Image credit: Peqsels

Uruguayan payment startup dLocal, a fast-growing global payments processor, saw its shares surge 50% in its IPO. The cross-border payments startup, which went public in early June, is one of several fintech companies that have IPOed on U.S. stock exchanges recently. The market capitalization of dLocal is currently around $9 billion. It is the first startup based in Uruguay to achieve unicorn status. The company’s shares are now trading on the Nasdaq stock exchange under the ticker symbol “DLO.”

Backed by prominent investors and companies such as General Atlantic, Mastercard, Tiger Global, and D1 Capital Partners, dLocal brands itself as “enabling global merchants to connect seamlessly with billions of emerging market users.” The company hopes to further expand its platform and geographic outreach.

Payments Startup Has Presence in 29+ Countries

Founded in 2016, dLocal has a presence in over 29 countries. It is especially focusing on LatAm and emerging markets more broadly. The payments startup plans to use the proceeds raised from the IPO toward platform innovation and geographic expansion. The company works with more than 330 merchants globally. Their customers represent a diverse range of industries such as e-commerce shops, SaaS companies, online travel providers, and more. Some of dLocal’s customers include Spotify, Dropbox, Amazon, and Microsoft.

In a statement from the company, dLocal highlighted the unique aspects of its business model: “Through one direct API, one technology platform, and one contract, which we collectively refer to as the One dLocal model, we enable global enterprise merchants to get paid (pay-in) and to make payments (pay-out) online in a safe and efficient manner.”

In other words, the “One dLocal” model allows companies around the world to accept payments, send payments, and settle funds seamlessly. This model cuts out the inefficiencies of setting up multiple local entities and dealing with different payment processors in each market.

A Word from the CEO

CEO Sebastian Kanovich has been leading the payments startup from the beginning. Originally hailing from Uruguay, Kanovich observed gaps in fintech and payment innovation. He realized the potential for dLocal to be a potentially disruptive force in emerging markets. Prior to dLocal, Kanovich was the CEO of AstroPay. AstroPay is a global payment solution that also targets emerging markets in Asia, Africa, and Latin America.

The company’s proprietary cloud-based platform efficiently facilitates both cross-border and local-to-local transactions. The company designed the platform to be versatile and scalable, improving dLocal’s ability to enter new markets. Currently, cross-border payments in emerging markets suffer from fragmentation. The payments startup has also focused on tailoring its compliance, tax, and fraud management capabilities to reduce the operational risk of transacting in different countries with different rules. Merchants are able to connect with over 600 local payment methods

While BigTech companies such as Facebook, Google, and Apple are heavily engaged in providing cross-border services, emerging markets can be difficult for them to navigate.

The payments startup previously raised a $150 million funding round in April 2021. This funding round put dLocal’s valuation at around $5 billion. Just seven months earlier, in September 2020, dLocal had attained unicorn status. Its September 2020 fundraising round, which secured $200 million for the rapidly growing company, gave dLocal a $1.2 billion valuation.

Just a few months before the company’s IPO, dLocal hired a new Chief Operating Officer. Sumita Pandit, who formerly served as the global head of fintech and a managing director at JPMorgan, assumed the COO position in early April. The former COO, Jacobo Singer, was promoted to the role of president of dLocal.

Payments Startup Prioritizing Emerging Markets

Emerging markets present high growth opportunities for fintech startups. In dLocal’s case, emerging markets are increasingly being prioritized in the company’s overall growth strategy. Merchants are likewise becoming more comfortable connecting with emerging market users. As CEO Sebastian Kanovich has observed, “Only a few years back they [merchants] would have said they don’t feel confident enough. But for instance, Nigeria has to be our fastest-growing market. And to be completely honest, we didn’t see that coming two years ago.”

Payment Volume Expected to Increase

With a highly multicultural team, the payments startup maintains employees in the United States, Uruguay, Israel, Brazil, and Europe. Additionally, there are employees on the ground in all 29 countries that they process payments.

Online payment volume is poised to increase in developing markets, providing dLocal with further growth opportunities. The middle class in emerging markets in growing at a rapid pace. Moreover, research from the International Monetary Fund (IMF) demonstrates that emerging markets represented 57% of aggregate global GDP in 2019. The COVID-19 pandemic has further accelerated the shift to online payments.

Martin Escobari, Co-President, Managing Director, and Head of Latin America at General Atlantic, commented: “We are excited to support dLocal as it continues to develop innovative local-payment solutions in the emerging markets. From our previous work with leading global fintechs, we know the payment solutions sector well and can bring deep, hands-on experience as dLocal establishes itself as a partner of choice for global merchants seeking bespoke solutions tailored specifically to their needs in a range of unique geographies.”