Numerous startups in Latin America, particularly Brazil, who raise funding from overseas VCs are dealing with slow and expensive processes when moving money across borders.
At present, the options are limited with banking institutions and have to pay upwards of a 4% fee every time they transfer money. Furthermore, this process can take 1.5 months on average.
Many young startups from underrepresented regions feel these costs the most, while banks are the ones to benefit. Here’s where Trace Finance comes into play.
The Sao Paolo-based company solves these problems by enabling faster and more streamlined cross-border banking for startups – reducing the spread from 4% to 0.2% and offering a more user-friendly experience.
Recently, the fintech company has raised a $4.3M seed funding round led by HOF Capital with participation from Circle Ventures, and The Chainsmokers. The round was oversubscribed, with more than 30 funds and individuals participating.
Other investors, including Stellar Development Fund, 2TM, as well as BlockFi Ventures and its CEO Zac Prince, Marcelo Sampaio of Hashdex, Miguel Fernandez of Capchase, Oliver Jung, and founders of Rappi, Coinmarketcap, and Quantstamp, also participated.
How will the funding be used?
The funding will enable Trace Finance to create a US-based bank account for LatAm startups, expand operations in both Brazil and the United States, and further streamline the process of exchanging capital across borders.
“We are seeing incredible demand among startups and investors from Brazil and LatAm that are raising large rounds but have a hard time finding good banking partners to receive those funds and send them to their operating entities,” noted Bernardo Brites, co-founder, and CEO of Trace Finance. “The problem is too much red tape and bureaucracy holding them back. We have created a new, more efficient platform that unlocks opportunities between these regions, which will lead to explosive growth. We are honored to work with such a great group of clients and investors and this round will considerably improve the financial lives of those companies globally.”
Transferwise of business banking
Founded by Bernardo Brites, Rafael Luz, and Leone Parise in 2021, Trace Finance works with startups and investors to improve the experience of moving money across borders.
Further, the company enables startups to have a seamless banking experience in each of the jurisdictions they operate in, with an interconnected financial platform.
Trace Finance currently has over 30 enterprise clients, including Noh, Condoconta, Pomelo, Zippi, The Coffee, and Big Bets, and a big waitlist for the US banking product.
”I’m amazed by how superior Trace Finance’s experience is. I was able to localize my seed round money in a single day, with an excellent exchange rate and with a customized user experience provided by Bernardo and Rafa. This was a delight for me, after having had to wait two months for my foreign entities and bank accounts to be opened – which Trace Finance will be tackling soon and I can’t wait,” says Ana Zucato, CEO & Founder of Noh.
HOF Capital is a global multistage VC firm with $1B in Asset Under Management (AUM) that partners with ambitious entrepreneurs from idea to IPO.
“Trace Finance is at the forefront of bridging the benefits of crypto with traditional finance, starting with treasury management and seamless cross-border payments for startups in Latin America,” said Victor Wang, Partner at HOF Capital. “The company’s services will ease several pain points faced by Brazilian startups today and we’re excited to partner with them as they disrupt business banking in the continent and beyond.”