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Don't worry, we speak : Español (Spanish), too!

AlphaCredit’s latest SoftBank-led equity round worth over US$100 million is a done deal

Don't worry, we speak : Español (Spanish), too!

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Contxto – Lots of the cast of characters you’ve come to love and hate are back, but this time with some pretty good news.

Mexico’s AlphaCredit, a fintech catering to underserved demographics, has officially closed an investment led by SoftBank.

The Series B round was announced in earlier this year, but has just been confirmed after the pair got the go-ahead from Mexico’s anti-trust body, Cofece. (Unlike SoftBank’s last run-in with the Mexican institution, resulting in a wrist-slap worth a few hundred thousand dollars.)

Nowhere to go but up

The equity financing round was announced to be worth more than MXN$2.4 billion (approximately US$100 million).

One would expect this to be linked to the absence of names when mentioning the other “existing and new investors” who contributed to the round beyond the leading Japanese outfit. 

Therefore, we can assume two basic facts:

  1. That the amount will most likely be higher than the announced US$100 million
  2. AlphaCredit has some money to play around with

That much was confirmed by the fintech’s Co-founder and Co-CEO, José Luis Orozco:

This capitalization, in addition to the US$400 million in senior notes offering completed in February, places us in a solid financial position to continue providing support to our clients during the current liquidity crisis as a result of the Covid-19 pandemic.

José Luis Orozco

Rise of the planet of the fintechs

AlphaCredit provides financial services to segments underserved by traditional banking institutions. It specializes in consumer lending and financing for small and medium enterprises (SMEs). 

If this feels like it rings a bell, it is because this company does some very to a Colombian startup I described in a piece I wrote only yesterday. Way back then, we found out that R5 had secured its own—though smaller—round of investment.

Many of the companies’ features were the same: their demographic focus, their attractiveness to investors, the general fintechness of it all. Take a look at Orozco detailing a similarly overlooked potential customer base in Mexico as in Colombia:

It makes one wonder, are we witnessing a crisis-driven golden age of fintech?

Well, if search rates are anything to go by then the answer is a resounding yes. In the first three months of 2020, “finance and business” sites have seen a 42 percent uptick in hits, according to Axios. 

However, look a bit closer and it might be a very specific type of fintech getting the upper hand in these tough times. 

Indeed, it is important to note who R5 and AlphaCredit cater to. As people increasingly lose their jobs and face salary cuts going forward, the ranks of the “underserved” will continue to swell, growing the customer pool these specific fintechs work for. 

Let’s hope the investments hold a steady upward tendency as well, otherwise, there’ll be hell to pay for. 

Related articles: Tech and startups from Mexico!

-AG

Alejandro González Ormerod
Historian, writer, and editor from Mexico City. He was a book publisher, academic, and cheesemonger before joining Contxto. Still deciding on which Latin American country to visit next; food and fun are the main criteria.

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