Gastón Irigoyen: my fundraising journey and lessons from raising Pomelo's first round

Back in April 2021, financial industry executives and entrepreneurs Gastón Irigoyen, Hernán Corral, and Juan Fantoni promised themselves they'd transform their new fintech idea into a product by the end of the year. Just one month after that promise, Pomelo raised an astonishing USD 9M seed round.

‍Pomelo now provides cards and payments infrastructure to 100+ corporate clients such as Nomad, Stori, and Rappi that can launch card-related products across Latin America. Pomelo has gone all the way to $100M+ in funding, with its most recent round being a Series B in December 2023.

‍In this article, Gastón retraces his early fundraising journey and shares his advice to other LatAm startup founders. This is part of our "Fundraising Journey and Lessons" a series of posts, written by mature tech entrepreneurs in Latitud's portfolio. As investors and journey partners, we hope this series will inform and inspire early startup creators in the region.

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After three months of deliberation, a robust thesis was finally in place. I had already left my previous company, and both Hernán and Juan were ready to leave theirs. We could finally start the business.

And for us, that also meant we had to build a deck and kick off fundraising.

There's no recipe for defining when a startup should start raising venture capital. It all depends on how much you can do with your current resources – if you have the time or the money to arrive at a minimum viable product and even to product-market fit with no or little external funds.

This is rare, and wasn't our case either. We were aiming to build financial infrastructure for companies in the entire region, so our capital wasn't gonna cut it. The sooner we raised, the faster we could hire and build at the needed pace.

Here's a glimpse into how we raised that first round – and what I took as dos and don'ts.

Understanding market and startup moment

We got our first check deep into the boom market of 2021, when it was common to raise between $2M and $5M for a Seed.

We were planning along these lines – but there were so many commitments that we saw we could raise a lot more money for the same dilution. By raising more, we could go even faster and strengthen our brand on the back of the round. So:

‍Understand the mood of the market. If you tried to raise “only” $1M in 2021, they'd think you're not ambitious enough. If you try to raise $10M today, they'll call you crazy. Regardless of the current mood, you must know how much you need and back it up with a solid plan.

You also need to decide how to start your fundraising path – if you'll raise a smaller pre-seed or go straight to a seed. To make that decision, you have to understand:

• What you need to accomplish;
• How cost-effective you can be;
• And the timeline to achieve that given your cost structure and the amount raised (there's a point of not growing fast enough that makes you ineffective).

Whichever path you go, the closer you can get to showing an initial product that has hints of traction with little capital, the stronger of a hand you'll have when you eventually get to the investor negotiation table. So deeply understand both the market and your startup's moments to fundraise successfully.

Leverage truthful storytelling

In that same year, we posted on our personal LinkedIn profiles about what we were building next and why. In these early days, the personal brand drove the company brand: our proven background and connections in the fintech industry generated traction. We used that to receive 200 inbound candidates, 50 of them engineers from top companies. We hired 15 of them and kicked off Pomelo's team.

But with time, our company developed its own way of communicating. People started to follow Pomelo because of its funny, out-of-the-box introductions of each employee.

When a founder comes from a good logo, a global or LatAm darling, they can leverage that experience. But not for too long: at the end of the day, one thing is the person and the other is the company you worked for.

So craft your own person, story, and credibility. Understand what assets make you and your startup different, and build the storytelling to match it.

Double down on founder-market fit

When we went out to fundraise, we had no product and no customers. So investors were betting solely on our ability to execute as a team that had previous experience in this market. Without that background, our fundraising story would have been completely different.

Founder-market fit is essential, especially in earlier stages. We worked for many years in LatAm fintech. We suffered multiple pains in multiple countries related to the problem we were trying to fix. And then, we had a clear idea to fix the biggest problem we encountered after all this time (how hard and slow it was to launch and scale financial products, especially in multiple countries, and even for big corporations with big teams and budgets).

Founder market fit = sector and geographic expertise + suffering the problem + clear idea of the solution + determination to spend multiple years on the problem because there's an internal passion driving you to crack it.

Build options, but limit true investors

Our first round took less than two months to raise – we were raising in 2021 and using SAFEs, two factors that accelerated the process.

Another acceleration factor was leveraging our network, including first investors, to attract other angels and VCs. The minute Latitud wrote us a check, it went into defending-the-investment mode. Brian and Tomi opened up their networks and helped us have as much of a successful fundraising as possible. Many of our investors came from Latitud or someone from the Latitud network.

We talked to 80-100 investors for our Seed, from angels to slightly larger funds. And in these 3 years of Pomelo, we've talked to about 300 investors.

Even today, we continue to talk to investors. We talk more or less depending on our fundraising moment – but we never refrain from these conversations.

For our Seed, we turned several investors down and arrived at 25-30 investors. Even if we didn't have a board yet, you can imagine how that was not ideal from a cap table management perspective. I'd encourage founders to:

1. Bundle smaller investors into SVPs (special purpose vehicles). As you grow and rounds become more complex, it's important to have an efficient cap table.

2. Choose few but excellent investors – spend the time to raise from good angels and funds because that will be rewarded both in this round and the next ones. It will be great not only for that efficient cap table issue, but also because these investors can fast-track you and your startup. If these incredible investors did their due diligence and decided to invest, you and your startup would be de-risked for the rest of the market and gain a more positive reputation.

3. If you're doing a LatAm play, it's important to have local investors, or global investors that have been committed to the region for multiple market cycles. At the end of the day, they're the ones who really understand the ups and downs of Latin America. Because local angels and VCs have suffered and learned from LatAm cycles, they'll be more understanding and resilient than other investors by design.

Benchmark globally from day one

Which brings me to a final point. Even if you're doing that LatAm play, operating and raising in the region, you live in a global world and market.

All of us benchmark on a world scale: you're still being compared by customers, employees, and investors against the best in the world.

So don't settle for less. Aspire to global standards, and have being the very best as your constant goal.