Nelo joins the BNPL onslaught with $ 20 million in new funding and targeting the Mexican market

Buy Now, Pay Later (BNPL) made headlines everywhere this year – from Square’s planned takeover of Afterpay to Confirm the IPO.

Nevertheless, Latin America remains an insufficiently penetrated market in the increasingly dense area.

Nelo, a startup founded by former Uber international growth team leaders, began offering Mexico services that buy now and pay later earlier this year. Its ultimate goal is to expand across Latin America. And it just raised $ 20 million to help achieve that goal. The Mexico City-based company already has over 100 dealerships, including Steve Madden and Ben & Frank. With the Nelo app, customers can shop at retailers such as Amazon, Mercado Libre, Telcel, Netflix and Spotify.

“Our goal is to enable digital commerce across Latin America and BNPL in Mexico is our first step towards that vision,” said CEO and Co-Founder Kyle Miller.

New York-based Two Sigma Ventures led the way, with existing supporters like Homebrew, Susa Ventures, Crossbeam and Angel Investor and popular podcast host Anthony Pompliano also participate. In addition to Primer Capital, Gaingels and Moving Capital, the new investors also include Angels such as Gokul Rajaram and Emilie Choi, founders and employees of Wealthsimple, Orum, Alloy, Chime, Square and funds / syndicates. With the latest Series A funding, Nelo has raised a total of $ 25.6 million since its inception in 2019.

To be clear, Nelo isn’t the only player in the Mexican market. A number of others, including Alchemy and Addi, have also outlined plans for buy now and later paying deals in the area. However, what sets Nelo apart from its competitors, according to Miller, is that it claims to be the only BNPL company in the region to have a consumer mobile app in addition to an embedded checkout experience for merchants.

“Our mobile app enables customers to buy from over 75 retailers now and pay later, and soon from anyone “Merchant,” said Miller, “who ultimately becomes the destination for every consumer who wants to shop online. This bound consumer base is critical to building the Nelo network. “

Nelo launched its first product in Mexico in January 2020, similar to a debit card offering from a Neobank. In the middle of the year, the company launched credit installment loans.

In March 2021, Nelo then launched its first product via an Android app. Customers can use the offer like a credit card and connect directly to retailers such as Netflix and Spotify. Many users started out by paying things like utility bills and cell phone bills and going from prepaid to postpaid.

Today, the startup has apps on both Android and iOS, and its sales and GMV are growing 50% month over month, according to Miller. It is currently registering over 100,000 new purchases / transactions per month.

Nelo plans to use its new capital to expand its consumer and dealer base and further expand its team. The company has hubs in Mexico City, New York City and remote workers. It currently has 23 employees, up from 12 in January.

Currently, Nelo is 100% focused on Mexico, where Miller finds e-commerce is “exploding” and is home to “the fastest growing market in the world”.

“This has had a huge impact on our business,” he told TechCrunch. “Right now is the perfect time for this business and product.”

Frances Schwiep, partner at Two Sigma Ventures, believes Nelo has the potential to establish itself as the leading consumer financing option in Latin America, starting with BNPL.

In their view, BNPL speaks even more of an argument in Latin America, and Mexico in particular, than it does in favor of BNPL in the many regions where popularity has already exploded, such as the United States, Europe, and Australia. She points out that there is an “extreme” lack of access to credit in Mexico, with less than 15% of the population in Mexico owning a credit card. In Mexico there has also been a practice of paying by installments that has existed for several decades, known as “meses sin interes”, but via “hard-to-reach” cash vouchers.

Meanwhile, e-commerce spending in Mexico is growing much faster than access to credit, Schwiep noted, in addition to open fintech regulation in the country that makes everything easier.

“The relatively young population in Mexico is also more geared towards the demographic target group of BNPL companies,” she said. “In addition, the increasing adoption of banking and mobile e-commerce in Latin America has now created an environment for a breakout company in the industry.”

On a personal level, having lived in Mexico last year (and previously lived in LatAm in 2011), Schwiep told me that it was “wild” to see the digital commerce market change fundamentally overnight.

“I believe Nelo built the team, product, data digging, and go-to-market playbook that is best positioned to take advantage of this incredible market opportunity,” she said.

The fact that Nelo initially offered installment payments for everyday necessities like electricity and telephone bills before evolving into retail brings some advantages to the startup, added Schwiep.

“First, Nelo has a direct and deep, recurring relationship with the consumer,” she said. “Nelo is the only BNPL company in the region that is building trust and brand loyalty with consumers in this way.”

In addition, according to Schwiep, the multiple points of contact with consumers each month mean “extremely valuable longitudinal data for Nelo”.

“They’re collecting valuable repayment history on their platform that established companies like Affirm and Afterpay and even local credit bureaus don’t have for consumers in the area,” she said.

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