Mexico City — Mexican fintech startup Stori has achieved a valuation of $1.2 billion following a $150 million Series C extension, making it the latest company from the country to achieve unicorn status.
This capital comes in addition to the $200 million Stori received in October 2021, of which $125 million was venture capital, in a round co-led by GGV Capital and growth-stage investor GIC, as well as $75 million for debt financing from Community Investment Management.
The credit card fintech, which facilitates financial inclusion for the unbanked, receives the capital in a challenging environment for startups, however.
Stori co-founder Marlene Garayzar told Bloomberg Línea that the startup received the new resources “in a period in which there is talk of a recession coming, and in which access to capital is going to be increasingly expensive.”
The startup co-founded by Garayzar and four financiers of US and Asian origin has received the Series C-2 only nine months after raising one of the largest Series C rounds in Latin America.
The $150 million raised is comprised of a $50 million venture capital investment from BAI Capital, GIC and GGV Capital, along with participation from other existing and new investors, including Lightspeed Venture Partners, General Catalyst, Vision Plus Capital, Goodwater Capital, Tresalia Capital and Davidson Kempner Capital Management LP. And it is joined by a $100 million credit facility from Davidson Kempner.
With this, Stori will be part of the Mexican unicorn club made up of Kavak, Clip, Bitso, Konfío, Clara, Merama and newcomer Nowports. Unicorns with Mexican DNA or that started in Mexico as their main market, such as Jokr, Incode and Jeeves, are also considered members of the club.
Mexico boasts 20%, and is of the total unicorns in Latin America, and is the second country in Latin America with the second largest number of unicorns after Brazil, which has 58% of the total, according to the Venture Capital Panorama in Latin America report by Endeavor and Glisco Partners.
In terms of sectors, fintechs account for 35% of the region’s unicorns, followed by e-commerce and marketplace startups, with 26%, and transportation and logistics startups with 10%.
Mexico and Latin America offer the biggest fintech opportunities with more than 400 million consumers underserved by traditional banking.
In a previous interview with Bloomberg Línea, Stori’s CEO Bin Chen said that more than 90% of Mexicans do not have access to credit and that the company’s solution differs from that of Nu Mexico, part of Nubank (NU), because Stori seeks a less established customer base than the Brazilian fintech, which was Latin America’s most valuable unicorn before listing on the New York Stock Exchange last year.
The lines of credit it offers range from 1,000 to 10,000 Mexican pesos ($48-$483) to people with no credit history, and whose risk is assessed with Stori’s own technology. The company’s credit granting rate is 95%.
Demand for Stori’s cards has grown during the Covid-19 pandemic, with the growth of e-commerce and the use of financial services digitally or remotely, Garayzar says.
The firm has added 1.4 million credit card users since its inception in January 2020. One of the goals Garayzar has set out is to reach two million users by the end of 2022.
The co-founder says the company will continue to monitor its main indices, such as acquisition costs, in order to reach its target. “As financiers, we cannot stop monitoring data”, she says.
This extension of its Series C, says Garayzar, finds Stori with healthy numbers, which is something that investors are monitoring more in these times of economic uncertainty.
“Investment is not going to stop, but it’s going to go toward companies that really have a lot of clarity about when they’re going to be profitable,” she clarified, and assured that Stori is looking to continue down that path.
With the new capital, Stori plans to continue growing in Mexico and studying other products in addition to credit, such as wallets and becoming a superapp with which users can make all kinds of payments, such as for utilities and airtime.
And in the medium term, Garayzar says Stori wants to reach another country in Latin America where financial inclusion is urgent, although they are still evaluating which could be the next market. The company also does not rule out going public, now that it has achieved the coveted unicorn status.