(Bloomberg) -- Among the ideas that have minted billion-dollar tech companies, Cicada’s business model is about as unflashy as it gets. 

The startup isn’t going after the industries that have grabbed headlines and the bulk of venture capital cash like credit cards, transportation and food delivery. Instead, it sees a fortune to be made in fixed-income trading --  specifically, local currency bonds in emerging markets. 

Three Mexican founders, including Javier Hernandez, who is a former member of Morgan Stanley’s debt capital markets team, and Manuel Ballesteros, a trader with 20 years experience, are quick to point out that in Latin America alone -- where they are focusing their business -- $60 billion worth of bond and swaps trades take place every day, according to company estimates based on market data. 

They’re building a digital trading exchange and a tech platform aimed at centralizing information and bringing transparency to a system in which many investors still rely on antiquated methods to make trades. This week, the company will launch in Mexico, its first market, with government bonds and some frequently-traded corporate notes. 

“Right now, $7 billion of trades in Mexico are done by phone. It’s brutal,” Ignacio Tovar, the creative director and co-chief executive officer, said in an interview. “Our vision is to finally provide a technological alternative to traditional execution by phone, in a way that gives access to and creates a fair environment for all participants.”

The Greenwich, Connecticut-based startup, which has 17 employees and an office in Mexico, raised $7.6 million, including $4 million in an extension of its seed round led by Kaszek Ventures and DILA Capital recently. It’s not disclosing its valuation, but does plan to pursue a series A fundraising round in early 2023, Tovar said. 

Its latest round came as venture capitalists have cut back. Investments to Latin American startups fell to $1.1 billion in the third quarter, compared to $6.6 billion the same period a year earlier, according to a report from CB Insights. Funding has dropped for five-straight quarters. 

Chile, Peru 

Hernandez left Morgan Stanley and decided to start Cicada two years ago along with Tovar and Ballesteros. The company has since gained approval from FINRA and the SEC to run the alternative trading system and is launching with local and international investors and broker-dealers, said co-CEO Hernandez.

Cicada plans to expand to swaps in Mexico before moving to other markets, starting with Peru, Chile and Central America. The series A round will be used to fund further expansion. 

The exchange allows for electronic, anonymous trading that’s also available to investors outside of Mexico, according to the company, which plans to collect a fee for each transaction. Third-party apps can link into the exchange, allowing retail investors to trade fixed income they way they can with stocks.  

Hernandez said the market is long overdue for disruption, particularly as most other areas of finance have gone digital.

“We’re not only providing a platform for institutional investors,” he said. “We’re providing the piping that finally gives digital access to the Mexican fixed-income market. We’re opening access to everyone.”

(Adds number of employees in 6th paragraph. A previous version corrected the firm’s regulatory status.)

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