Exclusive: Google's Gradient funds online tax startup in Mexico
Heru, a startup automating tax filings for freelancers, gig workers, and small businesses in Mexico, raised $6 million in seed funding from Google's Gradient Ventures, the company tells Axios exclusively.
Why it matters: Tax software remains largely an untouched market in Mexico, where the technologically advanced but still complex filing process presents an opportunity for intervention.
How it works: Mexico City-based Heru is trying to become "something like Turbotax" in Mexico, says COO Stiven Rodríguez Sánchez.
- Mexico requires freelancers and gig workers to file monthly, rather than annually.
- Serving the workers at the likes of Uber, MercadoLibre, Rappi and other gig companies, Heru connects to the country's electronic filing system and automates invoicing between the company and the freelance worker.
- Heru can also connect with the companies of the customers it serves, allowing automated expense deductions and helping gig workers avoid unnecessary fines and withholdings.
Context: Founded by CEO Mateo Jaramillo and Rodríguez Sánchez, former Uber employees in Latin America, the company is effectively a bet that Mexico is going online, fast.
- Cash currently still remains king in Mexico, where 41% of point-of-sale payments were made using said paper, according to an FIS-Worldpay report.
- That limits Heru's current addressable market, as neither Heru nor the Mexican government can reliably track cash movements.
- But that also means the government has clear incentive to shift the economy away from cash. Hence the advanced e-filing system created to mitigate tax evasion.
State of play: Heru is also not entirely without possible competitors. Intuit, which owns Quickbooks and Turbotax, does have offices in Mexico. EU-based Fonoa recently raised $60 million with a business model focused on global digital services companies.
Of note: SOMA Capital, GFC, Moving Capital, Mike Shoemaker (Roofstock’s COO), Flourish Ventures, and Magma Partners joined Gradient in the round.
What's next: Heru is testing software for serving salaried workers, and looking to deepen its partnership with the gig economy companies.