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Fintech Arrenda raised US$26.5 million in a pre-seed round that combined equity and debt. The round was led by Fasanara Capital and had participation from Kube Ventures, ODX, Toehold Ventures, Wharton Fintech, Lightspeed Venture Partners Scout Fund, PRMM Inmobiliaria, and angel investors.
The fintech that offers credit to landlords also announced the arrival of its first product, Adelanta, which provides capital to property owners through factoring, allowing them to obtain immediate cash.
This solution comes a year after the company was born in Mexico, after its founder and CEO, Joe Merullo, moved to the country from the U.S. and noticed that the process for renting a property was “horrible and crazy,” he told Contxto.
“Arrenda’s goal is to create an easier, more transparent business environment, with high levels of security and liquidity for both parties. We see a lot of opportunities to create credit products between landlords and tenants,” he added.
Arrenda sees a big market in Latin America
For Arrenda, Mexico represents a market of 5.5 million homes for rent. Latin America has 30 million residential units and an estimated value of US$400 billion in annual lease transactions, with a Compound Annual Growth Rate of 5%.
Given this market, Arrenda claims to be the first fintech to offer “independent” financing based on the income of property owners in Mexico. According to Merullo, this is possible thanks to their algorithm that uses artificial intelligence to research the owner and their financial history. They also analyze the lease contract to evaluate its value as a financing instrument on their platform.
With these two factors, they generate a risk score that they use to decide the number of interest rates per financing product.
The new capital will allow Arrenda to offer loans to property owners in Mexico and allocate funds for research and development of new financial products on its platform. “We are looking at more credit products such as rent now and pay later,” Merullo said, referring to a potential product for tenants.
In the coming months, Arrenda plans to enter the country’s largest cities to establish distribution channels through alliances with real estate brokers, property management companies, and real estate investment groups.
Currently, Arrenda only has a presence in Mexico but would like to reach Colombia, Chile, Peru, and Brazil in the future.
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