Addi Secures $75M Funding to Expand BNPL in Latin America

Buy Now, Pay Later Expansion in Latin America

The “buy now, pay later” (BNPL) model is experiencing widespread adoption globally, and Latin America is demonstrably part of this trend.

Addi, a regional startup, has recently announced a $75 million extension to its Series B funding round, increasing the total funding to $140 million. This follows a $35 million equity round led by Union Square’s Opportunity Fund and $30 million in debt financing from Architect Capital, announced in late May.

Valuation and Funding Details

The company, with dual headquarters in Bogota, Colombia, and São Paulo, Brazil, has not disclosed its current valuation. However, it states that the valuation has “nearly tripled” in the last 90 days, reaching the “hundreds of millions” of dollars.

This extension round was spearheaded by New York-based Greycroft, with participation from GGV Capital, Citius Capital, and Intersection Growth Partners. Existing investors, including Union Square’s Opportunity Fund, Andreessen Horowitz, Endeavor Catalyst, Foundation Capital, Monashees, and Quona Capital, also contributed.

To date, Addi has secured a total of $220 million in both debt and equity since its inception in September 2018. This comprises $140 million in equity and over $80 million in debt.

Addressing the Credit Gap

Santiago Suarez, Addi’s co-founder and CEO, along with Daniel Vallejo and Elmer Ortega, founded the company with the aim of facilitating digital commerce throughout Latin America. A significant challenge in the region is the limited access to credit, with fewer than 25% of individuals possessing a credit card.

“Our primary goal was to resolve the payment difficulties,” Suarez explained. “We sought to enable seamless payments while simultaneously making desired products affordable for consumers.”

Initially, Addi offered a BNPL solution, allowing purchases to be completed in minutes with minimal steps. Currently, customers can pay for purchases over three months without incurring any costs. For larger transactions, Addi provides financing options extending up to 24 months at rates described as “competitive and fair.”

Expansion Plans and Growth

Addi’s services are presently available for e-commerce, mobile, and in-store purchases in Brazil and Colombia. The company intends to broaden its reach across Latin America in the coming years, with a specific focus on entering the Mexican market in 2022.

According to Suarez, the company has experienced a 13-fold increase in its gross merchandise volume (GMV) since the beginning of the year. Annual recurring revenue (ARR) has mirrored this substantial growth.

Despite a temporary setback due to the COVID-19 pandemic, Addi quickly recovered.

“We experienced a 99% reduction in GMV within 20 days of the pandemic’s onset, necessitating difficult decisions, including workforce reductions,” Suarez recalled. “We then shifted our focus to e-commerce and digital payments, and have seen consistent growth since.”

Addi regained its pre-pandemic GMV levels in March/April 2021 and has since grown by approximately 300%.

Currently, the company prioritizes growth over immediate profitability, Suarez stated.

“This funding round reinforces our commitment to making digital commerce accessible throughout Latin America,” he said.

Latin America led the world in e-commerce sales growth last year. Addi currently serves over 150,000 customers, with a monthly growth rate of 30% to 40%. The company has established partnerships with nearly 500 merchants, including brands like Arturo Calle, Mario Hernandez, Keep Running, and Claro. A strategic partnership with Banco Santander was also formed earlier this year.

Team and Future Development

Addi’s team has expanded to over 260 employees, referred to as “partners” by Suarez, up from fewer than 120 a year ago. The company distinguishes itself as one of the few Latin American startups that offers equity to all staff members.

“We emphasize the concept of partners and co-owners rather than traditional employees,” Suarez explained to TechCrunch.

The new capital will be allocated to accelerating the product roadmap and geographic expansion. Addi plans to launch a “one-click checkout solution” for its merchant partners and customers by the end of the year. Expansion into Mexico, slated for early 2022, will also be expedited.

Investor Perspective

Thabet Mahayni of Greycroft stated that his firm had been closely monitoring Addi for an extended period prior to investing.

“Beyond an exceptional team, we believe the BNPL proposition is particularly strong in Latin America,” Mahayni told TechCrunch. “We…are confident they can fundamentally transform the consumer payments landscape in the region.”

This belief stems from the limited credit options currently available to consumers in Latin America. Card penetration is low, and credit applications are often complex and frustrating.

Furthermore, those who do have credit cards frequently receive low credit limits with high interest rates.

“This situation creates challenges and expenses for consumers seeking safe and reliable credit,” he said.

Mahayni believes Addi has “rebuilt the entire onboarding, underwriting, and fraud detection systems, enabling them to provide safer credit alternatives to consumers while simultaneously empowering merchants to increase their average order values and GMV.”

This marks Greycroft’s second investment in Latin America, following their earlier investment in Rocket.chat, a Brazilian enterprise communication platform.

In Mexico, Addi will compete with existing players like Nelo, which raised $3 million in April and had over 45 merchants and 150,000 users at that time. Alchemy also recently entered the Mexican market.