Colombia’s Palomma raises $10 million led by Cometa

Medellín-based Palomma has raised a $10 million Series A led by Mexican venture firm Cometa to expand its rental payments and financial services business, Crunchbase News said in an exclusive report. CEO and co-founder Cipriano Echavarría said the round brings the startup’s total funding to $14 million, including $4 million raised previously.

The round closed roughly three weeks before 4 November. Participants included Volpe Capital, Clocktower Technology Ventures, Tekton Ventures, Simma Capital and Yango Ventures, as well as existing investors Y Combinator, 17Sigma, Nido Ventures and Norte Ventures.

From payments to rental services

Echavarría founded Palomma with Felipe Monsalve and Nicolás Gómez del Campo, engineers trained at MIT with experience at Meta, Cobre and JP Morgan, after nearly two years at digital bank Nubank. The founders entered Y Combinator in January 2023 intending to build an account-to-account payments processor for Spanish-speaking Latin America. Echavarría said growth was largely flat in the first year before property managers began asking for help collecting rent.

Tenants faced rent due early in the month while receiving paychecks twice a month. Landlords had difficulty borrowing against rental income or protecting it when tenants stopped paying, and Echavarría said collections and payouts took property managers considerable work.

Palomma now reaches tenants and landlords through property managers. Its software helps managers handle leasing inquiries, customer service and collections, while its payment system collects rent and pays landlords. Those payments give Palomma rental-income records and tenant payment histories that it can use to assess applicants for financial products. Managers pay a subscription for its superintelligence (SI) software, and Palomma earns a percentage of rent through payments and financial services.

The company offers tenants rewards and credit-building benefits, and lets landlords receive up to 12 months of future rent upfront. Its rental guarantees cover income when a tenant defaults. Palomma bears that risk itself, but Echavarría said it is working to finalize an insurer partnership that would share the risk and allow it to offer more guarantees.

Company figures and expansion plans

Palomma says its annual recurring revenue, a measure of recurring income over a year, grew thirtyfold in 18 months to about $3 million. It says it processes about $130 million in rent payments each month and serves more than 200,000 tenants through over 500 property managers in Colombia. The company estimates its annualized rent-payment volume at $1.5 billion.

Palomma also reports 390% net revenue retention after 12 months: revenue from an existing customer group nearly quadrupled after accounting for customers who left or spent less.

Cometa managing partner Pepe Bolaños said the founding team and the opportunity to modernize the rental market attracted the firm. He highlighted Echavarría’s experience helping scale Nubank and Monsalve and Gómez del Campo’s technical and financial backgrounds. He said Palomma’s reach through property managers, its payment data and SI give it an advantage; he said the data can help assess applicants and identify potential defaults, while SI helps automate operations. SI also helps determine eligibility for rental guarantees using information from leasing conversations and rental-payment behavior. Palomma’s leasing agent communicates via WhatsApp and collects application documents; the company claims it can then approve an application in under 30 seconds.

Palomma plans to use the funding to expand in Colombia, develop more SI and financial products, and prepare for other markets. Echavarría said Colombia remains the priority; the company is considering Mexico, Brazil and the Spanish-speaking US market.

Among the products in development is a service that would let tenants split monthly rent into two installments. Longer term, Palomma plans to move into homeowners association payments and residential property transactions.