract users. Why? It’s hard to scale physical builds, he told TechCrunch. Software is much better for rapid expansion, and since that’s the name of the starter game, it might be a good idea to hold more physical locations until the business can raise more capital.
Heru has big plans to double her product work and possibly add more countries to her list. The Latin American market is a great place for startups to shake things up. Let’s see how quickly Heru can win.