Addi, a Colombian FinTech startup that is expanding quickly, recently completed a $86 million investment round that includes loan and equity financing.
With 2 million users since its launch in 2018, the buy-now, pay-later (BNPL) app has raised $36 million in equity from a group of investors that included Singapore’s foreign reserve manager, GIC Private Ltd., and venture capital firms Andreessen Horowitz and Union Square Ventures.
Goldman Sachs Group contributed $50 million in debt financing in addition to the equity investment, making the total amount raised in this round $86 million. Following a prior investment round in late 2021 that valued Addi at over $700 million, comes this most recent infusion of funds. But as of late, the company decided to cut its valuation in half, according to Santiago Suárez, the CEO and co-founder.
Speaking from Addi’s Bogotá offices, Suárez said:
“The company had obtained capital during the FinTech boom and was at ease with the choice to lower its valuation. Additionally, he disclosed that Addi has decided to concentrate on growing in its native Colombian market rather than pursuing its intentions to enter Brazil and Mexico.”
Addi’s growth over the last year has been outstanding, despite the value haircut. More than 13,500 retailers utilize the company’s payment-processing system, a substantial rise from the roughly 1,000 merchants it served in 2021. The company’s clientele increased by 60% in 2023. Last year, sales at connected stores totaled an astounding 1.6 trillion pesos, or $413 million.
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Globally, the buy-now, pay-later industry has become increasingly popular; on Black Friday of last year, US consumers alone spent close to $10 billion using these applications. Although these services frequently have interest rates that are lower than those of credit cards, some critics contend that their accessibility may encourage careless spending practices.
Suárez asserts, however, that Addi’s sophisticated creditworthiness modeling has enabled the business to retain a mere 1% of its portfolio of loans past due for more than three months. According to him, this has made it possible for Addi to carry on giving credit even as nearby banks tighten their lending policies, giving Colombians who might not otherwise have any financial options access to credit.
With $2 billion raised by dedicated funds in 2023 alone, VC firms are continuing to pour money into Latin America; Addi’s successful funding round and remarkable growth show the region’s potential for FinTech innovation and disruption.
