Nelo raises $3M to grow ‘buy now, pay later’ in Mexico

Buy now, pay later is a way of paying for purchases via installment loans that generally have no interest. The concept has grown in popularity in recent years, especially in markets such as the United States, Europe and Australia. Numerous players abound, all fighting for market share — from Affirm to Klarna to Afterpay, among others.

But notably, none of these bigger players have yet to penetrate another very large market — Latin America. Enter Nelo, a startup founded by former Uber international growth team leads, which is building buy now, pay later in Mexico. The company is already live with more than 45 merchants and over 150,000 users.

San Francisco-based fintech-focused VC firm Homebrew led its recent seed round of $3 million, which also included participation from Susa Ventures, Crossbeam, Rogue Capital, Unpopular Ventures and others. With the latest capital infusion, Nelo has raised a total of $5.6 million since its 2019 inception.

Nelo is not the only player in the Mexican market. A number of others, including Alchemy and Addi, have recently outlined plans for buy now, pay later offerings in the region. But where Nelo has an advantage, believes CEO Kyle Miller, is its established relationships with about 45 merchants.

“What I’m excited about is the relationship with the merchants,” Miller told TechCrunch. “If we find a large global one and increase conversion for them, that is our defensibility [against competitors]. What’s important here is signing on merchants, since they usually only have one offering in their checkout.”

He and co-founder Stephen Hebson used to work for Uber’s international growth team, growing financial services products in India, Mexico, China and Brazil.

“We got to see a cross market where countries were accelerating and where others weren’t,” Miller recalls. “For example, China was a leader in mobile payments and digital finance in India was completely transformed.”

Nelo co-founders Stephen Hebson and Kyle Miller; Image courtesy of Nelo

But in markets like Mexico, the percentage of cash payments for trips was very high. And to Miller and Hebson, this spelled opportunity.

Nelo launched its first product in Mexico in January 2020, similar to a debit card offering from a neobank. In the middle of the year, the company launched credit installment loans.

“It became immediately clear that it was going to be our most popular feature,” Miller said. “By the end of the year, it was the vast majority of our business and something that our users were telling their friends about. We were solving a real pain point.”

Indeed, cash remains the dominant method of payment in Mexico, with an estimated 86% of all payments being in the form of cash. According to eMarketer, the region was the fastest-growing e-commerce market in the world in 2020, with 37% year over year growth.

“Access to credit is something we take for granted in the U.S.,” Miller said. “By the end of the year, we realized this was the future of business, and we decided to focus just on credit.”

In March, Nelo launched its first product via an Android app and will be launching a web app soon.

Customers can use its offering like a credit card, connecting directly with merchants such as Netflix and Spotify. Many users are paying for things like utility bills and cell phone bills, turning them from prepaid to postpay.

With its current product, the company has lent about $2 million, and is seeing growth of about 20% month over month.

“We’re seeing massive demand for this new product in the way of organic signups,” Miller said, “for all the reasons Buy Now, Pay Later has been successful in markets like the U.S., Europe and Australia.”

Paying for installments is already common in Latin America, particularly in Brazil, so the concept is not foreign to residents in the region.

“We expected this is soon going to be a competitive market, so we’re hiring data scientists and engineers to continue improving our product, and grow,” Miller said.

Nelo has about 14 employees with an engineering team in New York.

Homebrew Partner Satya Patel says he’s excited about Nelo because he believes the startup “solves a serious problem related to the lack of credit for Mexican consumers.”

“Credit card penetration is less than 10% in Mexico and other forms of credit are effectively non-existent,” he wrote via email. “Nelo makes it possible for Mexicans to easily and inexpensively increase their purchasing power at the point of sale. And importantly, Nelo is delivering this solution online, supporting growing interest in e-commerce, and also offline, where consumers regularly shop today.”

Patel adds that what Nelo is building is valuable because he is not aware of any reliable, comprehensive consumer credit rating data set in Mexico.

“They are building underwriting models based on proprietary data and growing the merchant network at an incredible rate,” he said. “This buy now, pay later opportunity is untapped in Mexico but requires a very different approach than what has been successful in other markets.”

The Nelo team, according to Patel, understands the nuances of the market and “is executing at an exceptional pace.”

Altman brothers lead B2B payment startup Routable’s $30M Series B

We all know the COVID-19 pandemic has accelerated digital adoption in a number of areas, particularly in the financial services space. Within financial services, there are few spaces hotter than B2B payments.

With a $120 trillion market size, it’s no surprise that an increasing number of fintechs focused on digitizing payments have been attracting investor interest. The latest is Routable, which has nabbed $30 million in a Series B raise that included participation from a slew of high-profile angel investors.

Unlike most raises, Routable didn’t raise the capital from a bunch of VC firms. Sam Altman, CEO of OpenAI and former president of Y Combinator, and Jack Altman, CEO of Lattice, led the round. (The pair are brothers, in case you didn’t know.)

SoftBank-backed unicorn Flexport also participated, along with a number of angel investors, including Instacart co-founder Max Mullen, Airbnb co-founder Joe Gebbia, Box co-founder and CEO Aaron Levie, Salesforce founder and CEO Marc Benioff (who also started TIME Ventures),  DoorDash’s Gokul Rajaram, early Stripe employee turned angel Lachy Groom and Behance founder Scott Belsky.

The Series B comes just over eight months after Routable came out of stealth with a $12 million Series A.

CEO Omri Mor and CTO Tom Harel founded Routable in 2017 after previously working at marketplaces and recognizing the need for better internal tools for scaling business payments. They went through a Y Combinator batch and embarked on a process of interviewing hundreds of CFOs and finance leaders.

The pair found that the majority of the business payment tools that were out there were built for large companies with a low volume of business payments. 

After running enough customer development we identified a huge scramble to solve high-volume business payments, and that’s what we double down on,” Mor told TechCrunch. 

Routable’s mission is simple: to automate bill payment and invoicing processes (also known as accounts payables and accounts receivables), so that businesses can focus on scaling their core product offerings without worrying about payments.

“A business payment is more like moving a bill through Congress, where a consumer payment is more like a tweet,” Mor said. “We automate every step from purchase order to reconciliation and by extending an API, companies don’t have to build their own inner integration. We handle it, while helping them move their money faster.”

Since its August 2020 raise, Routable has seen its revenue grow by 380%, according to Mor. And last month alone, the company tripled its amount of new customers compared to the month prior. Customers include Snackpass, Ticketmaster and Re-Max, among others.

“We’ve been beating every quarter expectation for the past 18 months,” he told TechCrunch.

The company started out focused on the startup and SMB customer, but based on demand and feedback, is expanding into the enterprise space as well.

It has established integrations with QuickBooks, NetSuite and Xero and is looking to invest moving forward in integrating with Oracle, Microsoft Dynamics Workday and SAP. 

“A lot of our investment moving forward is to be able to bring that same level of automation and ease of use that we do for SMB and mid-market customers to the enterprise world,” Mor told TechCrunch.

Lead investor Sam Altman is in favor of that approach, noting that the recent booms in the gig and creator economies are leading to a big spike in the volume of both payments and payees.

“With the addition of enterprise capabilities, we think this can lead to an enormous business,” he said. 

The round brings Routable’s total raised to $46 million. The company has headquarters in San Francisco and Seattle with primarily a remote team. 

Sam Altman also told me that he was drawn to Routable after having experienced the pain of high-volume business payments himself and working with many startup founders who had experienced the same problem.

He was also impressed with the company’s engineering-forward approach.

“They can offer the best service by being embedded in a company’s flow of funds instead of the usual approach of just being an interface for moving money,” Altman said. 

With regard to the other investors, Mor said the decision to partner with founders of a number of prominent tech companies was intentional so that Routable could benefit from their “deep enterprise and high-growth experience.”

As mentioned above, the B2B payments space is white-hot. Earlier this year, Melio, which provides a platform for SMBs to pay other companies electronically using bank transfers, debit cards or credit — along with the option of cutting paper checks for recipients if that is what the recipients request — closed on $110 million in funding at a $1.3 billion valuation.

Philippines ‘buy now, pay later’ startup Plentina raises $2.2M seed round

Plentina co-founders Kevin Gabayan and Earl Valencia

Plentina co-founders Kevin Gabayan and Earl Valencia

E-wallets are rapidly gaining popularity in the Philippines, overtaking credit cards, which have a penetration rate of under 10%. Fintech startup Plentina is leveraging that trend with buy now, pay later (BNPL) installment loans that can be used and repaid through e-wallets.

The company announced today it has closed a $2.2 million seed round, co-led by former Tableau executive and ClearGraph chief executive officer Andrew Vigneault, Unpopular Ventures and DV Collective. Other participants included JG Digital Equity Ventures (JGDEV), Amino Capital, Canaan Partners Scout Fund and Ignite Impact Fund.

Its last funding was $750,000 pre-seed round raised last year from investors including Techstars, Emergent Ventures and the 500 Startups Vietnam Fund. Plentina also participated in the Techstars Western Union and Stanford’s StartX accelerator programs.

Plentina launched in the Philippines in October 2020 and has been downloaded more than 30,000 times. Its merchant partners include 7-Eleven Philippines and Smart Communications, a telecom provider with more than 70 million prepaid subscribers.  The company will use its seed round to onboard more merchant partners in the Philippines before expanding in Southeast Asia and other regions.

Plentina uses machine learning models to gauge the creditworthiness of loan applicants, drawing on founders Kevin Gabayan and Earl Valencia’s data science backgrounds. Gabayan was data science lead at Bump Technologies and then spent five years working at Google after it acquired the startup. Valencia’s experience includes serving as managing director of digital transformation at Charles Schwab.

“We’re making BNPL work in emerging markets where few have credit scores and merchants can’t easily integrate technology,” Valencia, Plentina’s chief business officer, told TechCrunch. In addition to alternative credit scoring, the startup also focuses on making installment payment work with merchants’ legacy workflows, he said.

So for, Plentina has generated 10 million credit scores from alternative data sources, including mobile data obtained with user permission and retail loyalty programs, and will continue to develop its models as its merchant partnerships and customer base grows. Customers who build good credit scores with Plentina can increase their credit limits and unlock more offers.

Loans have a flat 5% service fee, with no interest. 7-Eleven and Smart Communications both offer 14 day loans, and Plentina will introduce more dynamic loan terms in the future, Valencia said. Loans can be used to purchase goods at all of 7-Eleven’s 3000 stores in the Philippines and prepaid mobile airtime with Smart Communications.

Other installment loan services in the Philippines include BillEase, Tendopay and Cashalo. Valencia said Plentina “aim[s] to be a customer’s financial service partner throughout their lifetime. We’re starting by offering closed-loop store credit for essentials purchases for consumers to easily establish their financial identity. As a customer’s financial wellness matures, we can graduate them into additional financial services.”

In a press statement about his investment, Vigneault said, “I’ve worked with many early stage fintech companies over the years. However, I’ve come across few founders who are as impressive as Kevin and Earl and have been able to achieve such levels of success with customers, channel partners, and product at such an early stage.”

Austin’s newest unicorn: The Zebra raises $150M after doubling revenue in 2020

The Zebra, an Austin-based company that operates an insurance comparison site, has raised $150 million in a Series D round that propels it into unicorn territory.

Both the round size and valuation are a substantial bump from the $38.5 million Series C that Austin-based The Zebra raised in February of 2020. (The company would not disclose its valuation at that time, saying now only that its new valuation of over $1 billion is a “nice step up.”)

The Zebra also would not disclose the name of the firm that led its Series D round, but sources familiar with the deal said it was London-based Hedosophia. Existing backers Weatherford Capital and Accel also participated in the funding event.

The round size also is bigger than all of The Zebra’s prior rounds combined, bringing the company’s total raised to $261.5 million since its 2012 inception. Previous backers also include Silverton Partners, Ballast Point Ventures, Daher Capital, Floodgate Fund, The Zebra CEO Keith Melnick, KDT and others. 

According to Melnick, the round was all primary, and included no debt or secondary.

The Zebra started out as a site for people looking for auto insurance via its real-time quote comparison tool. The company partners with the top 10 auto insurance carriers in the U.S. Over time, it’s also “naturally” evolved to offer homeowners insurance with the goal of eventually branching out into renters and life insurance. It recently launched a dedicated home and auto bundled product, although much of its recent growth still revolves around its core auto offering, according to Melnick.

Like many other financial services companies, The Zebra has benefited from the big consumer shift to digital services since the beginning of the COVID-19 pandemic.

And we know this because the company is one of the few that are refreshingly open about their financials. The Zebra doubled its net revenue in 2020 to $79 million compared to $37 million in 2019, according to Melnick, who is former president of travel metasearch engine Kayak. March marked the company’s highest-performing month ever, he said, with revenue totaling $12.5 million — putting the company on track to achieve an annual run rate of $150 million this year. For some context, that’s up from $8 million in September of 2020 and $6 million in May of 2020.

Also, its revenue per applicant has grown at a clip of 100% year over year, according to Melnick. And The Zebra has increased its headcount to over 325, compared to about 200 in early 2020.

“We’ve definitely improved our relationships with carriers and seen more carrier participation as they continue to embrace our model,” Melnick said. “And we’ve leaned more into brand marketing efforts.”

The Zebra CEO Keith Melnick. Image courtesy of The Zebra

The company was even profitable for a couple of months last year, somewhat “unintentionally,” according to Melnick.

“We’re not highly unprofitable or burning through money like crazy,” he told TechCrunch. “This new raise wasn’t to fund operations. It’s more about accelerating growth and some of our product plans. We’re pulling forward things that were planned for later in time. We still had a nice chunk of money sitting on our balance sheet.”

The company also plans to use its new capital to do more hiring and focus strongly on continuing to build The Zebra’s brand, according to Melnick. Some of the things the company is planning include a national advertising campaign and adding tools and information so it can serve as an “insurance advisor,” and not just a site that refers people to carriers. It’s also planning to create more “personalized experiences and results” via machine learning.

“We are accelerating our efforts to make The Zebra a household name,” Melnick said. “And we want a deeper connection with our users.” It also aims to be there for a consumer through their lifecycle — as they move from being renters to homeowners, for example.

And while an IPO is not out of the question, he emphasizes that it’s not the company’s main objective at this time.

“I definitely try not to get locked on to a particular exit strategy. I just want to make sure we continue to build the best company we can. And then, I think the exit will make itself apparent,” Melnick said. “I’m not blind and am very aware that public market valuations are strong right now and that may be the right decision for us, but for now, that’s not the ultimate goal for me.”

To the CEO, there’s still plenty of runway.

“This is a big milestone, but I do feel like for us that this is just the beginning,” he said. “We’ve just scratched the surface of it.”

Early investor Mark Cuban believes the company is at an inflection point.

” ‘Startup’ isn’t the right word anymore,” he said in a written statement. “The Zebra is a full fledged tech company that is taking on – and solving – some of the biggest challenges in the $638B insurance industry.”

Accel Partner John Locke said the firm has tripled down on its investment in The Zebra because of its confidence in not only what the company is doing but also its potential.

“In an increasingly noisy insurance landscape that includes insurtechs and traditional carriers, giving consumers the ability to compare everything in one place is is more and more valuable,” he told TechCrunch. “I think The Zebra has really seized the mantle of becoming the go-to site for people to compare insurance and then that’s showing up in the numbers, referral traffic and fundraise interest.”

Embedded procurement will make every company its own marketplace

In 2019, my colleague Matt Harris coined the term “embedded fintech” to describe how virtually all software-driven companies will soon embed financial services into their applications, from sending and receiving payments to enabling lending, insurance and banking services, an idea that quickly spread within the fintech community.

Vertical apps such as Toast for restaurants, Squire for barbershops and Shopmonkey for car repair shops will deliver financial services to businesses in the future rather than traditional, stodgy financial institutions.

Embedded procurement is the natural evolution of embedded fintech.

The embedded fintech movement has just begun, but there is already a sister concept percolating: embedded procurement. In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.

If you own a coffee shop, wouldn’t it be convenient to schedule recurring orders for beans and milk from the same software portal where you process payments, manage accounting and handle payroll? The companies that figured out how to monetize financial services via embedded fintech are well positioned to monetize through procurement, too.

Embedded procurement is the natural evolution of embedded fintech. The salon software company Fresha is a typical embedded fintech story. Fresha’s platform is an online and mobile platform specially designed for spas and salons, encompassing appointment scheduling, reporting and analytics, marketing promotions, and point-of-sale capabilities. The software is free for salons; Fresha monetizes through payment processing.

In the future, Fresha will undoubtedly turn to embedded procurement, becoming a logical place for business owners to order and manage inventory like shampoo, scissors, brushes and other supplies. In turn, Fresha can aggregate demand from thousands of spas to place orders with its suppliers, leveraging its scale to negotiate more favorable pricing on behalf of its customers. Borrowing a concept from the healthcare world, vertical software companies will become group purchasing organizations in every sector.

Pie Insurance raises $118M for data-driven workers’ comp coverage

Pie Insurance, a startup offering workers’ compensation insurance to small businesses, announced this morning that it has closed on $118 million in a Series C round of funding.

Allianz X — investment arm of German financial services giant Allianz — and Acrew Capital co-led the round, which brings the Washington, D.C.-based startup’s total equity funding raised to over $300 million since its 2017 inception. Pie declined to disclose the valuation at which its latest round was raised, other than to say it was “a significant increase.”

Return backers Greycroft, SVB Capital, SiriusPoint, Elefund and Moxley Holdings also participated in the Series C financing.

The startup, which uses data and analytics in its effort to offer SMBs a way to get insurance digitally and more affordably, has seen its revenues climb by 150% since it raised $127 million in a Series B extension last May. Its headcount too has risen — to 260 from 140 last year.

Pie began selling its insurance policies in March 2018. The company declined to give recent hard revenue numbers, saying it only has grown its gross written premium to over $100 million and partnered with over 1,000 agencies nationwide. Last year, execs told me that in the first quarter of 2020, the company had written nearly $19 million in premiums, up 150% from just under $7.5 million during the same period in 2019.

Like many other companies over the past year, Pie Insurance — with its internet-driven, cloud-based platform — has benefited from the increasing further adoption of digital technologies. 

“We are riding that wave,” said Pie Insurance co-founder and CEO John Swigart. “We believe small businesses deserve better than they have historically gotten. And we think that technology can be the means by which that better experience, that more efficient process, and fundamentally, that lower price can be delivered to them.”

Pie’s customer base includes a range of small businesses including trades, contractors, landscapers, janitors, auto shops and restaurants. Pie sells its insurance directly through its website and also mostly through thousands of independent insurance agents.

Workers’ compensation insurance is the only commercial insurance mandated for every company in the United States, points out Lauren Kolodny, founding partner at Acrew Capital.

“Historically, it’s been extremely cumbersome to qualify, onboard and manage workers’ comp insurance — particularly for America’s small businesses which haven’t been prioritized by larger carriers,” she wrote via email. 

Pie, Koldony said, is able to offer underwriting decisions “almost instantly,” digitally and more affordably than legacy insurance carriers.

“I have seen very few insurtech teams that come close,” she added.

Dr. Nazim Cetin, CEO of Allianz X, told TechCrunch via email that his firm believes Pie is operating in an “attractive and growing market that is ripe for digital disruption.”

The company, he said, leverages “excellent,” proprietary data and advanced analytics to be able to provide tailored underwriting and automation. 

“We see some great collaboration opportunities with Allianz companies too,” he added.

Looking ahead, the company plans to use its new capital to invest further in technology and automation, as well as to grow its core workers’ comp insurance business and “lay the groundwork for new business offerings in 2021 and beyond.”

Nigerian fintech of the unbanked Bankly raises $2M led by Vault and Flutterwave

Nigeria remains a largely cash-dominated country. There are over 100 million adult Nigerians, of which more than half have little or no access to financial services

Today, Bankly, a Nigerian fintech startup digitizing cash for the unbanked, announced that it has closed a $2 million seed round. Founded by Tomilola Adejana and Fredrick Adams in 2018, Bankly is digitizing the informal thrift collections system known with different names such as esusu or ajo in Nigeria.

In the absence of a banking system nearby or a disregard for one, the unbanked resort to these traditional systems because they work completely offline. The system allows them to collate and save cash with a thrift collector responsible for disbursing funds when due.

However, there are issues around this system. First is the security issues that arise when the thrift collector goes missing with the money or is feared dead, leaving no clue where the savings are kept. There’s also limited access where members cannot consistently save if absent from a particular location. The third is the lack of customer data since most don’t have an online banking presence.

What Bankly has done is to digitize their whole process of collating money and allow these unbanked people to save using online and offline methods.

Over the past 18 months, the company has been building out its distribution and agent networks. Here, customers can deposit and withdraw cash with a Bankly agent anytime. This solves the issue of access as there are thousands of agents in these cash-dependent communities.

When the information of this new set of customers is collected and saved on its platform, Bankly starts to build engaging communities where these people can collectively save their income with the agents. Slowly, an online banking presence is built for them.

With most of their money in a bank and little or no cash to buy airtime or make payments, they would frequently opt to access these services online via their mobile phones.

Image Credits: Bankly

Onboarding these new set of customers means they get to save and transact more over time. This opens up access to credit and with more value created, there’s a new set of banked people, which leads to financial inclusion in the long run

“The first phase is building agent networks which is good but that’s not the goal,” CEO Adejana said to TechCrunch. Just in the same way mobile inclusion happened, you need to then focus on acquiring customers who, after transferring cash to their mobile accounts, use it to buy airtime or make payments. We call that the three-phase process. The distribution first, then focusing on the consumer, after that full digitization. This is how we reach financial inclusion.”

With its insights into customer behaviour and transactions, Bankly also provides “data-as-a-service” to other service providers to offer tailored products and services to Nigeria’s informal sector

Bankly operates like a traditional bank but with fewer assets, revenue, customers and operational costs. But because it doesn’t spend a lot in acquiring customers and building physical presences, it can pass on those cost savings to customers as interests and still make decent margins.

Agents on the platform also take commissions for any transaction a customer makes through them. This time last year, the company had a little over 2,000 agents across the country. Now, that number has grown to 15,000.

The company still plans to add more agents with the new investment received. To increase its 35,000 customer base in cash-dependent communities, Bankly will also provide direct-to-consumer products in the coming months.

L-R: Fredrick Adams (CPO) and Tomilola Adejana (CEO)

In Bankly’s three years of operation, Adejana cites finding the right partners, talent, and most importantly, the right investors as challenges that the company has faced. Due to the nature of Bankly’s business, Adejana didn’t accept some of the investments offered to the company and only let in investors who aligned with the company’s plans for the unbanked.

“We’ve had to be patient to make sure that we were talking to people who deeply understand the problem and are passionate about solving it and are not about getting returns as soon as possible,” she said.

These investors include co-leads Vault, the holding company of VANSO, a fintech that was sold to Interswitch in 2016; and African payments company Flutterwave. While both companies have pioneered the technology the banked enjoy by building payment rails, they’ve done little to move the needle for the unbanked. With Bankly, there’s a chance to do so.

“Given our over twenty years experience in Nigeria’s fintech industry and previous exits, we strongly believe that Bankly understands the nuanced needs of this market — not to mention the team, strategy, and technology — to succeed in bringing affordable financial services to the unbanked. We are delighted to participate in this financing round as Bankly moves into its next growth stage,” Idris Alubankudi Saliu, partner at Vault said.

For Flutterwave, this marks its first disclosed investment into another company. When it raised a $170 million Series C last month, CEO Olugbenga Agboola mentioned to TechCrunch that Flutterwave might explore some partnerships with smaller companies and potential acquisitions in the coming years. So while the investment comes as a surprise, it’s not rare to see startups invest in other startups, particularly in the ones they hope to acquire in the future—case in point, Stripe and Paystack.

Other investors who took part in the round include Plug and Play Ventures, Rising Tide Africa and Chrysalis Capital.

Bankly aims to grow its customer base to 2 million unbanked Nigerians over the next three years. The goal is to support the Central Bank of Nigeria’s National Financial Inclusion Strategy of increasing the number of banked Nigerians from 60% to 80% by 2020. A year on, that strategy is yet to be actualized. But Adejana says Bankly is working with these regulators towards a more realistic target of 2025.

“We’re thrilled to have closed this milestone fundraise and to have such seasoned fintech investors who understand the market join us on this journey to bank Nigeria’s unbanked. Now we have built the agent network and are poised to serve customers directly via offline and online channels. Partnerships, collaboration, and a deep understanding of the needs of the unbanked will be vital to our success,” said Adejana.

Before Bankly, the CEO was an investment banker but it was during her masters’ program in Sydney she got into the world of fintech. After returning to Nigeria, Adejana worked on a product that offered loans to small businesses, then later joined Accion Venture Lab, a program focused on products that foster financial inclusivity. It was there Bankly started.

The product has caught on well. And while there are lots of fintech products in the Nigerian market pitching to reach the unbanked, Bankly remains one of the very few that can boldly stake a claim to that.

To truly attain financial inclusion in Nigeria, Adejana believes the onus lies with the fintechs to have long-term views just as the telcos and fast-moving customer goods did in the past. This increases the pie of customers fintechs can serve instead of taking a slice of an existing one. “For financial services to reach the last mile, it has to be distributed the same way fast-moving consumer goods are distributed,” she added

Nuvemshop, LatAm’s answer to Shopify, raises $90M in Accel-led Series D

The COVID-19 pandemic has led to people everywhere shopping more online and Latin America is no exception.

São Paulo-based Nuvemshop has developed an e-commerce platform that aims to allow SMBs and merchants to connect more directly with their consumers. With more people in Latin America getting used to making purchases digitally, the company has experienced a major surge in business over the past year.

Demand for Nuvemshop’s offering was already heating up prior to the pandemic. But over the past 12 months, that demand has skyrocketed as more merchants have been seeking greater control over their brands.

Rather than selling their goods on existing marketplaces (such as Mercado Libre, the Brazilian equivalent of Amazon), many merchants and entrepreneurs are opting to start and grow their own online businesses, according to Nuvemshop co-founder and CEO Santiago Sosa.

“Most merchants have entered the internet by selling on marketplaces but we are hearing from newer generations of merchants and SMBs that they don’t want to be intermediated anymore,” he said. “They want to connect more directly with consumers and convey their own brand, image and voice.”

The proof is in the numbers.

Nuvemshop has seen the number of merchants on its platform surge to nearly 80,000 across Brazil, Argentina and Mexico compared to 20,000 at the start of 2020. These businesses range from direct-to-consumer (DTC) upstarts to larger brands such as PlayMobil, Billabong and Luigi Bosca. Virtually every KPI tripled in the company in 2020 as the world saw a massive transition to online, and Nuvemshop’s platform was home to 14 million transactions last year, according to Sosa.

“With us, businesses can find a more comprehensive ecosystem around payments, logistics, shipping and catalogue/inventory management,” he said.

Nuvemshop’s rapid growth caught the attention of Silicon Valley-based Accel. Having just raised $30 million in a Series C round in October and achieving profitability in 2020, the Nuvemshop team was not looking for more capital.

But Ethan Choi, a partner at Accel, said his firm saw in Nuvemshop the potential to be the market leader, or the “de facto” e-commerce platform, in Latin America.

“Accel has been investing in e-commerce for a very long time. It’s a very important area for us,” Choi said. “We saw what they were building and all their potential. So we pre-emptively asked them to let us invest.”

Today, Nuvemshop is announcing that it has closed on a $90 million Series D funding led by Accel. ThornTree Capital and returning backers Kaszek, Qualcomm Ventures and others also put money in the round, which brings Nuvemshop’s total funding raised since its 2011 inception to nearly $130 million. The company declined to reveal at what valuation this latest round was raised but it is notable that its Series D is triple the size of its Series C, raised just over six months prior. Sosa said only that there was a “substantial increase” in valuation since its Series C.

Nuvemshop is banking on the fact that the density of SMBs in Latin America is higher in most Latin American countries compared to the U.S. On top of that, the $85 billion e-commerce market in Latin America is growing rapidly with projections of it reaching $116.2 billion in 2023.

“In Brazil, it grew 40% last year but is still underpenetrated, representing less than 10% of retail sales. In Latin America as a whole, penetration is somewhere between 5 and 10%,” Sosa said.

Nuvemshop co-founder and CEO Santiago Sosa;
Image courtesy of Nuvemshop

Last year, the company transitioned from a closed product to a platform that is open to everyone from third parties, developers, agencies and other SaaS vendors. Through Nuvemshop’s APIs, all those third parties can connect their apps into Nuvemshop’s platform.

“Our platform becomes much more powerful, vendors are generating more revenue and merchants have more options,” Sosa told TechCrunch. “So everyone wins.” Currently, Nuvemshop has about 150 applications publishing on its ecosystem, which he projects will more than triple over the next 12 to 18 months.

As for comparisons to Shopify, Sosa said the company doesn’t necessarily make them but believes they are “fair.”

To Choi, there are many similarities.

“We saw Amazon get to really big scale in the U.S.. Merchants also found tools to build their own presence. This birthed Shopify, which today is worth $160 billion. Both companies saw their market caps quadruple during the pandemic,” he said. “Now we’re seeing the same dynamics in LatAm…Our bet here is that this company and business has all the same dynamics and the same really powerful tailwinds.”

For Accel partner Andrew Braccia, Nuvemshop has a clear first mover advantage.

Over the past decade, direct-to-consumer has become one of the most important drivers of entrepreneurship globally,” he said. “Latin America is no exception to this trend, and we believe that Nuvemshop has the level of sophistication and ability to understand all that change and fuel the continued transformation of commerce from offline to online.”

Looking ahead, Sosa expects Nuvemshop will use its new capital to significantly invest in: continuing to open its APIs; payments processing and financial services; “everything related to logistics and logistics management” and attracting smaller merchants. It also plans to expand into other markets such as Colombia, Chile and Peru over the next 18-24 months. Nuvemshop currently operates in Mexico, Brazil and Argentina.

“While the countries share the same secular trends and product experience, they have very different market dynamics,” Sosa said. “This requires an on the ground local knowledge to make it all work. Separate markets require distinct knowledge. That makes this a more complicated opportunity, but one that enables a long-term competitive advantage.”

Airtel Africa sells $200M mobile money business stake to TPG’s Rise Fund

In February, London-listed telecom, Airtel Africa, said it was looking to sell a minority stake in its mobile money business in a bid to raise cash and sell off some assets.

The firm seems to have found an investor as it announced that The Rise Fund, the global impact investing platform of investment firm TPG, will invest $200 million in its mobile money arm

The investment will see the mobile money business —  Airtel Mobile Commerce BV (AMC BV) — valued at $2.65 billion. AMC BV is an Airtel Africa subsidiary and the holding company for several of Airtel Africa’s mobile money operations across 14 African countries, including Kenya, Uganda, and Nigeria.

AMC BV says the holding company will use the investment to reduce its debt and invest in network and sales infrastructure in the respective operating countries. The deal will close in two tranches — $150 million invested at first close, with $50 million to be invested at second close.

Following the deal’s completion, Airtel Africa will still hold a majority stake in the business and is also exploring the opportunity to take the business public within the next four years

“Our markets afford the substantial market potential for mobile money services to meet the needs of the tens of millions of customers in Africa who have little or no access to banking and financial services, and this demand is driving growth,” Airtel Africa CEO Raghunath Mandava said. “With today’s announcement, we are pleased to welcome The Rise Fund as an investor in our mobile  money business and as a partner to help us realise the full potential from the substantial opportunity  to bank the unbanked across Africa.”

Airtel mobile money business, one of the many players driving financial inclusion across the continent, offers a range of services. They include mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual credit card and international money transfers

Typically, these services are present across countries of operation except Nigeria. In the West African country, Airtel has gone through the route of partnering with local banks but has now applied for its own mobile banking licence

In its most recent reported results for Q3 2020, Airtel Africa witnessed a year on year revenue growth of 41.1% to $110 million, largely driven by 29% growth in the customer base to 21.5 million and 9.7% ARPU growth. Transaction value went 53% up to $12.8 billion ($52 billion annualised), and underlying EBITDA stood at $54 million ($216 million annualised) at a margin of 48.7%.

AMC BV benefits from a strong offline presence of kiosks, mini shops and agents which tie with its core telecom business. And in a bid to drive growth this year, the business has struck partnerships with Mastercard, Samsung, Standard Chartered Bank, WorldRemit, among others, to expand both the range and depth of its mobile money offerings.

Yemi Lalude, a partner at TPG who leads Africa investing for The Rise Fund, said that with financial inclusion being a global issue that is most acute in Africa, the telecom is closing the gap between traditional financial institutions and the millions of unbanked Africans.

“We look forward to working with Airtel Africa to enhance their mobile money services, broaden its use cases, and grow into new markets. With this investment in Airtel Africa’s mobile money operations, we are excited to expand The Rise Fund’s global fintech portfolio and continue to deepen our focus on improving financial inclusion in Africa and around the world,” she said.

Last year, TPG which has more than $5 billion in assets under management invested $600 million in Reliance Jio. The telecoms operator is a competitor to Airtel Africa’s parent company, Bharti Airtel. That’s one interesting detail although both investments target different markets.

Fraud prevention platform Seon raises a $12M Series A round led by Creandum

Seon, which lets online businesses fight online fraud like fake accounts has raised a $12 million Series A round led by Creandum, with participation from PortfoLion, part of OTP Bank. The funding appears to be one of Hungary’s larger series A rounds to date.
 
Seon is a fraud-detection startup that establishes a customers’ ‘digital footprint’ in order to weed out false accounts and thus prevent fraudulent transactions. Clients include Patreon, AirFrance, Rivalry and Ladbrokes Launched in 2017, the company claims to bave been profitable since the end of 2019, after experiencing growth through working with neobanks, esports, gaming, Forex, and crypto trading throughout the rapid digitization brought on by the pandemic.

SEON’s CEO and Founder, Tamas Kadar, said in a statement: “We’re extremely pleased to have completed our latest funding round, led by Creandum, joining its exciting tech portfolio. We feel we have found a like-minded investor to work closely with to pursue the significant global opportunity for our business as we continue to democratize fraud fighting.”
 
Simon Schmincke, general partner at Creandum, said: “At Creandum, we believe cybercrime will be one of the most serious threats of the 21st century. With SEON, we’ve found an anti-fraud solution that’s effective, affordable, flexible, intuitive, and clearly proves its ROI.”
 
Gábor Pozsonyi, partner at PortfoLion Capital Partners, added: “Seon is a fundamentally useful brand: it offers a solution to one of the greatest challenges of digitalization, not only saving hundreds of millions of euros for its partners but making the internet a safer place.”

SEON are seen as competing with Emailage, Iovation, Threatmetrix. However, SEON’s thesis is that social media is a great proxy of a legitimate user vs bot/fake fraudster, so it looks heavily at social accounts to weed out fraudsters.

As part of the funding round, Seon has brought on board the following investors as shareholders: N26 founders, Maximilian Tayenthal and Valentin Stalf; SumUp founders Stefan Jeschonnek and Jan Deepen; Tide CEO Laurence Krieger; Revolut ex-CFO Peter O’Higgins; iZettle ex-chief Product Officer Leo Nilsson; Onfido cofounder Eamon Jubawy, and ComplyAdvantage founder Charlie Delingpole.