While credit cards are ubiquitous in the US, they are much less the case in Latin America, where people — especially the lower-income population — traditionally relied on cash for payments.
But the market in LatAm has shifted in recent years and with the increased digital adoption, more people are opening their minds to using credit cards for payments. The problem is that people with little to no credit have a hard time getting them.
Enter Storic. The startup, which offers credit cards to underserved populations in Mexico, told gotechbusiness.com it has raised an additional $50 million in equity at a valuation of $1.2 billion. It has also secured $100 million in debt financing. BAI Capital, GIC and GGV Capital jointly led the equity portion of the deal, which also included participation from other existing and new investors, including Lightspeed Venture Partners, General Catalyst, Vision Plus Capital, Goodwater Capital and Tresalia Capital.
With this latest raise, Stori has raised more than $200 million in equity financing since the start of 2018.
Last September, the company announced that it had entered into $125 million in equity capital and a $75 million debt facility. The new valuation of $1.2 billion represents a “more than 25% increase” than increase thataccording to Stori CEO and co-founder Bin Chen.
This is notable because in most to almost all cases, overtime rounds are raised at flat valuations. It is also noteworthy that Marlene Garayzar, chief governance officer and co-founder, is considered the first Mexican woman to set up a unicorn technology startup in the country.
The fact that Stori saw “20x” revenue growth in 2021 helped drive valuations to increase the Series C extension, Chen told gotechbusiness.com, refusing to reveal hard revenue numbers. The startup earns income through interest and interchange fees from transactions using its credit card offerings.
Stori launched its credit card product in Mexico in January 2020. Today, the company says it has more than 1.4 million customers in Mexico, which it claims has increased “more than” 3x” from the previous year. The ambitious goal is to serve 100 million underserved customers in Latin America one day. The primary target, Chen said, is the region’s growing middle-class population.
“Our technology and adoption allow us to make a credit card offer to anyone who signs up, regardless of credit history, all through a paperless, mobile-first experience,” said Chen.
Several members of the startup’s founding team spent years at Capital One improving their skills in insuring underserved populations, while others worked at Mastercard, Morgan Stanley, GE Money, HSBC and Intel in Mexico and the US, among others. That strong team was what partially attracted its lead investors to back the company.
“The Stori team is a rare combination of industry knowledge, busyness and a mindset of change,” said Hans Tung, managing partner of GGV Capital. “The market demand for inclusive financial products tailored to local markets is clear.”
Annabelle Long, the founder of BAI Capital, believes that: Stori’s ability to raise this capital at a time of economic uncertainty is a reflection of “investors’ confidence in Stori and its mission”.
The company plans to use its latest cash injection to hire more staff and expand its product offering, both geographically and in Spanish-speaking Latin America. The company currently has more than 200 professional employees and more than 400 support and service personnel, compared to 70 professionals a year ago. Most of the team is based in the Mexico City headquarters.
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