Nelo joins BNPL rush, with $ 20 million in new funding and Mexican market in sight – TechCrunch
Buy Now, Pay Later (BNPL) made headlines this year, from The proposed acquisition of Afterpay by Square To Affirm becoming public.
Yet Latin America remains an under-penetrated market in an increasingly crowded space.
Nelo, a startup founded by former leaders of Uber’s international growth team, began offering buy now, pay later services in Mexico earlier this year. Its ultimate goal is to expand to all of Latin America. And he just raised $ 20 million to help him move towards that goal. The Mexico City-based company is already active with over 100 merchants, including Steve Madden and Ben & Frank. Using the Nelo app, customers can make purchases from merchants such as Amazon, Mercado Libre, Telcel, Netflix, and Spotify.
“Our goal is to enable digital commerce throughout Latin America, and BNPL in Mexico is our first step towards this vision,” said CEO and co-founder Kyle Miller.
New York-based Two Sigma Ventures led the round, with existing backers including Homebrew, Susa Ventures, Crossbeam and an angel investor and popular podcast host. Antoine Pompliano also participate. New investors include angels like Gokul Rajaram and Emilie Choi, founders and employees of Wealthsimple, Orum, Alloy, Chime, Square and funds / syndicates in addition to Primer Capital, Gaingels and Moving Capital. With the latest Series A funding, Nelo has raised a total of $ 25.6 million since its inception in 2019.
To be clear, Nelo is not the only player in the Mexican market. A number of others, including Alchemy and Addi, have also come up with plans to buy now, pay later deals in the area. But what sets Nelo apart from its competition, according to Miller, is that it claims to be the only BNPL company in the region to have a mainstream mobile app in addition to an integrated payment experience for merchants.
“Our mobile app allows customers to buy now and pay later at over 75 merchants, and very soon, any merchant, ”Miller said,“ ultimately becoming the destination for any consumer who wishes to shop online. This captive consumer base is crucial to building the network that is Nelo.
Nelo launched its first product in Mexico in January 2020, similar to a neobank debit card offer. In the middle of the year, the company launched installment loans.
Then, in March 2021, Nelo launched its first product via an Android app. Customers can use its offer like a credit card, connecting directly with merchants such as Netflix and Spotify. Many users started out paying for things like utility bills and cell phone bills, moving them from prepaid to postpaid.
Today, the startup has apps on Android and iOS, and its revenue and GMV are growing by 50% month over month, according to Miller. It currently records over 100,000 new purchases / transactions per month.
Nelo plans to use his new capital to grow his consumer and merchant base, and continue to strengthen his team. The company has hubs in Mexico City, New York and remote employees. It currently has 23 employees, up from 12 in January.
For now, Nelo is 100% focused on Mexico, where Miller notes that e-commerce is “exploding” and home to “the fastest growing market in the world.”
“It has had a huge impact on our business,” he told TechCrunch. “Right now is the perfect time for this company and this product. “
Frances Schwiep, partner of Two Sigma Ventures, believes that Nelo has the potential to become the leading financing option for consumers in Latin America, starting with BNPL.
According to her, BNPL’s case in Latin America, and in particular Mexico, is even stronger than for BNPL in the many regions where it has already exploded in popularity like the United States, Europe and Australia. She points out that in Mexico, there is an “extreme” lack of access to credit with less than 15% of the Mexican population having a credit card. In addition, there is an existing behavior of installment payments in Mexico that has existed for several decades, called “meses sin interes”, but via “hard to access” payment vouchers.
Meanwhile, e-commerce spending in Mexico is growing much faster than access to credit, Schwiep noted, in addition to the open fintech regulation in the country, which makes everything easier.
“Mexico’s relatively young population is also more in tune with BNPL’s business demographic target,” she said. “On top of that, the accelerated adoption of banking and mobile e-commerce services in Latin America has created an environment for a cutting-edge business in the space today. “
On a personal level, having lived in Mexico for the past year (and having lived in Latin America in 2011), Schwiep told me that he had been “bonkers” to watch the digital commerce market transform. essentially overnight.
“I think Nelo has built the team, the product, the data divide and the go-to-market playbook that is best positioned to capitalize on this incredible market opportunity,” she said.
The fact that Nelo started out offering installment payments for essentials of daily living, such as utility and phone bills, before going into retail, gives the startup some advantages, Schwiep added.
“First, Nelo has a direct, deep and recurring relationship with the consumer,” she said. “Nelo is the only BNPL company in the region to establish trust and brand loyalty with the consumer in this way. “
In addition, the multiple monthly points of contact with consumers translates into an “extremely valuable longitudinal data asset for Nelo,” according to Schwiep.
“They’re building up a valuable repayment history on their platform that incumbents like Affirm and Afterpay and even local credit bureaus don’t have on consumers in the area,” she said.