Latin America is not an exception to the rule of buy now and pay later.
Today Addi, a startup from the region, announces a $75 million extension of its Series B. This brings the total round to $140million. The startup announced in May that it had raised $35m in equity funding led by Union Squares Opportunity Fund and $30m in debt financing from Architect Capital.
The company has two headquarters in Bogota (Colombia) and So Paulo (Brazil). It declined to disclose its new valuation, except to say that it is almost triple the value it was when it closed on its first tranche of Series B.
Greycroft, a New York-based investor, led the extension. It also included participation by new backers GGV Capital and Citius Capital as well as existing investors Union Squares Opportunity Fund and Andreessen Horowitz.
Addi now has $220 million in debt or equity, with $140 million of it in equity, and $80 million in debt.
Santiago Suarez is the co-founder of Addi and CEO. He says that he, Daniel Vallejo, and Elmer Ortega founded the company with the vision of making digital commerce a reality for Latin America, a region in which less than 25% have a credit score.
He said that we needed to solve the payment issue in order to do this. We wanted frictionless payments to be possible, while still allowing customers to have the freedom to choose what they want.
Addi began with a buy-now, pay later option that allowed customers to purchase in a matter of minutes and pay over three months for no additional cost. Addi allows customers to pay up to 24 months for larger purchases at what it calls fair and competitive rates.
Addi is available in Brazil and Colombia for mobile, e-commerce and brick-and mortar purchases. Plans to expand throughout Latin America are in place. It plans to expand its presence in Mexico by 2022.
Suarez reports that Addi's GMV (gross merchandise value) has increased 13x since the start of this year.
He also said that our ARR has experienced similar growth.
Addi, like many other businesses, experienced a temporary slowdown in business due to the COVID-19 pandemic. It quickly recovered.
When the pandemic struck, we lost 99% our GMV within 20 days. Suarez recalls that we had to make difficult decisions and let go of many of our colleagues during a very difficult period. We also refocused our business on ecommerce and digital payment, and have not looked back.
Addi has increased by approximately 3x since then.
Suarez said that the company's focus is on growth and not profitability for now.
He said that this round has increased our focus to make digital commerce accessible and ubiquitous across Latin America.
Latin America was the leader in ecommerce sales growth last year. Addi, for its part, has over 150,000 customers and is growing at 30%-40% month-over-month. It has more than 500 merchant partners on the merchant side, including brands like Arturo Calle and Mario Hernandez. It signed a strategic partnership agreement with Banco Santander earlier this year.
Addi now has more than 260 employees, or as Suarez puts it, partners. This is an increase of 120 people a year ago. The company is proud to be one of few Latin American startups that gives equity to all employees.
Suarez said that they make it a point to talk about co-owners and partners rather than employees.
The company intends to use the capital to accelerate its product roadmap, and expand geographically. It will launch a one-click checkout system for merchant partners and customers before the end of the year. Addi will also accelerate its entry to Mexico, which it previously mentioned. It aims to launch in the early 2022.
Greycrofts Thabet Thabet Mahayni stated that his company had been following Addi for a while before he invested in it.
Mahayni said that in addition to a great team, the BNPL value proposition in LatAm is stronger than anywhere else in world. He believes they have the potential to transform the consumer payments experience in the area.
He points out that consumers in Latin America currently have few options when it comes to credit. Mahayni said that card penetration is low and that credit applications can be cumbersome and confusing.
Credit card holders often get very low credit limits and high interest rates.
He said that it is easy to see why this dynamic makes credit access difficult and costly for consumers.
Mahayni claims that Addi has rebuilt the entire underwriting, onboarding and fraud stack to offer consumers safer credit options and merchants can increase their basket sizes and GMV.
Greycroft's second LatAm investment is in this venture. Greycroft previously invested in Rocket.chat (a Brazilian enterprise communication platform and collaboration platform).
Addi will be joining Nelo in Mexico next year. The startup, which raised $3 million in April and was already live with over 45 merchants, and more than 150,000 users, had at that time raised $3 million. Alchemy also entered the Mexican market earlier in the year.
