(Bloomberg) -- R2, a Latin American startup building lending tools for tech companies in the region, raised $59 million in equity and debt to continue expanding operations, including a push to grow its business in Chile.
The company raised $9 million in equity in a Series A extension led by Mexican funds Hi Ventures and Cometa, said co-founder Roger Larach in an interview. Other investors included Endeavor Catalyst and prior backers Y Combinator and Google’s Gradient Ventures. An additional credit line of as much as $50 million was secured from San Francisco-based Community Investment Management for lending in Chile.
R2 provides lending infrastructure and capital to allow companies — such as last-mile delivery company Rappi, payments firm Clip and ride-hailing app InDrive — to offer financial services under their own brands. The company provides revenue-based loans in which the repayment happens automatically as a percentage of sales, which helps curb delinquencies.
“Our aim is to build an invisible bank, without a brand, to stand behind Latin America’s tech platforms and offer their users financial services,” Larach said. “We’ll continue to focus on improving our core product while also building the base for that invisible bank — and that includes analyzing a bank license in Mexico, our largest market.”
The company will use the funds to improve its underwriting and invest in more computing power for its artificial intelligence models to boost lending. It will also seek to expand its client base to include accounting service providers and so-called enterprise resource planning companies.
CIM previously extended a $100 million credit line to R2 for its business in Mexico. The $15 million Series A led by Gradient Ventures was announced in Sept. 2022 at a valuation of $100 million. Larach declined to comment on the current valuation.
After a flurry of fundraising activity in 2021, it’s gotten more challenging for Latin American startups to raise money as global interest rates shot up. With more limited financing options, many have pivoted to focus more on reaching profitability at the expense of some growth.
R2, which aims to break even and double its lending in 2025, has lent $85 million since 2021. It operates in Mexico, Chile, Colombia and Peru with 13 clients, some of which — like Rappi and InDrive — work with R2 in multiple countries.
A bank license in Mexico would allow R2 to offer debit cards, which provide more data on individuals and increases “user stickiness,” while also cutting funding costs, Larach said.
R2, which employs 50 people, will seek to raise debt for lending in Colombia next year.
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