Miami — Stori Card, the Mexican fintech that aims to provide credit cards to the masses, today announced the close of a $200 million Series C round of funding. The funding was split into $125 million in equity funding and $75 million in debt financing, bringing its total funding to date to more than $250 million.
Mexico lags behind other countries in Latin America when it comes to credit card access. In fact, it lags behind emerging markets such as Kenya and India, too, according to The Economist.
That’s the opportunity that Bin Chen and Marlene Garayzar, co-founders of Stori, are capitalizing on. “More than 90% of Mexicans don’t have access to credit,” Chen told Bloomberg Línea.
Stori offers a credit card starting with a $50 per month credit limit and has developed its own method of underwriting so it is able to evaluate customers who don’t already have credit. If this sounds similar to that of Nu Mexico - Nubank’s Mexican operation - it’s because it is, though Chen says that Stori is going after even a less financially established client-base than Nu Mexico.
“We are similar in that it’s a credit card with a mobile app,” Chen said, “but the majority of our customers have never had a credit card in their lifetime.”
Mexico accounts for 28% of the e-commerce market in Latin America, only trailing Brazil, according to a September 2021 report by Statista. The report also says that LatAm, while continuing to be a slow adopter to e-commerce, is home to 300 million digital buyers and that number is expected to reach 360 million by 2025. But as we all know, to really reap the savings and conveniences of shopping online, we need to have a credit card. And it’s necessary for other uses such as ride sharing and Netflix, too.
“In the U.S., the credit bureau serves 80% of the population, but when we go to emerging markets, most of the consumers don’t have strong credit data in the bureau, so it becomes a chicken and egg solution,” Chen said.
Before founding Stori, Chen, who is originally from China and has lived and worked in the U.S. for years, worked at the Boston Consulting Group (BCG), Capital One and Mastercard. Through his work, he became familiar with Alipay, the financial services arm of Alibaba. When he decided to go off on his own, he found that most Mexicans have no access to credit, and that it would therefore be the perfect market to launch in - despite him not speaking any Spanish. Today, Chen splits his time between the company’s Washington, D.C. and Mexico offices.
“The nature of the opportunity is so big and it’s difficult to realize the potential, and LatAm was behind in tech advancement and startups until just a few years ago,” he said.
Stori was founded in 2018 and launched its credit card product in January 2020. “In the last eight months we have doubled our [credit card] applications from 1 million to 2 million,” Chen said. While the company declined to give specific revenue data, it did say that its revenue has grown 20x compared to the same period last year.
While only operating in Mexico, Chen said they intend to expand throughout LatAm. Stori plans to use the money from this round to grow its customer base, and Chen said the way he plans to do that is by growing the team as well as by offering other products and services.
Stori currently has about 100 professional staff members, plus an additional 200 people in its call center.
Like most credit cards, the company makes money by charging interest on revolving balances and earning interchange revenue and account opening fees.
The equity portion of the round was led by GGV Capital and GIC, with participation from General Catalyst, Goodwater Capital, Mexico-based Tresalia Capital, Lightspeed Venture Partners, Vision Plus, BAI Capital and Source Code Capital. The debt financing was provided by Community Investment Management.