Ep. 20: Stori reaches unicorn status during an extension round, Kapital goes after Clara’s territories, Arrenda’s successful pivot, and some M&A news.
Welcome to Scenius Mexico: Your weekly newsletter on technology, innovation, and startups in Mexico.
Mexico is adding its second unicorn since the beginning of the market downturn - Stori becomes Mexico unicorn number 8.
Kapital raises a hefty Seed round to compete with Clara in the Latin American market, and Arrenda completes its pivot with a US$1.5 M equity round.
Negative economic conditions mean lower valuations. Lower valuations mean cheap acquisition targets. This week long-running Urbvan is being sold to Dubai-based Swvl and Challenger Bank Klar is spending its new VC money on SOMOS’ acquisition.
Meanwhile Kavak is deploying millions to take over the world and venture outside of the LatAm region with its expansion into Turkey.
Funding Rounds
Kapital raises a US$10 million Seed round along with a US$20 million loan
If you’re familiar with spend-management Startups like Clara in Mexico, Ramp in the US, or Spendesk in Europe, you will have no problem understanding what Kapital is doing. Otherwise, good luck… JK!
Spend Management software and corporate credit card companies are trying to disrupt the corporate finance world offering an all-in-one solution for everything related to finance in a company - from credit card control to expenses management. In a word, everything between accounting and bank loans.
In the US, players like Ramp and Brex are already engaged in a fierce competition to gain market shares, raise massive rounds of money and reach sky-high valuation (Brex: $12.3 billion & Ramp: $8.1 billion). Kapital probably saw an opportunity to enter the LatAm market where competition is still early (Clara: $1 billion) and the market size is bigger.
The equity part of the round will be used on developing the technology-side of the business and going after the Colombian market, while the loan will be used to offer credit lines to their customer base.
Sector: FinTech - Spend Management & Corporate Credit Card
Total Raised: US$10.5 million Equity + US$20 million Debt
Founders: Rene Saul, Fernando Sandoval, Eder Echeverria
Investors: Tenacity Venture Capital, TeleSoft, Broom Ventures, Pioneer Fund, Soma Capital, FoundersX
FinTech Stori reaches unicorn status during an extension rounds
The startup offers credit cards to underserved populations in Mexico, a market where credit card adoption is still low and people with little to no credit history have trouble getting them.
Stori launched its credit card product in January 2020. Today, the company says it has more than 1.4 million customers in Mexico, which it claims is up “over 3x” from the prior year, when they closed on US$125 million in equity and a US$75 million debt facility.
Today’s additional US$50 million in equity at a $1.2 billion valuation, and US$100 million in debt financing is notable because in most to nearly all cases, extension rounds are raised at flat valuations.
Also worth noting is that Marlene Garayzar, chief governance officer and co-founder, is believed to now be the first Mexican woman to have founded a unicorn technology startup in the country.
As usual, the funds will be wisely used to do more hiring, as well as to expand its product offering, and its operations across Spanish-speaking Latin America.
Sector: FinTech - Credit Card
Total Raised: US$225 million Equity + US$ 100 million Debt
Founders: Bin Chen, Marlene Garayzar, Nick Chen
Investors: Lightspeed Venture Partners, Vision Plus Capital, BAI Capital, Source Code Capital, GGV Capital, GIC, General Catalyst, Goodwater Capital, Tresalia Capital
After pivoting and emerging from “Stealth mode” Arrenda announces US$1.5 M in equity and US$25 M in debt financing
With its first product, Adelanta, the company is offering digital financial services to the real estate market of Latin America. Specifically, a revenue-based financing offering that leverages Arrenda’s proprietary technology to enable landlords in Mexico to advance up to a year of future lease receivables in 24 hours or less.
The startup, formerly known as ViveFácil, started in 2021 providing insurance and failed. Nevertheless, it led Merullo and his team to credit with the creation of Arrenda in 2022.
In the current market, traditional financial institutions are still the dominant place to go for credit. However, Arrenda is differentiating itself through its proprietary underwriting process that quickly provides financing terms, and makes determinations in a 24-hour window.
While still being pre-revenue, Adelanta’s website now has 900 people on its waitlist and aims to reach $1 million in annual recurring revenue by the fourth quarter of this year. There are also plans to expand the financing offering into the commercial real estate space to landlords of warehouses, offices and shopping centers.
Joe Merullo’s journey with Arrenda looks like a good example of rapid pivoting leading to a successful outcome.
Sector: PropTech, Revenue-Based Financing
Total Raised: US$1.5 million Equity + US$ 25 million Debt
Founders: Joe Merullo
Investors: Fasanara Capital, Kube Ventures, ODX, Toehold Ventures, Wharton Fintech, Lightspeed Venture Partners Scout Fund, and PRMM Inmobiliaria
Startups News
Kavak is deploying US$180 million to take over the world
Mexico’s first unicorn announced it will expand to Turkey, Chile, Peru and Colombia. Last year, Kavak acquired Turkish company Garaj Serpeti, rebranded Carvak, and will now invest US$60M to expand into Turkey and the Asian continent.
For the Latin American countries, Kavak will invest the remaining US$120M and hire some 300 employees. Excluding Mexico and Brazil, the region is estimated to represent another $40B market opportunity.
VC - M&A News
UAE (yes, Dubai) Swvl acquires Mexican Startup Urbvan
Swvl is a global provider of tech-enabled mass transit solutions, offering intercity, intracity, B2B and B2G transportation across 135 cities in 20 countries. As a global company, part of its growth strategy is based on external acquisitions, like this one, and the rationale behind the deal is to deepen penetration in the Mexican market to provide a strong foothold for further growth in Latin America.
Urbvan was founded in 2016, with the purpose of using shared mobility as a catalyst for improving people's lives. The company operates in 18 cities across Mexico with solutions for urban routes, intercity routes, for private organizations and for private on-demand needs. The startup's last financing round was a US$9 million round in August 2019 with no major news since then.
In the current market environnement, the co-founding team and investors might have seen an interesting exit in the Swvl offer, giving Urbvan the resources to keep going and move forward. The acquisition is expected to be completed in Q3 2022.
Challenger Bank Klar buys Risk Management Startup SOMOS
Credit risk management is a prominent topic for banks, above all when markets get volatile and economic conditions turn negative like right now. Therefore, Klar’s rationale behind this deal is to reduce its credit risk with better models and algorithms.
Armed with US90$ million from its latest funding round, the FinTech might take advantage of the current lower valuation environment to beef up its external growth strategy.
Accelerators open for applications
iLab’s impact focused ThinkCamp program
Starting date of the program: September 1, 2022
Deadline to apply: August 15, 2022
500 Startups Batch 17
Starting date of the program: September 26, 2022
Deadline to apply: July 31, 2022