Brazilian fintech Tako comes out of hiding with major seed round led by a16z and Ribbit Capital

Payroll management is difficult in any country, but perhaps especially so in Brazil because of constantly changing laws and highly influential unions that make it very difficult to get it right. Fernando Gadotti struggled with this as founder and CEO of DogHero, the LatAm version of Rover. When Gadotti left the company in 2022, after selling it in 2020, she decided that’s where she wanted to focus next.

“Every time the lead people come in, it’s a struggle, like a nightmare, for hours, like double-checking the data back and forth, and we couldn’t get the insights we needed,” Gadotti told TechCrunch. “[We were] it is very good to work in the dark, and as we continued to grow, it struck me that these problems were not only disturbing; they are actually shrinking the company. We waste a lot of time in busy work.”

Just a few months after leaving DogHero, Gadotti started working at São Paulo-based Tako, an employee lifecycle platform that automates tasks like onboarding and payment to save companies time and bring all employee information into one place. Tako also provides employees with a dashboard to view information and access an interactive paystub aimed at increasing transparency.

Gadotti said that while there are US legacy payment companies operating in Brazil, such as ADP, it makes sense to have a local solution because Brazil’s payment system is very different. He said the laws affecting payment are constantly changing. There are also 10,000 unions — companies often have more than one employee, he said — that update their rules several times a year, and sometimes have more power than the actual rules.

Tako uses LLM (large language model) to keep up with these continuous changes. LLM imports labor law and union law data and digests it so Tako developers can keep the code base up to date. He said they want to keep people in the loop to ensure accuracy, but having an LLM off to a good start saves a lot of time.

Tako launches its product in 2023. Gadotti said the company made tens of millions of dollars as it operated undercover but declined to share more details with its clients. Gadotti said the company is currently focused on B2B companies with between 100 and 500 employees in the financial services sector.

“The strategy we have adopted is that we are not trying to boil the ocean,” said Gadotti. “We want to start in the sector we know before entering industries or complex areas. We start with simple sections; as the company develops, we go to more complex parts in the future. “

Tako is exiting the round with a $13.2 million seed round co-led by Ribbit Capital and Andreessen Horowitz. The round also brought ONEVC together with the founders of Ramp. Gadotti said the company plans to invest more in research and development in addition to doubling or tripling its R&D team.

There are many potential areas for Tako to expand into in the future, such as the larger world of employee benefits. Gadotti said the company plans to grow as it expands into building more things like instant payments.

In addition to competing with traditional companies such as ADP, there are many other HR tech startups in the country such as Gupy and Caju, both of which specialize in other areas within HR and workforce management. But if Tako expands into these areas, which it likely will, these companies could have strong competitors.

The name Tako is Japanese for “octopus,” which Gadotti says is how she thinks about the business. Tako’s platform is intended to be the brain of employee data and its tentacles reach out to various areas of employee management.

“We want to focus on the entire employee life cycle,” Gadotti said. “We always listen to our customers where they feel pain and where they want us to help them.”