Addi, a rapidly growing fintech startup based in Colombia, has just raised a total of $86 million in a funding round that included both equity and debt financing. The buy-now, pay-later app, which has amassed 2 million clients since its inception in 2018, received $36 million in equity from a group of investors that included venture capital firms Union Square Ventures and Andreessen Horowitz, as well as GIC Private Ltd., the manager of Singapore’s foreign reserves.
In addition to the equity investment, Goldman Sachs Group provided $50 million in debt financing, bringing the total raised in this round to $86 million. This latest injection of capital comes on the heels of a previous funding round in late 2021 that valued Addi at more than $700 million. However, the company has since made the decision to slash its valuation by approximately half, according to CEO and co-founder Santiago Suárez.
Suárez, speaking from Addi’s headquarters in Bogotá, explained that the company had raised money during the fintech boom and felt comfortable with the decision to decrease its valuation. He also revealed that Addi has put its plans to expand into Brazil and Mexico on hold, instead choosing to focus on growth in its home market of Colombia.
Despite the valuation haircut, Addi has seen impressive growth over the past year. The company’s client base surged by 60% in 2023, and more than 13,500 retailers now use its payment-processing system, a significant increase from the roughly 1,000 merchants it served in 2021. Sales at affiliated stores reached a staggering 1.6 trillion pesos ($413 million) last year.
The buy-now, pay-later sector has seen a surge in popularity worldwide, with US shoppers alone spending nearly $10 billion through these apps during Black Friday last year. While these services often offer lower interest rates than credit cards, some critics argue that their easy accessibility can encourage irresponsible spending habits.
However, Suárez maintains that Addi’s advanced creditworthiness modeling has allowed the company to keep its portfolio of loans more than three months past due at just 1%. He stated that this has enabled Addi to continue offering credit even as local banks tighten their lending practices, providing financial options to Colombians who might otherwise have none.
As venture capital firms continue to pour money into Latin America – with $2 billion raised by dedicated funds in 2023 alone – Addi’s successful funding round and impressive growth demonstrate the region’s potential for fintech innovation and disruption.
