YC-backed Heru raises $1.7M to build software services for Latin American gig workers – ProWellTech
Given the attention ProWellTech pays to Y Combinator Demo Days, we also try to keep the same startups in check as they scale and raise more capital. Yesterday we talked about the YC Winter 2020 BuildBuddy participant, for example. Today we take a look at Heru, a Mexico City-based startup announcing a $ 1.7 million raise after taking part in YC’s summer 2019 session.
The pre-seed round was conducted by Mountain Nazca and was attended by Magma Partners, Xtraordinary Venture Partners, Flourish Ventures, the YC itself and a handful of angels. The investment was raised in two parts: one check for $ 500,000 in February and the other for $ 1.2 million that ended a few weeks ago.
Heru wants to provide software-based services for gig workers in Mexico and possibly other countries. Its founders, Mateo Jaramillo and Stiven Rodríguez Sánchez, are both former Uber employees, and that’s how they ended up in Mexico from their native Colombia.
But Heru did not have a direct path to existence. The founding duo told ProWellTech that their original idea, something like OYO, was what they followed through Y Combinator and initially raised funds for. But after finding OYO already in the target market, the company took three months to rethink and, keeping investors on board, pivoted to Heru.
Heru is a package of software products aimed at delivery drivers and the like, which helps provide support for preparing insurance, credits and taxes. The tax element is key, as the company’s founders explained to ProWellTech that Mexico now expects self-employed workers to file taxes on a monthly basis. People need help with this, so Heru built them a tool to do it.
There is competition for that element of his product, Heru said, noting that there are accountants on the market who will do the job for $ 25 to $ 30. Heru’s tax service, by contrast, costs $ 5 each month (100 pesos). Insurance costs an additional $ 5 each month for accident-related coverage. The startup teamed up with an insurance provider to create what it describes as a “tailor-made” policy for gig workers in need of low-cost coverage.
However, Heru doesn’t just target drivers of Uber and the like. The company noted that it also wants to support freelancers more broadly, a population that is much larger than the three million gig workers it counts in the Mexican market.
The company’s app has been on the market for a few weeks now, with the launch now making more noise about its existence. According to its founders, around 1,200 users were accepted during the trial period. Another 20,000 are online.
Among its initial user base, customers buy an average of 1.2 Heru products, a number I’ll follow up with the startup scaling.
Heru’s app is clean, its market is large and the need to serve material. But in the background of the history of software is a story of bricks and mortar. The startup, in addition to creating its app, has put together a series of so-called “Heru Casas”, places where workers can recharge 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 isn’t sure if it wants to expand that part of its efforts to more cities where its app might attract users. Because? It’s hard to scale physical structures, he told ProWellTech. Software is much better for rapid expansion, and as this is the name of the startup game, holding onto more physical positions might make sense until the company is able to raise more capital.
Heru has big plans to double down on her product work and eventually add more countries to her roster. The Latin American market is a ripe place for startups to shake things up. Let’s see how quickly Heru manages to make his mark.