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It's an impressive feat for any entrepreneur to launch a startup that leads to exit, but when an entrepreneur moves to Mexico during the pandemic and launches a startup and successfully exits it is even more intriguing.
In today's VC Mx feature, I will share Joe Merullo’s journey from Boston to SF to Mexico. We'll explore his path to entrepreneurship and angel investing, his successful startup exit, and his current role as a visiting partner at Pygma, an accelerator focused on LATAM startups.
Enter Joe Merullo.
After leaving San Francisco, CA for a vacation in Tulum and parlaying his stay into nearly 5 years in Latin America, it is safe to say Joe Merullo has immersed himself in the tech ecosystem. In Mexico, Joe noticed an opportunity in the market and launched Arrenda, a digital financing platform that provided revenue based financing for landlords.
From Rent Security to Financing Solutions
Initially, Joe was inspired to assist landlords with liquidity challenges through guaranteeing rent payments. However, it soon became evident that there was a greater opportunity leading to Arrenda to focus on providing loans to small and medium-sized businesses (SMBs).
Cash Flow Challenges
Many SMEs struggle with cash flow, and Joe's solution addressed this key issue. "The residential rental market in Mexico presented unique challenges for our initial business model," Joe Merullo explained to VC Mexico. "We launched ViveFácil, offering rental guarantee insurance similar to Jetty and Rhino in the US. However, factors like fraudulence and informality in the Mexican market made it difficult to scale."
"This initial setback forced us to re-evaluate our approach," Joe continued. "We pivoted towards credit solutions, leveraging our understanding of the market. This led to the birth of Arrenda in 2022, leading to greater traction with both property owners and businesses." - Joe Merullo
Building a Team in a New Market
Building a company from scratch is no easy feat, especially in a new country.
Joe launched without outside investment, focusing on finding (PMF) Product Market Fit before seeking angels/VC’s. Something today that Joe really emphasizes as a visiting partner at Pygma. “It’s critical to build something people want, and the best way to figure out if you’re doing this is speaking to the market. I spent my first year at Arrenda doing exactly this, interviewing landlords, property managers & real estate investors across the country, which eventually led us into launching the product we brought to the market,” said Merullo.
Upon gaining some traction, Joe recognized that he needed a strong team to navigate the local Mexican market. His journey began with a key hire - Gustavo, a talented engineer who had previously served as VP of Technology at Flink, a successful Mexican FinTech startup. Gustavo's impressive experience, including leading a team that secured significant funding and achieved a successful exit, made him an ideal choice.
Utilizing Gustavo's network, the team grew organically. Eventually bringing on a product manager, a back-end engineer, and a marketing director.
Eventually, Joe and his team were presented with a once in a lifetime opportunity to partner in a JV with two of the most active family offices in Latin America; and announced their acquisition by the group in November of 2023.
Today, Arrenda lives under the Ziff brand, offering contract monetization of long dated account receivables to Mexican SME’s.
Sharing Knowledge and Investing in the Future
After successfully exiting Arrenda, Joe's entrepreneurial spirit continues. He recently joined Pygma, a Bogota-based accelerator program focused on helping promising ventures navigate the crucial pre-seed stage, as a visiting partner. Pygma's founder-friendly approach, with a small equity stake and focus on mentorship, resonated with Joe's own vision of empowering entrepreneurs.
More about Pygma
Unlike many accelerators that take a large equity stake and offer minimal support, Pygma flips the script. They prioritize the founder by taking only a 1% stake in the company, while providing their comprehensive acceleration services completely free of charge. This allows promising startups to focus on growth and development without significant upfront dilution of ownership.
Looking Ahead
Joe sees a bright future for tech in Latin America. Although FinTech investment has slowed as of late, he believes there's enormous room for innovation; especially in the digitization of traditional financial services. Other sectors that Joe finds interesting are climate-tech solutions that address serious problems like water scarcity, decarbonization & climate change.
Joe's journey offers valuable lessons for those considering a business venture in Latin America
- Focus: Don't get distracted by unimportant things. Prioritize work that truly impacts meaningful objectives in your business.
- Manage Resources Wisely: Be careful with your money and build a strong team. Your next financing round is never guaranteed.
- Be Persistent: Don't let negativity stop you from achieving your goals.
- Find a Local Partner: Work with someone who understands the local market.
Advice for Aspiring Entrepreneurs
