Neobank Vexi raises millions to offer young Mexicans lower interest rate credit cards

Getting a in installments paper is thing astir Americans return for granted.

In countries specified arsenic Mexico, it’s a overmuch more difficult and little communal endeavor. In fact, little than 20% of nan organization has entree to a shape of credit, pinch conscionable an estimated 10% having in installments cards.

In caller years, a number of startups person emerged to connection underserved Mexicans much options successful an effort to boost inclusion successful nan country. One specified startup is Vexi. erstwhile Citi exec Rojo Blasquez started nan institution successful 2018 and was later joined by Gabriela Estrada (who besides spent much than 9 years astatine Citi), Cinthia Merlos, Salvador Michel and Carlos Franco arsenic co-founders. All founders grew up successful mediate people households and are personally invested successful helping Latin America’s emerging mediate people person entree to amended financial services, said Merlos, who serves arsenic nan company’s COO. 

“We each travel from mediate people families present successful Mexico. We went to nationalist schools and worked really difficult to get scholarships for backstage schools aliases to study abroad,” Estrada told TechCrunch. “We really want to make a change, and we are seeing that alteration each azygous time pinch our customers.”

Mexico City-based Vexi describes itself arsenic a neobank but doesn’t connection checking aliases savings accounts — yet. For now, its only offering is simply a in installments card, which it offers done American Express without utilizing immoderate third-party issuers aliases processors. This helps nan institution gain much gross done interchange fees, according to Merlos — arsenic overmuch arsenic 3x arsenic that of startups that do usage 3rd parties. Vexi’s offering besides includes interest-free installments, rate back, acquisition security and “competitive” liking rates. By competitive, it intends successful nan scope of 29% to 79%, which successful nan U.S. is considered highly high. In Mexico, however, it falls importantly little than nan liking rates connected microloans, for example, noted Merlos.

“In Mexico, only 1 successful 10 group person entree to a in installments card, mostly because they gain little than what accepted banks require aliases because they activity successful nan informal system owed to a deficiency of general sources of employment,” Merlos said. “That is why we compete against rate and high-interest microcredits, alternatively than against those accepted banks.”

About 75% of Vexi’s cardholders are betwixt nan ages of 18 and 35 and their mean income is $600 to $800 per month. Nearly 60% of its customers are self-employed aliases tally their ain business — nan mostly of which person reported utilizing nan cards to acquisition business supplies.

Merlos and Estrada opportunity nan company’s homegrown in installments scoring strategy allows it to connection in installments cards successful tiers truthful that its lending is responsible. As users beryllium their in installments worthiness, their in installments limits — and scores — summation while their liking rates lower. Also, nan brace declare that users are truthful eager to build in installments that they activity other difficult to make judge they make payments connected clip and not suffer their access. The app besides offers acquisition accusation truthful that users are learning much astir really to amended negociate their finances and spending.

“Our imagination is to usage our technology, talent, passion and acquisition to break nan vicious circle wherever a personification successful Latin America cannot entree nan first statement of in installments to commencement their in installments history and gets stuck taking retired precocious liking loans that they tin ne'er retrieve from,” said Estrada, who serves arsenic nan CEO of Vexi. 

The brace are not deterred by competitors successful nan space. 

“They are saying ‘I want to thatch group really to thrust a car, truthful we will springiness them a Nissan because they are learning really to thrust a car,’ aliases successful different words very basal products,” Merlos said. “But what we are doing otherwise is we are saying ‘Okay, I will thatch you really to drive. But while you commencement driving and arsenic you show you are getting to beryllium a amended driver, I will springiness you a amended car.’ ” One perk nan institution offers is giving its users a measurement to salary for things pinch in installments cards utilizing their mobile phones.

And today, nan institution is announcing it has raised $8 cardinal successful an “oversubscribed” Series A information of backing led by Magma Partners. It secured $3.7 cardinal successful a seed round, and astir $20 cardinal successful indebtedness astatine nan extremity of 2021. Previous investors Alpha4Ventures, Noa Capital and Pomona Impact besides participated successful nan Series A round, on pinch caller backers Redwood Ventures and U.S.-based Rebalance Capital. 

“We’ve been beardown Vexi backers since 2020 and decided to travel connected because nan Vexi squad is solving a existent problem for Latin Americans. We’re excited to support them successful building nan early of Mexican society’s finances,” said Magma Managing Partner Nathan Lustig.

Vexi says it will usage nan caller costs to turn its customer base, onboard caller talent to fortify nan squad and heighten its proprietary tech stack and consequence algorithms. While nan institution declined to uncover difficult gross figures, Merlos said nan institution has seen its gross turn by “4x” successful nan past 24 months. 

“We were capable to get to 2.5 cardinal applications pinch little than $4 cardinal successful equity raised earlier this Series A,” Estrada said. So far, nan institution has issued astir 850,000 in installments cards.

“We judge successful a sustainable measurement of growth, a slower gait possibly compared to different startups but pinch solid, affirmative portion economics,” Merlos told TechCrunch. “This truth itself allowed america to bootstrap during nan pandemic, and makes our institution much coagulated to grip economical turndowns.”

For now, Vexi is focused only connected nan Mexican market, which successful and of itself is immense — pinch a organization of astir 127 million. Eventually, it plans to grow extracurricular of nan state into different parts of LatAm.

Other Mexican startups successful nan abstraction see Stori, Klar and ZenFi, among others.

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